2010 June | Well Heeled Blog

Financial Topics for Living Together

Written by WellHeeled on June 29, 2010 · 30 Comments

It’s official. CB and I just put down the security deposit for our apartment. We will be signing the lease in a week and then getting the keys to move in. I am looking forward to this phase of our lives together (and I can’t say that the prospect of lower rent isn’t appealing!).

Everything moved pretty quickly – I honestly haven’t expected to find a place we both liked so soon. Our apartment was literally the 4th place that we looked at. In two weeks, we will become the new tenants of a nice 1-bedroom apartment with ample natural light. Best of all, we get two parking spaces in the underground parking garage so neither one of us has to worry about finding a spot on the street. This place has our must-have (2 designated parking spaces), most of our like-to-haves (upper unit, refrigerator), and even a few unexpected perks (a whole wall of closet space, dishwasher in the kitchen, wrought-iron chandelier in the dining area).

As for the finances of this move…

We will be splitting the rent 60/40. Everything else housing-related (gas, electricity, and internet) will be split 50/50.
I’m not sure how we will treat groceries, but we probably can just buy our own food. I tend to get more expensive groceries – for example, I think of nothing buying free-range eggs, whereas CB will eat regular eggs just as happily. On the other hand, CB eats more in terms of quantity, so it probably evens out in the end.
We may also be putting our cars with the same insurance carrier to save money. I need to research on what, if any, liabilities this step might expose us to.

Other than that, we have no plans to combine our money. I’m not sure if we need to have a written cohabitation agreement, but I do plan on discussing all relevant financial issues.

What’s the most useful money-related tip you’ve received for living together? What financial topic is a MUST-discuss for you?

Balancing Retirement with Short-Term Goals

Written by WellHeeled on June 28, 2010 · 15 Comments

Ah.. balance. That holy grail most personal finance bloggers (including this one) searches for. Saving for retirement is one of my biggest financial priorities, but I know that I have to balance saving for the far off future with saving for the near-term future. Prepare for tomorrow but enjoy life today, right? I recently wrote about my dilemma: should drastically decrease my cash for near-term expenses by contributing the full $16,500 to my 401K, or should I opt for more cash on hand?

After considering the should I max out my 401K? question (thank you for all your helpful insights), I’ve decided to compromise, and contribute $15,000. I’ll leave the maxing out for 2011.

I admit, I was a little worried about the impact the $2,500 monthly contributions ($2,500 x 6 months = $15,000) would have on my net cash flow. So in comes the Paycheck City calculator. After I crunched the numbers, I saw that if I am careful with budgeting, I should be able to contribute the $15,000 for the rest of this year. It also helps that I will have rent that’s $200 cheaper starting in a month. I can theoretically afford to contribute $16,500, but that would be cutting things very tight.

Of course I want to save as much as I can in the 401K, but I wasn’t quite comfortable with putting away the entire $16,500 this year. A few things tilted me towards that decision:

My car seems okay, but it’s nearing 230,000 miles. Though I hope it lasts me another 2 years, I have to be prepared to get a new / new-to-me car at a moment’s notice. Having to purchase a new vehicle will knock about $10,000 of my cash savings.
I want to save $30,000 for graduate school. My mother had previously indicated to me that she will put $30,000 of her inheritance from my grandmother towards my graduate school costs. That makes $60,000, or roughly 1 year of tuition + living expenses at a full-time MBA program. My goal is to only take out loans for the second year. If I were to need a new car, I will need to rebuild that cash cushion.
Enjoying life today is also important to me. I want to eat! and travel! And eat while traveling… and all that takes cash. I don’t want to end up so cash-poor for the rest of the year that I will be taking money out of my savings.

Near-term goals have to be balanced against retirement goals, so this is the compromise. Including $5,000 in Roth IRA, I’ll be able to put away $20,000 for 2010. Considering how I spent a quarter of the year making barely $2,000 a month because I was freelancing / collecting unemployment, I think I am doing OK. Next year I will plan on putting away the maximums allowed under 401K and Roth IRA.

How do you balance retirement goals with big-ticket short-term goals such as travel, graduate school, down payment, car purchases, weddings, etc?

