New Year’s resolutions can help you find emergency money
Common New Year’s resolutions
It’s not that difficult to find emergency money if you are willing to sacrifice. Now that the beginning of the year is here, many people are making New Year’s resolutions. Five of the most common are quitting smoking, exercising, eating healthier, decreasing debt and saving more money for emergencies. These are all good goals to have but many people don’t realize that on top of being beneficial, they also can save people a lot of money if they manage to commit to the changes long-term. Here are some ways each one will benefit your bank account.
Smoking drains your wallet
On top of smoking being bad for you, it also is a huge cost to the average smoker. A study done by the American Lung Association said that smokers listed “saving money” as the number one reason they wanted to quit. If you are smoking just a pack a day, you are spending anywhere from $1,825 to $3.650 a year for your habit. Add to that the cost of caring for smoke-heavy clothing throughout the year, and the expense can get out of control.
Quitting can save you money when it comes to insurance premiums. Normally smokers have to pay 15 to 25% more on health insurance premiums than nonsmokers and 50% more in payments for life insurance. If you manage to stop smoking for a full year, you also will be privy to special nonsmoker rates on both health and life insurance premiums.
Everyone says they want to exercise
According to the National Association of Health, on average Americans have to spend $7,800 on their health care. President of the organization Scott Leavitt said, “More than half of these costs are the result of lifestyle choices.” Research is showing that exercise can bring down those costs. Leavitt stated, “If people are eating right and exercising three times a week for 20 minutes a day, they see prescription costs decrease by 70% and medical costs decrease by 30%.” Medical research has shown that exercise can have positive results on conditions like diabetes, high blood pressure, high cholesterol and heart disease. Dietician Katherine Tallmadge said, “With exercise alone a lot of patients are able to go off of medications entirely or cut medication in half.” The savings here is substantial for people looking to save more and increase their emergency money funds, rather than throw their money away on bad health.
Eating healthier can save you money
Contrary to what some people believe, eating healthy does not have to be a budgetary stretch. Tallmadge said, “The fat, the salty, the sweet, that’s the expensive stuff. You can buy a 10-ounce bag of potato chips for $2.59. For the same amount you could buy four pounds of raw potatoes that have vitamins and fiber.” Some good tips for those who want to save money are to buy leaner cuts of meat, eat protein-rich beans and buy produce when it is in season and least expensive. Tallmadge instructs clients to “not focus on what is the cheapest, but rather what is going to meet their needs most economically.”
Debt is a huge expense
It costs to carry debt. Just ask the millions of Americans who are currently mired in billions of dollars-worth of it. The average American owes $8,329 according to a 2009 Nilson Report survey. That debt costs to maintain. For example, people who are carrying that much debt may be trying to pay it down. If they have a 15.99% APR and are making minimum payments of $167 per month, it will take them 33 years to pay the debt off. And they will end up paying over $15,000 in interest alone. On the other hand, in the same scenario, if they increase their payments to $200 a month, that same debt can be paid off in just five years and have a total interest of $3,800.
Creating an emergency fund is crucial
As many Americans learned during the recession, it’s difficult to manage without savings. When you have savings, you won’t be forced to use high-interest credit cards to manage emergencies. You also won’t need payday loans or short-term loans to cover the shortage. If you have an emergency bill of just $500, and have to put it on credit, you could easily end up paying $580 due to a high interest rate. It’s best to do an assessment of your budget and see where you can come up with savings. Small things like buying fast-food for lunch or stopping for a morning coffee can add up over the course of a month. Cutting back on these two items alone can bring anywhere from $40 to $200 in savings to your bank account.
The resolution’s staying power
Committing to any of the above resolutions can create emergency money. Consistent changes on a small scale will add up over time. Whether you are stopping smoking, committing to exercise, changing your diet, getting rid of debt or saving more, you will be thankful when you look back in a year from now. While others will be in the same position they were in December 2009, you’ll be able to revel in your accomplishments.