When Tarif and I first set up our Flexible Spending Accounts (FSAs), we knew they could save us money, but we didn’t realize how much they could actually help with everyday family expenses. We used our FSA for Kennedy’s daycare costs, and it was such a relief. Having that pre-tax money set aside made budgeting easier and gave us a little more breathing room during the year. It also reminded me how important it is to plan ahead and make sure every dollar we contribute gets used.
What is an FSA?
A Flexible Spending Account (FSA) is an employer-sponsored benefit that lets you set aside pre-tax dollars for eligible expenses. Most people use them for healthcare, but some employers also offer a Dependent Care FSA, which covers daycare, after-school programs, or summer camps for children under 13. Both types can offer meaningful savings.
Why It’s Beneficial
The money you contribute to an FSA isn’t taxed, which means you’re essentially getting a discount on costs you already have. For many families, that can add up to hundreds or even thousands in savings each year. It’s one of those quiet financial tools that can make a real difference when used intentionally.
What You Can Use It For
There are two main types of FSAs, and both can help offset everyday costs:
Health Care FSA:
- Doctor visits, copays, and prescriptions
- Glasses, contacts, and eye exams
- Dental cleanings and orthodontics
- Physical therapy and chiropractic care
- Over-the-counter medicines and first aid items
Dependent Care FSA:
- Daycare or preschool
- After-school care
- Summer day camps
- Use It Before You Lose It
Here’s the part people often forget: FSAs generally follow the “use-it-or-lose-it” rule. That means any money you don’t spend by the plan’s deadline, usually December 31, goes back to your employer. Some employers offer a short grace period or a small rollover, but not all do. Please check with your employer on this grace period.
Now’s the time to check your balance and make sure you’re putting your funds to good use. Schedule appointments you’ve been postponing, refill prescriptions, or prepay for eligible childcare expenses before the year ends.
Our experience with Kennedy’s daycare made me realize just how powerful a little planning can be. Whether it’s for healthcare or childcare, your FSA is money you’ve worked hard for—make sure it works just as hard for you.
Remember, It isn't how much you make, but how much you get to keep.
If you’d like help reviewing your benefits or planning ahead for 2026, our team at 2nd Story Wealth is here to help you make the most of every opportunity. Reach out anytime to schedule a conversation before the year wraps up.