Trade bad habits for good ones

We all have ‘em: those little indulgences that do us no real good, but that we keep doing anyway. Maybe you’re still smoking. Or perhaps you have a four-cup-a-day espresso macchiato habit. It could be lunch out, magazines grabbed at the check-out or that wicked sweet tooth. Or maybe it’s hanging with friends.

If socializing is costing a ton because you meet in bars, over dinner in restaurants, or at expensive outings, substitute less expensive, equally as satisfying social encounters. Instead of meeting in the pub, have a Friday-night game-night (the point is to be with friends, right?). Each week you decide the location, game and food theme for the following week, and then you all chip in. If it’s taco night, someone brings the cheese, someone else the veggies, someone else the salsa and shells. That’s no more expensive (except for the gas) than having dinner at home.

When you’re replacing bad habits with good ones, you can see the financial benefit right off the bat if you take the time to figure out what you’re saving each week and how that savings can grow.

Let’s say you’ve decided to eliminate coffee on the road by substituting homemade coffee, and this is saving you $20 a week. Multiply that $20 by 52 to figure out how much you’d save in a year.

If you were to apply a reasonable interest rate (say 6%) to those savings, and multiply that total by the number of years until you retire, you might be surprised by what a bad habit is costing you.

If you’re saving $20 a week and you’re 30 years old, eliminating that one bad habit will mean $84,000 in your pocket. Yup, $84,000! That’s some pretty expensive coffee.

You can’t say you don’t have money to save if you smoke, drink booze, buy lottery tickets, never drive a car that is more than four years old, pay more than $20 a month for bank charges or carry a balance on your credit cards. Since you have the money to waste on bad habits, you’re just making excuses for not saving.

So, how much are you planning to save this year?