Health Care Costs Rising – Prepare Financially and Physically

By on August 26, 2013

The Importance of Saving and Budgeting for Health Care

It’s a topic that often goes over-looked as a young adult, and can have profound consequences for individuals who fail to recognize the importance of budgeting for health care. With health care costs rising dramatically, it’s more necessary than ever that we take a fresh look into proper health care planning for ourselves and our families. Before I go any further, I want to mention that this post is not geared solely towards young adults. After watching ESPN’s documentary “Broke” recently, it reminded me of how many people are growing up unaware of how to properly plan financially for the long term.

Many of these athletes having come from relative poverty began to receive $300,000+ checks shortly after they were drafted. Having never been taught the concept of budgeting, saving or investing, most of that money went right out the window. They found themselves living paycheck to paycheck. As the documentary put it, “mutual funds aren’t sexy.” You might be asking yourself…”why would you need to live paycheck to paycheck when you earn 300 grand?” You assume that money will continue to arrive in the mail at the same time every month. But what happens when it stops? What happens when your career ends after 5 years, and you’ve had 5 concussions, two ACL tears and a chipped vertebrae and you spent all your money? Long story short, it’s important to put some of that money away now. When you’re 80 years old and you can barely walk, you might wish you had some cash left to replace your knee.

The above is an extreme example, but I like using examples of that nature to make a point. That being said, individuals of all ages should begin to think about budgeting for their health not long after you start working full time. No matter what stage you’re at in life, re-assess your emergency and or health care fund. If you don’t have either, you should open up a new tab and open an online savings account right now. If you’re young and still on your parents health insurance plan, most, if not all carriers will cease offering you insurance when you hit age 26. At that point, you’re really on your own.

No one can predict the future, and it goes without saying that accidents or sickness can happen at anytime, whether you’re young or old. However, there are many factors that should be considered when determining how serious of a budget you should be contemplating and implementing, and the first factor to help you determine this is age. Let’s use a hypothetical timeline.

Health Care Costs are Rising

According to Aetna, health care costs and spending has been on a steep incline since the 1970’s. It’s estimated that $3 trillion dollars is spent annually on health care necessities (or lack there of in some cases). This number is expected to rise to nearly $5 trillion in the US in less than 10 years. That number is startling, and only goes to show how necessary it is that we begin to start planning for our health now.

Start saving As soon as possible

If you’re young and just out of college, you’re at the point where fending for yourself may just be starting to hit you like a ton of bricks. Chances are how much money you should have set aside should you get injured or sick is not something at the front of your mind. I know when I first graduated I was more concerned with how to still be cool with all the undergrads and make it to the new freshman $5 keg parties. Then I realized, those days were pretty much over. Most of my friends and myself now needed to make our way. The reality is, as soon as you graduate you need to be looking for a job immediately. Depending where you live and what you majored in, this could come easily or be a huge pain in the ass.

Lets just assume you find your first full-time, major-related job one month out of college (you’re lucky!!). The company offers you a couple health insurance plans and covers most, if not all of the cost. Great! You should be feeling confident and relatively well covered as a young, ambitious go-getter. At this point, you don’t need to, and probably can’t afford to set aside a large sum of money specifically for health care. What you should do, however, is start an emergency fund and contribute to it when you can. Many personal finance professionals offer an array of opinions on how much money should be contributed and maintained in this fund. One of the more commonly agreed upon amounts, at least for someone fresh out of college would be a couple months worth of your living expenses. After you’ve been working for a couple years, this should increase to at least 6 months worth of your annual salary. Most college students will be starting from scratch, so don’t feel worried if your fund is minimal for several months. Just keep the idea in your head and contribute to it when you can. This concept alone, puts you ahead of most. As your job, fund, and you mature, you can begin to establish set contributions each month.

Continue Saving

So you’re now at that point in your life where you have a family. Your spouse and children are now relying heavily on you to survive day to day. Luckily, you read this post a few years back and learned how to budget for your health from an early age. Even though your family is most likely on your company’s, or your personal health insurance plan (assuming you have one), you need to start increasing your contributions to your emergency health care fund. The obvious reasons being you’re supporting more than one person, and life is unpredictable. At this point, I would have a years worth of my salary set aside.

Improve your Quality of Life and Save Money on Health Care by Being Active and Eating Right

I can’t stress enough how important it is to think about your health from as young an age as possible. I was lucky enough to have a father who instilled in me how important it is to be active and physically healthy from a very young age. I began a strict weight lifting and cardio routine 3-5 times a week when I was 14. Mind you I wasn’t trying to get huge at this point and stunt my growth, I just wanted to be strong and fit. I still continue a very similar, 3-5 times a week workout regimen to this day. The advantages of that, combined with a relatively healthy diet, keep my cholesterol low, my mind alert and my body able to keep up with most of what’s thrown at it. Furthermore, staying physically fit and active will benefit you long into the late stages of your life. Your bones will retain more mass and strength, as will your muscles. As you get older, I recommend switching from running to other forms of cardio, like an elliptical machine to avoid the pounding on your knees. Your heart will still get the same benefits.

All things considered, you should have some money set aside to take care of not only yourself, but the people who rely on you. With health care costs rising, start doing this early on, and you’ll find peace of mind isn’t very far away. There are numerous methods to reduce your health risks and increase your confidence in supporting yourself and or your family.

Stay active – Try to exercise at least a couple times a week. Even a couple days of cardio weekly will help you maintain a healthy heart, reduce toxins, reduce bad cholesterol, contribute to healthy blood pressure and overall physical health.

Budget your time and money – Spend a little time each month to see where your money is going. If you find you could save a little here and there by being more frugal, do so. Put that money in a high interest savings account for a rainy day.

Teach your children early – When your kids are at the right age, have the occasional conversation about why it’s important to save. Be active with them. Teach them that being active is good for them. They might not know it yet, but you’re already saving them money later in life.

One Comment

  1. 2-copper-coins.com (@2coppercoins)

    November 20, 2013 at 3:09 am

    This is excellent advice, especially considering the health care costs that will increase in March of 2014. We don’t often think of our health as something we invest in but it really is. My wife and I have an HSA plan which is a savings account for health care expenses. Also thank you for calling us to pass on healthy habits to the next generation. That is critical.

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