Apartment Hunting? 5 Things to Bring

Written by WellHeeled on June 27, 2010 · 7 Comments

This weekend was dedicated to apartment hunting for our place together. CB and I spent an entire afternoon visiting 6 apartments and walking around the surrounding areas. We found one place that we both loved and is in our budget. I am crossing my fingers because we were the first and (as of the time I spoke with the manager) the only applicants for the place.

Based on my experience apartment hunting, here are five items to make the whole process just a little bit easier (note: I have no idea if this advice applies to renting in New York City, which is a whole another beast altogether. I have nothing but respect for the fortitude of NYC apartment-hunters.):

1. A map of your apartments. I created a map in Google My Maps, and had the location and address of each apartments I wanted to check out. I made different color-codes for apartments with appointments and apartments that I’d like to see if we had time. A map is also a useful tool to gauge how much time you need to give yourself when going from one viewing appointment to another.

2. Printed copies of apartment rental ads. I printed out a copy of our apartments so that I had their address, pictures, and contact numbers. I also took notes on those papers.

3. Comfortable shoes, sunscreen, and water. There’s a lot of legwork to do in apartment-hunting – literally! There’s no better way to see a neighborhood than walking, so be prepared to walk, see apartment, and then walk some more.

4. Checkbook. When you see an apartment that you’re sure you want to apply for, it’s a good idea to submit the application on the spot and pay the credit check fee. I forgot my checkbook today, but luckily we scraped together all the cash we had on hand, filled out the applications and submitted the credit check fees right then and there.

5. Camera. After seeing so many apartments, I couldn’t remember in detail what each one looks like. It would have been helpful if we bought a camera and snapped pictures as we went along.

What else would you bring?

Should I max out my 401K?

Written by WellHeeled on June 24, 2010 · 25 Comments

Most personal finance experts recommend contributing to the 401K up to the match. Even without a match, the plan provides a fairly easy way to automate your savings while lowering your taxes. With open enrollment approaching at my job, I’m faced with the question: Should I max out my 401K? When I first got this position, I set a goal to contribute $16,500, the maximum possible. Now, that figure seems a bit intimidating. Spread over 6 months, $16,500 will be $2,750 per month, or more than a majority of my monthly paycheck.

Why I should NOT max out my 401K:

$16,500 is a lot of money to be tying up – I may very well need money for a new car, graduate school tuition, big moving expenses, etc. in the next 1-5 years
The next open enrollment period is January 2011, so basically once I set my contributions, I’m locked in. I can’t decide in September that I’d like to scale back.
I don’t have an employer match
I can access lower expense ratios in my Rollover IRA / Roth IRAs

Why I SHOULD max out my 401K:

There is no better way of enforced savings. Truly. 401K contributions come out before Federal Income tax, for goodness sakes. You know how Uncle Sam always gets his money where it’s due? Well, maybe it’s time for Auntie Retirement to get hers too.
Lower taxes. Right now, about 28% of my paycheck is gone before the money even hit my checking account. Maxing out my 401K will dramatically reduce my Federal income tax.
I will be very thankful that I maxed out 401K if I go back to graduate school in a few years. An MBA comes with big loans, not tax-deferred retirement vehicles.
On a related note, the next 5 years will likely be filled with a lot of moving pieces, both personally and professionally. Hopefully I will be earning a higher salary in 5 years, but I will also have more personal obligations (some possible big expenses that come to mind are: wedding/honeymoon, grad school, new car, cross-country relocation, etc). So it’s probably wise to save as much as I can right now.
I didn’t have a 401K for 2008. So really I’m only saving $8,250 a year if you spread the contribution over 2008 and 2010.
When I roll over my contributions, I can invest the money in a much wider variety of funds. But I have to have the money in a 401K first before I can roll anything over.

So.. there you have it. I have until June 30th to make a decision. A reasonable suggestion might be to contribute $10,000 to the 401K, but I admit I really like the sound of maxing out 401K! I have been saving for the past couple of month in an savings account that I dubbed the “cash-flow subsidy account” to supplement my paycheck for the rest of the year. I have enough cash savings so that even if my car dies tomorrow (knock on wood!), I can buy a new economy car or a 2nd hand Honda and my emergency fund will still be in fairly decent shape.

What do you think? Should I max out my 401K or not?

