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5 lifestyle changes that will save you money—and make you healthier

Accomplish your savings and health goals with this list of tips.

December 15, 2017

Staying fit can benefit more than just your waistline. Good health can also bring more wealth your way by helping you save money.

“Getting personally and financially fit are really similar,” says JT, a pseudonym for the founder of a personal finance blog. “Your calorie intake is like your spending. Eat fewer calories than you use, and you lose weight. Spend less money than you make, and you save.”

Making certain lifestyle changes that will save you money could be a smart move if you’re working toward a financial goal, like saving up for retirement, planning for a large purchase, building up your emergency fund or cutting back on spending. You can set aside any extra cash you save from getting healthy for the future.

But does that mean you have to completely overhaul your daily routine? Nope. Not at all. Here are five ways to save money without drastically changing your lifestyle:

Kelan Kline, who co-founded a personal finance blog with his wife Brittany, set a goal in the fall of 2016 to lose 40 pounds by the beginning of the following summer. To merge his passion for frugality with a desire to stay fit, he aimed to lose weight while spending as little money as possible.

Instead of paying for a monthly gym membership at a private club, he and his wife got a yearly membership to the gym at their local college for just $45. They also turned to the great outdoors for exercise, choosing to bike, swim, hike and walk to stay active.

“The beauty of working out is you can literally do it anywhere,” Kline says, and it doesn’t have to cost a fortune.

 Ditch one bad habit

When you’re looking for ways to save money without drastically changing your lifestyle, try getting rid of one thing that may be hurting your health and your wallet.

Michelle Clardie, founder of a personal finance blog focused on helping young women hone their money management skills, says smokers might consider kicking the habit. This is a great example of a lifestyle change that will save you money.

Assume you spend $7 a day on cigarettes. By going cold turkey, you could save $2,555 a year, Clardie says. And, if your insurance costs were to decrease by $100 a month as a result, you could add another $1,200 to your savings. With that money alone, you’d be more than halfway to fully funding an Individual Retirement Account (IRA) for the year. For 2022, the annual contribution limit for both traditional and Roth IRAs is $6,000, with an extra $1,000 allowed for savers 50 and older.

Other lifestyle changes to make if you want to save more money might include cutting out soda and alcohol, or dialing back on how often you consume them. Both could make you healthier while also leaving you more money to add to your savings.

Skip dinner out

Eating out can be a serious budget buster. Aside from draining your wallet, it’s easy to pack on the pounds if you’re not mindful of what you’re eating at your favorite restaurants.

Anna Dunn Tabke, principal at an investment firm based in Atlanta, recommends meal planning when making lifestyle changes that will save you money. It can take some getting used to, she says, but it’s worth it—both for your health and your finances.

“When we started meal planning, it would take us over an hour on Sunday to go through cookbooks and pick meals,” she says. “Now that we’ve been doing it for a few months, it only takes us 10 to 20 minutes and has saved us about 10 percent off our monthly grocery bill.”

If you’re spending $200 a month eating out, cooking at home can be a great way to save money without drastically changing your lifestyle. If you were to eliminate such spending entirely, you would have another $2,400 a year that you could funnel into a retirement account, emergency fund or high-yield savings account, for example. Even if you were to cut back on meals by a third, that would free up $800 a year for your savings.

Eat fresh

Cooking at home is a lifestyle change that will save you money, but to reap the most health benefits, it’s important to choose the right ingredients. That means steering clear of processed foods in favor of fresh alternatives. The assumption that going organic means going broke is not necessarily the case.

“A lot of people think that eating healthy costs a bunch of money,” Kline says. “The reality is you can eat well on a budget.” Reports have found that while some organic items may be more expensive, others may be priced the same or less than their non-organic counterparts. It all hinges on what you buy, where you shop and what’s on sale at any given time.

Clardie says if you’re looking for a healthy lifestyle change that will save you money, it’s all about choices. That might mean splurging for organic versions of the “dirty dozen”—produce that can be heavy with chemicals when grown conventionally. This list includes celery, peaches, strawberries, apples, nectarines, sweet bell peppers, spinach, cherries and grapes. You can opt to purchase non-organic (and less expensive) versions of the “clean 15,” produce with little or no trace of pesticides and therefore safe to consume even when not grown organically. This list includes onions, avocados, mangos, cabbage, eggplant and grapefruit.

Eating fresh—and tracking your calories while you’re at it—are two relatively low-key lifestyle changes that will save you money and give your health a boost.

 

5. Take advantage of employee health benefits

Other ways to save money without drastically changing your lifestyle might be right under your nose if you have certain health benefits through your job. A health and wellness program, for example, could help you slim down and spend less.

Wellness programs are designed to offer workers incentives to get and stay healthy. Yours might feature benefits like a discounted gym membership, rewards for reaching certain health goals and programs to help you quit smoking or lose weight.

