In 2000 my wife and I budgeted for new glasses, contacts, some minor dental work and medicine and thought we had all expenses covered. Well, we did and had not factored in the discount eye glasses and contacts from VSP or Vision Service Plan. Our FSA or Flexible Spending Account was left with approximately $250 and we had to spend it within a few days. An FSA, if used correctly can be a tremendous asset for your family finances. You can set aside pretax money for use for medical items like medication, medical procedures, dental visits, and more. Unfortunately, the Health Savings Account did not allow non prescription, over the counter items like contact solution or aspirin. We would have just gone to Target or Walmart and stocked up on contact solution. Another reason I wish Costco took Visa or Mastercard, this year our FSA uses a Mastercard for all purchases. Very handy, but not at Costco where they only accept American Express. Losing $250 because we didn’t budget correctly was a terrible feeling. At least if we went out and at at the finest restaurant and spent $250 on steak and lobster, we would have had something to show for it. Instead the lesson was learned to budget and spend to our FSA limit.

It’s interesting that we want to be frugal and make wise decisions with our personal budget, but if I feel that we will lose any of it to FSA, I say spend it quickly. Yesterday we checked our FSA account balance and found that we have about $80 left for the year. That gives me one day to spend $80. A quick trip to Target and we should be stocked with contact solution for all of 2009. I might even splurge and buy Alcon instead of the the generic Target contact solution.

Do you have an FSA or Health Savings Account as part of your budget? Have you lost money by not spending it all? Many FSA or HSA offer Mastercard or Visa cards and are very efficient and convenient. The hard part is to remember and use the card when purchasing medication that can be reimbursed with the FSA card. Contact solution and many other over the counter medicines qualify now for reimbursement. Make sure you don’t donate any funds to your FSA or Health Savings account company. Check your companies FSA rules for eligible purchases.

Finding new sources of passive income, residual income, or even extra income can be offset if you don’t spend all of your FSA money. Be sure to spend that FSA account money that you worked so hard to earn in 2008. If you happen to forget, be sure to keep that Visa or Mastercard as your first credit card in your wallet. Mine is red and I often wish it could be used for non medical procedures like Costco pizza. For 2009 we are increasing our FSA budget as my wife wants to have Lasik eye surgery. The benefits can be tremendous as she will not have to wear contacts and can wake up in the middle of the night and see the clock clearly. I can’t imagine what that would be like. Instead, I think I’ll wear contacts for a few more years.

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