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Apartments Rental Ads: How to write an effective ad on Craigslist

Written by WellHeeled on June 23, 2010 · 15 Comments

So a year after I found my perfect studio, I am on the apartment hunt again. CB and I are looking at various vacancies and hopefully we will be able to find the right unit at the right price. Since graduating, this will be my THIRD time apartment hunting. I look at a lot of Craigslist ads. I’m constantly struck by the difference between the best apartment rental ads and the poorest ones. Landlords don’t need to put up fancy multimedia slide shows of their place, but a few simple steps can make a real difference to prospective renters. Seeing how it’s a renter’s market in many areas of the country, an effective ad makes sure that your apartment stands out.

1. Use proper spelling & grammar

I’ve seen ads WITH ALL CAPS or wRiTteN LiKe tHiS. When I was in middle school, I went through a brief phase when I used randomly placed capital letters. Hey, I thought it was cool. Are you cringing? Because I am. Posts that are hard to read will be glanced over.

2. Don’t be too nitpicky

One ad I read had a laundry list of “thou shalt not’s” (although this is more common with renting rooms or apartment sharing) – the renter cannot have overnight guest, cannot have guests after 9pm, cannot cook too much, cannot use the laundry facilities, cannot parking the parking lot. It seems as if the renter’s sole responsibility is to sleep in the room and pay the landlord a not-so-insignificant amount of money every month! I understand such situations when the rent is drastically reduced to make up for the inconveniences, but when it’s not, rational people will pass up the ad. My thoughts are: if the landlord seem so difficult to deal with in an ad, what will he/she be like in person?

3. Provide enough information

Some of the information at a minimum should be: (1) rent, (2) security deposit, (3) hardwood or carpet? (4) fridge included? (5) laundry on premises? (6) # of parking spots and parking situation – street parking, carport parking, subterranean parking? (7) available move-in date (8) specific address (9) proximity to freeways, (10) availability of AC, (11) utilities – what will the tenant be responsible for and what is the landlord responsible for? (12) upstairs or lower unit, (13) length of lease required

Here are some information that is good to provide: (1) proximity to shops, nightlife, notable attractions (museums, zoo’s, colleges, etc.), (2) number of units in the complex, (3) cost of credit check, (4) phone number for prospective renters to call

4. Pictures!

Some apartment hunters will bypass ads without pictures. As to the number of pictures, I always like 4-5 pictures: 1 picture of the outside of the complex, 3-4 pictures of the interior (kitchen, living room, and bedroom). Be sure to take pictures when there is plenty of natural light so you can show off the unit to its best advantage. Pictures of the floor plan are also a plus.

5. Link to address in Google Maps

I love this feature and heartily applaud any landlord who makes apartment hunting just that wee bit easier.

6. Be upfront with the monthly rent

This is a personal pet-peeve of mine (and might not extend to other renters), but I don’t want to see $1,000 as the “effective rent” when the apartment is normally $1,300 and is offering a 1-month free deal. If I expect to stay in this apartment for longer than a year, this is something I’m concerned about. Because I don’t want the second year rent to suddenly jump up from $1,300 to $1,500.

And lastly, a word on rent. If you overprice your unit, prospective renters will know. We saw one unit that was small, dark, and not well-maintained. It was 2 blocks from a bigger unit, priced $25 lower, that was bright and cheery. Anyone who is looking seriously at Apartment Dark & Dingy will probably come across Apartment Big & Bright in their search. And I can’t imagine anyone choosing the first apartment after they’ve seen what they can get with their money with the second. If you can afford it, try to price your apartment $25 to $50 below the market rate. My parents did this with a house that they are renting out (they priced at $1,750 instead of $1,800, which was what a similar house across the street wanted), and within a day they had two applications. They rented out the unit in 2 days. A good tenant is worth $600 a year.

Apartment hunters, is there anything else you really want to see in an ad? Landlords, what do you think of this list?

Guilty Financial Pleasure: keep your hobby on a budget and make money from it

Written by WellHeeled on June 22, 2010 · 5 Comments

This guest post was written by Go Banking Rates, bringing you informative personal finance content and helpful tools, as well as the best interest rates on financial services nationwide. Follow them on Twitter at @GoBankingRates.