A Health Savings Account (HSA) is another benefit you don’t want to overlook if you’re considering lifestyle changes to make if you want to save more money. These accounts, which are linked to high-deductible health insurance plans, allow you to save money for future health care expenses in a tax-advantaged way.

For 2022, for example, you can save up to $3,650 in an HSA if you have individual coverage, or up to $7,300 if you have family coverage. You can then use those funds to pay for medical expenses as the need arises and, unlike a Flexible Spending Account, the money rolls over from year to year. Your contributions are also tax-deductible, which reduces your taxable income for the year, potentially reducing your tax bill or boosting your refund.

If your lifestyle changes keep you healthy, your HSA can double as a retirement account down the line. After age 65 or Medicare eligibility, you can tap this money without penalty for any reason. You’ll just pay income tax on withdrawals that aren’t used for health care.

Start small when making lifestyle changes that will save you money

Knowing what lifestyle changes to make if you want to save more money is important if you’re working toward a financial goal. You don’t necessarily have to make all the changes outlined here, however. Adopting just one or two of these lifestyle changes that will save you money could make a positive difference in your physical and financial health over the long term.

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Personal finance is a term that covers managing your money as well as saving and investing. It encompasses budgeting, banking, insurance, mortgages, investments, and retirement, tax, and estate planning. The term often refers to the entire industry that provides financial services to individuals and households and advises them about financial and investment opportunities.

Individual goals and desires—and a plan to fulfill those needs within your financial constraints—also impact how you approach the above items. To make the most of your income and savings, it’s essential to become financially savvy—it will help you distinguish between good and bad advice and make intelligent financial decisions.

KEY TAKEAWAYS

Few schools have courses on managing your money, so it is important to learn how through free online articles, courses, blogs, podcasts, or books.

The core areas of managing personal finance include income, spending, savings, investments, and protection.

Smart personal finance involves developing strategies that include budgeting, creating an emergency fund, paying off debt, using credit cards wisely, saving for retirement, and much more.

Being disciplined is important, but it’s also good to know when you shouldn't adhere to the guidelines.

The Importance of Personal Finance

Personal finance is about meeting your personal financial goals. These goals could be anything—having enough for short-term financial needs, planning for retirement, or saving for your child’s college education. It depends on your income, spending, saving, investing, and personal protection (insurance and estate planning).

Areas of Personal Finance

The five areas of personal finance are income, saving, spending, investing, and protection.

Income

Income is the starting point of personal finance. It is the entire amount of cash inflow that you receive and can allocate to expenses, savings, investments, and protection. Income is all the money you bring in. This includes salaries, wages, dividends, and other sources of cash inflow.

Spending

Spending is an outflow of cash and typically where the bulk of income goes. Spending is whatever an individual uses their income to buy. This includes rent, mortgage, groceries, hobbies, eating out, home furnishings, home repairs, travel, and entertainment.

Being able to manage spending is a critical aspect of personal finance. Individuals must ensure their spending is less than their income; otherwise, they won't have enough money to cover their expenses or will fall into debt. Debt can be devastating financially, particularly with the high-interest rates credit cards charge.

Saving

Savings is the income left over after spending. Everyone should aim to have savings to cover large expenses or emergencies. However, this means not using all your income, which can be difficult. Regardless of the difficulty, everyone should strive to have at least a portion of savings to meet any fluctuations in income and spending—somewhere between three and 12 months of expenses.

Beyond that, cash idling in a savings account becomes wasteful because it loses purchasing power to inflation over time. Instead, cash not tied up in an emergency or spending account should be placed in something that will help it maintain its value or grow, such as investments.

Investing

Investing involves purchasing assets, usually stocks and bonds, to earn a return on the money invested. Investing aims to increase an individual's wealth beyond the amount they invested. Investing does come with risks, as not all assets appreciate and can incur a loss.

6. Monitor Your Credit Score

Credit cards are the primary vehicle through which your credit score is built and maintained, so watching credit spending goes hand in hand with monitoring your credit score. If you ever want to obtain a lease, mortgage, or any other type of financing, then you’ll need a solid credit report. There are a variety of credit scores available, but the most popular one is the FICO score.

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Factors that determine your FICO score include:

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Payment history (35%)

Amounts owed (30%)

Length of credit history (15%)

Credit mix (10%)

New credit (10%)

FICO scores are calculated from 300 to 850. Here’s how your credit is rated:

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Exceptional: 800 to 850

Very good: 740 to 799

Good: 670 to 739

Fair: 580 to 669

Very poor: 300 to 579

To pay bills, set up direct debiting where possible (so you never miss a payment) and subscribe to reporting agencies that provide regular credit score updates. In addition, you can detect and address mistakes or fraudulent activity by monitoring your credit report. Federal law allows you to obtain free credit reports once a year from the “Big Three” major credit bureaus: Equifax, Experian, and TransUnion.

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Reports can be obtained directly from each agency, or you can sign up at AnnualCreditReport.com, a federally authorized site sponsored by the Big Three.

Some credit card providers, such as Capital One, will provide customers with complimentary, regular credit score updates, but it may not be your FICO score. All of the above offer your VantageScore.

