Your Accounts Can Do Double Duty


by David D. Holland



Now that the PlanStrongerTV™ show has officially launched, you will find that I will talk about some of the program content here in the PlanStronger™ column. For those of you who are unable to watch the show, you will be able to keep current on program topics, and for those who do watch regularly, it will be a great way to reinforce some of the main points from my monologues, interviews and discussions.


Holland FinancialMy very first television guest, Nancy Anderson, a fellow CFP® practitioner from Salt Lake City, Utah, and I talked about the importance of having an “emergency fund.” So, you’ve probably heard this a hundred times, “Save 6 - 9 months’ salary just in case”. Well, that isn’t such an easy task, is it? Other priorities vie for those same dollars, like saving for retirement, a child’s college tuition, routine household expenses and maintenance, vacations, and on and on.


Let’s say you are able to save enough to cover 4 months of expenses. Where could the other two months of emergency money come from? The answer is: your other accounts. For example, many people are not aware that you can take principal out of a ROTH IRA account without penalty. Depending on your balance, that could provide enough to reach your goal of a 6-month emergency fund. During difficult times, another source of money (albeit indirectly) could be your Health Savings Account (HSA). Here is how it could work. If you don’t use your HSA dollars for medical expenses (essentially “hoarding” those dollars in your account and paying for your medical expenses out-of-pocket), you can later reimburse yourself for your past medical bills as long as you keep all your receipts.


Lastly, don’t forget about brokerage accounts, also known as non-qualified accounts (the money you put into the account has already been taxed). A brokerage account can be a very good back-up resource for funds in a pinch.


Nancy loves a good analogy like I do! As we closed the first show, she noted the benefits of “squirreling” away earnings whenever possible. Then, those “acorns” (savings) can be placed into different accounts – the same accounts that can be extraordinarily helpful if a person experiences a job loss or is suddenly in need of money due to an unforeseen emergency.



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