Living for the moment is a rule that some people love to live by. However, since the onset of the recession, many people became serial penny pinchers, determined to hold money in their bank accounts until the banks crumble with their money inside (well at least it’s insured, right?).

Despite the choice many have made to tighten their financial reins, some people are still working overtime for their guilty financial pleasures, refusing to let high expenses stop them from nurturing their favorite hobby or interest. But is this an acceptable thing to do? How can we know whether we should always penny pinch or whether it’s okay to go ahead and dive headfirst into our guilty pleasures?

Determine Whether Your Guilty Pleasure is Worth the Money

Obviously there are tons of benefits to saving money, just as many as there are downfalls to spending too much on something that doesn’t necessarily benefit you. So if you’re spending an arm and a leg on your guilty pleasure, it’s good to at some point ask yourself if it’s actually worth the money you’re paying.

For instance, if you love to purchase stamp collections because you love the way they look, you may have to ask yourself if spending $1,000 here and $5,000 there is worth it, especially if you are left trying to figure out how to pay your mortgage.

The same goes for the love you may have for fixing up cars or purchasing the latest cell phone every time one is released. Just because you see it and want it doesn’t necessarily mean you should spend your hard-earned money on it. So before you throw money away, it’s good to make sure what you buy is actually worth the money.

Turn Your Guilty Pleasure into Profit

What’s one way to determine whether your guilty pleasure is worth it? It helps to see if your hobby can offer you a profit. For instance, we all know that stamp collections can be very valuable. But if you are spending hundreds of dollars on stamps that aren’t worth much then your pleasure is not worth the money.

To make your hobby financially worth it, you could conduct plenty of research on the stamps you choose to gain knowledge of what’s valuable. That way, you would know that your stamps are actually making you a profit.

Same goes for fixing up your cars or even purchasing the latest cell phones. You could fix up your cars then enter them into car shows with cash rewards. And as you buy cell phones, you could blog about all of their elaborate upgrades and rake in money through advertisements for offering your expertise.

After you’ve collected your money, you could open one or more high interest savings accounts or looking into some investment strategies that could help you grow your money even further.

Create a Budget that Loves Your Guilty Pleasure

If you are engaging in a guilty pleasure that you can’t seem to turn into a profit. then it’s good to consider making sure that your budget accommodates your hobby. Many people find that they have drained their checking account because they spend haphazardly on what they love.

However, if you place your hobby into your budget, you could find ways to make spending work without breaking the bank. Adding your guilty pleasure to your budget could help you:

Organize: By taking a closer look at your budget, you have the opportunity to look at how much you’re bringing in and need to spend on bills. This could help you determine just how much leeway you have to spend on your hobby.
Make adjustments: Working on a budget helps us take a closer look at items we spend money on unnecessarily. For instance, you may have five subscriptions to magazines that you don’t read. By cutting those loose, you might be able to create space for your guilty pleasure.
Become financially responsible: The key to good money management is learning to restrict your wild spending. By adding your hobby to your budget and allowing yourself only a certain amount to spend on it each month, you learn the value of money and what it means to be financially responsible.

There’s nothing wrong with having a guilty pleasure. For many of us, it makes us feel that we’re actually living our lives to the fullest. However, if your pleasure is causing you financial pain, it’s good to take a look at how it could be budgeted into your finances — or even turned into a profit — so that you don’t go broke having fun.

Do You Need a Dating Prenup Before You Move In Together?

Written by WellHeeled on June 14, 2010 · 43 Comments

In today’s brave new world of dating, mating, and personal finance, couples who are moving in together may well be considering a “dating prenup.” What is that, you ask? Well, I’ve never heard of the term either, until I started Googling. A prenuptial agreement is a legal document that spells out what happens to a couple’s assets and liabilities in the event of death or divorce. A dating prenup is like a prenup for unmarried couples who move in together (and thus have none of the protection or guidelines offered to married people), providing terms and guidelines for a host of issues surrounding a breakup.

There might be some cohabitation in the not-so-far off future, and while CB and I have casually discussed the financial mechanisms of such a move, we haven’t really drilled down to the nitty-gritty. Despite a penchant for all things personal finance, I don’t particularly want to make everything out to be so, well, contractual. In other words, we both agree that if we make different salaries, it’s fairer to divide the rent according to percentage of total income instead of 50-50. But we don’t (nor do we plan to – I hope) expect the one person to reimburse the other for a gallon of water that was not equally consumed.