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Financial experts generally recommend putting away 20% of each paycheck every month. Once you’ve filled up your emergency fund, don’t stop. Continue funneling the monthly 20% toward other financial goals, such as a retirement fund or a down payment on a home.

4. Limit and Reduce Debt

It sounds simple enough: Don't spend more than you earn to keep debt from getting out of hand. But, of course, most people have to borrow from time to time, and sometimes going into debt can be advantageous—for example, if it leads to acquiring an asset. Taking out a mortgage to buy a house might be one such case. Still, leasing sometimes can be more economical than buying outright, whether renting a property, leasing a car, or even getting a subscription to computer software.

On the other hand, minimizing repayments (to interest only, for instance) can free up income to invest elsewhere or put into retirement savings while you’re young when your nest egg gets the maximum benefit from compounding interest. Some private and federal loans are even eligible for a rate reduction if the borrower enrolls in auto pay.

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Student loans account for $1.59 trillion of consumer debt—if you have an outstanding student loan, you should prioritize it. There are myriad loan repayment plans and payment reduction strategies available. If you’re stuck with a high interest rate, paying off the principal faster can make sense.

Flexible federal repayment programs worth checking out include:

Graduated repayment—progressively increases the monthly payment over 10 years

Extended repayment—stretches out the loan over a period that can be as long as 25 years

Income-driven repayment—limits payments to 10% to 15% of your income (based on your income and family size)

5. Only Borrow What You Can Repay

Credit cards can be major debt traps, but it’s unrealistic not to own any in the contemporary world. Furthermore, they have applications beyond buying things. They are crucial to establishing your credit rating and a great way to track spending, which can be a considerable budgeting aid.

Credit needs to be managed correctly, meaning you should pay off your entire balance every month or keep your credit utilization ratio at a minimum (that is, keep your account balances below 30% of your total available credit).

Given the extraordinary reward and incentives offered these days (such as cashback), it makes sense to charge as many purchases as possible—if you can pay your bills in full.

Personal Finance Services

Several financial planning services fall under one or more of the five areas. You're likely to find many businesses that provide these services to clients to help them plan and manage their finances. Some of these services are:

Wealth Management

Loans and Debt

Budgeting

Retirement

Taxes

Risk Management

Estate Planning

Investments

Insurance

Credit Cards

Home and Mortgage

Personal Finance Strategies

The sooner you start financial planning, the better, but it’s never too late to create financial goals to give yourself and your family financial security and freedom. Here are the best practices and tips for personal finance.

1. Know Your income

It's all for nothing if you don't know how much you bring home after taxes and withholding. So before deciding anything, ensure you know exactly how much take-home pay you receive.

2. Devise a Budget

A budget is essential to living within your means and saving enough to meet your long-term goals. The 50/30/20 budgeting method offers a great framework. It breaks down like this:

Fifty percent of your take-home pay or net income (after taxes) goes toward living essentials, such as rent, utilities, groceries, and transport.

Thirty percent is allocated to discretionary expenses, such as dining out and shopping for clothes. Giving to charity can go here as well.

Twenty percent goes toward the future—paying down debt and saving for retirement and emergencies.

It’s never been easier to manage money, thanks to a growing number of smartphone personal budgeting apps that put day-to-day finances in the palm of your hand. Here are just two examples:

YNAB (an acronym for You Need a Budget) helps you track and adjust your spending to control every dollar you spend.

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Mint streamlines cash flow, budgets, credit cards, bills, and investment tracking from one place. It automatically updates and categorizes your financial data as information comes in, so you always know where you stand financially. The app will even dish out custom tips and advice.

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3. Pay Yourself First

It’s important to “pay yourself first” to ensure money is set aside for unexpected expenses, such as medical bills, a significant car repair, day-to-day expenses if you get laid off, and more. The ideal safety net is three to 12 months of living expenses.

Switch to an Alternate Carrier

Gone are the days when you have to go with one of the major cell phone carriers like AT&T or Verizon. Scrappy new cell phone carriers are abundant, and some have networks powered by larger companies. They also make it easy to transfer your phone number.

While your best choice for an alternate cell carrier might depend on where you live, always explore online reviews specific to your city before committing to a new plan.

With some alternative carriers, you could also experience slower data speeds than you would as a subscriber on the main network. For example, even though Visible runs on the Verizon network, a Visible customer would likely have slightly lower data speeds than a Verizon customer. The reason is simple: Verizon serves Verizon customers first.

Here’s what you can expect to pay for an unlimited talk, text and data plan with three different alternate cell carriers:

Investing can be difficult for those unfamiliar with it—it helps to dedicate some time to gain an understanding through readings and studying. If you don't have time, you might benefit from hiring a professional to help you invest your money.

Protection

Protection refers to the methods people take to protect themselves from unexpected events, such as illnesses or accidents, and as a means to preserve wealth. Protection includes life and health insurance and estate and retirement planning.