Medical Insurance has just become more complicated these days. I won't go into details of what type of insurance that's best fit for you but I do get a lot of questions on what FSA (Flexible Spending Account) or HSA (Health Savings Account) is and if they should utilize that. In the simplest term, FSA and HSA are ways to contribute to an account pre-tax to lower your AGI (adjusted gross income) for the year. If you can figure out ways to lower your AGI, I recommend to use it. HSA is usually only available to high deductible health insurance option and FSA is usually available with most of your health insurance plans. Sometimes if you are enrolled in the high deductible that uses HSA, you can also contribute to a limited contribution FSA as well. 

My recommendation for my clients usually is if you get sick a lot, it might serve you better to choose the high premium medical insurance so you only pay a co-payment but if you don't, I would rather you pay a lower premium and max out on your HSA (assuming all your other higher priority goals like savings, debts and emergency fund goals have been taken care of). Sometimes companies even contribute money as incentives to get you enrolled in a high deductible insurance. A lot of people usually get turned off that they have to pay full price till the deductible is met hence they won't enroll in this but if you are a fairly healthy person and you don't see yourself going to the doctor more than two or three times that year, enrolling in this plan might save you more money. How? First, it lowers your AGI by $3,350 for single and $6,750 for family, which is equivalent to about $1k to almost $3k in tax savings for the year depending on your marginal tax rate. The other benefit of HSA is that you can keep carrying over the balances to the following year unlike the "use it or lose it" option for FSA. Plus the fact that you can bring your HSA funds with you whenever you switch jobs and you can keep maxing out the benefits till you retire AND you can also invest inside the account. Later, you can use the money as part of your after-tax medical cost income during retirement. Another way to think about this is it provides tax benefits of both 401(k) and a Roth IRA's. I always encourage clients to think of this as another valuable 'savings' vehicle that they can use for retirement.

Feel free to make a comment or like and share this blog if you found it helpful. ☺️

Thank you,
Christine Teh
Teh Financial Coaching
My dream is for all my clients to attain Financial Freedom

I could never be thankful enough for having such a wonderful aunt who is so smart with money. She encouraged me to open a Roth IRA account when I first immigrated here in the US at the age of 20. I remember thinking when she first suggested that to me 'Why the heck am I thinking and saving for retirement already this early? I am too young to think about retirement!' but I trusted that she always have our best interest at heart so I listened to her advise. Boy, I am so glad I did! I have been maxing out that account since I started except for one year when I felt rebellious and decided not to. I didn't know anything about investments then, nor what stocks to buy or what the heck even a market means. Luckily, my aunt knew enough to advise me on what to invest on and I bought the companies she advised me to. Fortunately, the ones that she had me buy were really great companies that have grown in value and is still continuing to grow in value that I plan to hold for awhile.


So why all this fuss about Roth IRA? The simplest answer is because you need different buckets of income during retirement. There is the taxable bucket and the non-taxable bucket. Roth IRA falls under the non-taxable bucket so you can withdraw a million dollars (hopefully you will have at least that much), you will NEVER incur any taxes on it. It is a place where you can put your after-tax money now and EVERYTHING inside the Roth will grow tax free so when you retire, everything you withdraw will never be considered as income. Retirement is a whole other set topics to talk about since there are many different strategies one can do to make sure you don't run out of money when you retire. I can't stress enough that it is never too early to plan for your retirement. Invest now!


To break it down for you, it is NEVER TOO EARLY to start a Roth IRA. Nor is it ever too late! If you know your AGI (Adjusted Gross Income) is going to be less than $117k (for the year 2016), you are fully eligible to max the $5,500 annual contribution. If you can afford to transfer $100 there every month, please do so, some money is better than no money transferred and make sure to invest it in the market since you won't be touching the money till you retire.


If you need guidance with planning for your retirement, please do not hesitate to contact me for a free initial consultation and we can talk about how best I can serve your financial needs and goals. Please refer to the Contact page for my contact information. Thank you.


Christine Teh
Teh Financial Coaching
My dream is for all my clients to attain Financial Freedom

Budgeting. How does that word make you feel? It can stir up a lot of not so comfortable emotions for some people or even scare them away from doing anything connected to it. Budgeting means paying attention to what you spend, it means paying attention to all your regular income that comes in (this will be different from the self-employed since their income is irregular). It basically means really paying attention to your finances and some people don't want to have to do that.


I strongly feel that in order for us to get a handle on our finances, we have to budget. If you have an online tool that you use that gives you a good handle on your money, great, I congratulate you on that. I personally like using spreadsheet since I enjoy typing in my expenses. I pretty much enter any expenses I incur on a daily basis in my spreadsheet since it only takes a few minutes and I'm done. I can see how much I spend for the day and if I go over my daily budget I set up for myself. In my case, I set up a $25 daily budget. Usually, I only spend an average of about $15 per day during the weekdays on food so I always carry over an extra $10 a day for the week, which would give me an extra $50 for the weekend to spend. For me, this is the number that I've always felt good with.


What is your daily average budget number? Figure out how much roughly you spend daily and give yourself some extra allowance, the extra will be what you will use for the weekend. If you like to splurge during the weekend, you might need a different budget for the weekend ☺️. Everyone is different, I tailor each budgeting differently for everybody depending on their personality and style. If you don't know where to start on how to budget, please give me a call (refer to the contact page) and we can set up a free initial consultation.