When I typed in “moving in together finances” into Google, however, most of the websites that popped up mentioned the importance of a moving-in-together contract. There are many names for this phenomenon: dating prenup, cohabitation contract, written agreement, pre-prenups, live-in contract, etc. I think prenups are generally a good idea (especially for community property states), but I’m surprisingly lukewarm to the prospect of drafting and signing a live-in contract with CB.

According to Kiplinger, though, I’m letting my heart rule over my head. Kiplinger says that it’s essential to put your arrangement in writing:

This little piece of paper can help you keep your trial of domestic bliss from becoming a nightmare. In it, you should detail how much each partner will pay for rent, who will cover what household expenses, when bills are due, and other space-sharing arrangements.

The article even helpfully provides a sample cohabitation agreement. AOL Personals shares horror stories of couples who didn’t have a cohabitation agreement and ended up fighting over a pen. NY Post reports that more NYC couples are signing dating prenups. In addition to the more mundane financial aspects of living together, these pre-prenups can also set the terms of pet ownership / visitation after a breakup, expectations for graduate school support, even who pays for a termination of pregnancy, etc. A recent CBS News did a segment on this trend, featuring a real life couple who has a dating prenup.

As sensible as these dating prenups seem though, I just can’t muster much enthusiasm for them. Part of the reason is because CB and I don’t have combined finances (unless you count our joint savings account for Galapagos), and we have no plans to enter into major asset purchases before we are married. We are both fairly financially-responsible. We have been in a committed relationship for a long time.

Part of the reason is good old-fashioned optimist: I don’t think we will break up, though of course there are no guarantees. Or, if we do, I harbor the hope that in the event that we break up after we move in together, we will both behave with grace, dignity, and respect for each other. But I understand the prudence of a cohabitation agreement for couples who do have significant assets together, or if one partner would be giving up a job to move in with the other person.

My question is: Did you have dating prenup before you moved in? If so, what did you include? If not, how did you decide to forgo it?

image source: cbs.com

Sushi: An Expensive Culinary Habit

Written by WellHeeled on June 9, 2010 · 30 Comments

I am far from the suavest of sushi aficionados (try as I might, the most adventurous I get in terms of raw fish is with tuna sashimi, and I love rolls). Even at a more pedantic level of enjoyment, however, sushi is an expensive culinary habit.

Case in point: Last Saturday night CB and I went to a new sushi restaurant that had gotten rave reviews from my friends. The place did not disappoint and was entirely reasonable for a nice Saturday evening meal. Still, for two people, with no drinks, the total tax & tip came out to $50 for three specialty rolls (with all of my favorite ingredients – spicy tuna, unagi, crab, roe, avocado, cucumber, tuna, and salmon), and a bowl of green tea ice cream. The food was beautifully presented and delicious, the service was friendly, and the atmosphere cozy.

It was a wonderful dinner, and I view our $50 bill as money well spent. After all, sushi are truly works of art – it costs money to prepare the labor-intensive dishes and to purchase high-quality fish and other seafood. At some other restaurants, the cost of sushi can go as high as your wallet will expand (or is it contract?). I doubt that I will develop the sense of adventure or sophistication necessary to truly enjoy sea urchin, squid, or octopus sashimi. I do know, however, that I’ve graduated from $5 spicy tuna rolls at the mall sushi shops, and I don’t think I can go back. We’ve all heard of lifestyle inflation. This might be the very first step on my road to sushi inflation.

How often do you eat sushi? Are you willing to spend more on sushi than on other meals? What is your favorite dish?

Question From a Reader: Where and When to go to Graduate School?

Written by WellHeeled on June 8, 2010 · 14 Comments

One of my readers, “Em,” is thinking about going back to graduate school so she can transition in a career in Human Resources. I thought I’d open her question up to all of you.

I am in a bit of a career rut. I received my BA in 2006, and have since been working in assistant/office manager/receptionist-type roles. I am 26, and have been thinking it’s time to start thinking seriously about my career and the steps I need to take so that I can start down an official Career Path. I know there are no typical, proven, Total Success Guaranteed ways to approach the elusive Career Path, that different careers have different requirements, and that people find their dream jobs in multitudes of ways. However, I am finding myself stuck in this rut, and not sure how to move forward.

