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5 habits that save you money

When you make those New Year's resolutions, you're thinking about fresh starts and the year ahead. What you might not realize is that they also could save money.

Here are five popular resolutions and just how much you could save if you resolve them in 2010:


Quit Smoking

Smoking won't just kill you, it'll drain your bank account.

Smokers are using the high cost of the habit as one reason to quit. In an August study by the American Lung Association in Washington, D.C., smokers listed "saving money" as the No. 1 reason they wanted to quit, says Dr. Norman H. Edelman, chief medical officer.

You can save money by stopping a pack-a-day habit, which can cost between $1,825 and $3,650 per year, depending on the cost of cigarettes in your area. Nationally, a pack-a-day smoker is going to average $2,000 annually on cigarette costs, says Edelman.

Then there's the extra dry cleaning to rid your clothes of the smell, dental bleaching or caps for yellowed teeth and Botox to iron out smoking-induced wrinkles, he says.

Quitting also can save on insurance premiums. Typically, a smoker pays 15 percent to 25 percent more on health insurance premiums than nonsmokers and 50 percent more for life insurance, says Scott Leavitt, past president of the National Association of Health Underwriters in Arlington, Va., and president of Scott Leavitt Insurance & Financial Services in the Boise, Idaho, area.

And if you successfully quit smoking, you'll get nonsmoker rates after you've been smoke-free for a year, says Leavitt.


Exercise Regularly

You'll save money in several ways with regular exercise.

On average, Americans are spending $7,800 annually on health care, according to the National Association of Health Underwriters. "More than half those costs are the result of lifestyle choices," says Leavitt.

But exercise brings real savings. "If people are eating right and exercising three times a week for 20 minutes a day, they see prescription costs decrease by 70 percent and medical costs decrease by 30 percent," he says.

Dietitian Katherine Tallmadge has seen similar results in her patients. Exercise can dramatically improve conditions like diabetes, high blood pressure, high cholesterol and heart disease, she says.

With exercise alone, patients (with their doctor's guidance) "are able to go off medications entirely or cut medication in half," says Tallmadge, spokeswoman for the Chicago-based American Dietetic Association and author of "Diet Simple."


Eat Healthier

A healthy eating plan can be as -- or more -- economical than fast food. "It's a total myth that eating healthy is expensive," says Tallmadge. "It's the cheapest way to eat."

"The fat, the salty, the sweet, that's the expensive stuff," she says. For example, a 10-ounce bag of potato chips is $2.59. For the same money, you could buy four pounds of potatoes, which contain vitamins and fiber, she says.

Connie Diekman, director of University Nutrition at Washington University in St. Louis and past president of the American Dietetic Association, offers these tips to save money: Buy smaller but leaner cuts of meat, eat protein-rich beans and buy produce in season when it's freshest and least expensive.

A smaller amount of a leaner cut can slice your food bill and your bad cholesterol.

"You don't focus on what's the cheapest," says Diekman. "You focus on what's going to meet your needs most economically."


Pay Down Debt

If this is a priority, it means that you've already recognized your life would be better without the stress of debt.

The average American owes $8,329, according to a 2009 survey by The Nilson Report, a Carpinteria, Calif.-based newsletter on consumer payment systems. If you're carrying that load with a 15.99 percent APR and making minimum payments of $167 per month to start, it will take you 33 years to pay off the debt. And you'll pay $15,289 in interest.

But kick in an extra $35.50 per month (paying $202.50 every month), and you can pay that same debt off in five years. Total interest: $3,821.

Paying down debt has another added benefit: Your credit score goes up. That means the next time you borrow money, you'll pay less for that loan.


Build Up Emergency Fund

Nothing takes the stress out of financial situations like spare cash. But it can also save you money. When you have cash on hand, you don't have to use more expensive options like high-APR credit cards, short-term loans and payday loans for emergencies.

If you're hit with an unexpected $500 car repair, you're covered. If you put that $500 on a credit card with a 15.99 percent APR and take a year to pay it off, it will cost you about $580.

With a payday lender, the interest rate will average 15 percent for two weeks, which works out to 400 percent annually, says Keith Ernst, director of research for the Center for Responsible Lending in Durham, N.C. At that rate, a $500 emergency could cost much more.

Having money set aside can be your answer to unexpected bills, says Dave Jones, president of the Fairfax, Va.-based Association of Independent Consumer Credit Counseling Agencies. Says Jones: "Having that emergency fund there is such a comfort."

Source: Bankrate

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