I would like to pursue a carer in Human Resources, specifically in the area of employee onboarding/training and learning and development programs. In this job market, I’m finding that you need previous HR experience even for the most entry-level jobs in the field, and because I cannot figure out how one gains experience in a position that requires the experience to be hired (which came first, the chicken or the egg?!), I’m thinking about going back to school.

However, school costs money. I do not want to stay at my current job long enough to take advantage of their education reimbursement program (I’d be required to stay at least another two-three years, if I even qualify for it, which I might not, since it is hard to justify how an HR program is important to my role as a receptionist in a company that doesn’t even have an actual HR department), but I have been thinking about my options, and trying to see what is worth the investment.

There are a few Human Resource Management Certification programs that I’ve been looking into, ranging in cost from $1500-$6000. The higher cost comes with the UC Berkeley (extension) label, better classes, and a (somewhat) closer proximity to where I live (though it’s still about a half hour. The lower cost comes with a California State school label, less interesting-sounding classes, and a location that I might not even be able to get to (I would likely be attending these classes at night after work). The other option is a strictly online university, but I’m not sure that would carry the same weight as even a state school.

The other option that I have just started thinking about is some sort of Masters program, though I haven’t begun to research programs, schools or costs yet. I always said I would only go back to school if it was necessary for furthering my career, and I’m starting to think that it’s time, but we’re talking about a lot of money here! Although the other side of me says “$1500? That’s like one, nice vacation. Or my portion of two month’s rent. It’s not THAT much, if it means doors opening to a new career.”

How do you decide when a higher degree is a necessity for career advancement, and then how do you decide how much money is worth it to spend?

image source: studentbranding.com

The Pudding Index: Get Your Retirement Score

Written by WellHeeled on June 7, 2010 · 7 Comments

Retirement planning is as much an art as a science. One of the most common questions is: How am I doing? No one can tell you for sure, but one nifty little website tries to give you a sense of your progress compared to a predefined index. This website, the Pudding Index, tries to answer the question: when you retire, what percentage of your income will your retirement accounts provide?

The Pudding Index does so by comparing you to a Benchmark Account (represented by the score 100). The Benchmark Account for women means that you are on track to save 55% of current income by age 65. For men, it means that you are on track to save 65% of current income. If you score above a 100, it means that you are ahead of the 55% (or 65%, if you are a man) of current income. If you score below a 100, you are lagging behind the index. The Benchmark Account for women is lower because women tend to live longer – another reason we ladies need to save early and save often. The Benchmark assumes that your investments will grow at 7% a year and that you will contribute 9% of pay to retirement every year. It also adjusts for inflation in terms of pay.

The Pudding Index calculator requires four simple inputs: (1) birth date, (2) gender, (3) current income, (4) defined contribution assets (401Ks and IRAs for most people). Then the Pudding Calculator spits out a single number to show how you compare against the index.

This Index doesn’t take into account cash savings, possible Social Security benefits, government / private pensions, or other assets (such as real estate, inheritances, business interests) that can become retirement assets. It’s not a perfect measure (and one doesn’t exist), but it is a good way to check your progress against an Index based on just what you have saved in defined contributions accounts.

Most retirement experts I’ve read recommend 70% to 90% of your current income. When I input my factors, I received a score above 100. The website says that if my account’s performance were to match the Benchmark Account’s (i.e. every year I save 9% of pay and my investments grow at 7%), my retirement assets can replace about 65% of my income at 65. Given that retirement is always a moving target, I prefer to err on the side of saving too much rather than too little. I am glad to know that I’m on the right track, though.

Feel free to share your scores in the comments. Did this calculator teach you something new? Or did it confirm what you’ve already known?

image source: puddingindex.com

5 Little Habits Now That Can Save You Big Money Later

Written by WellHeeled on June 2, 2010 · 28 Comments

Many little habits we develop today can save us tens of thousands of dollars down the road. I’ve listed 5 things that, done regularly, will help achieve a happy, healthy, and wealthy life.

1. Wear sunscreen

Every article I’ve ever read about skin care and every dermatologist I’ve been to have said the same thing: (1) sun ages your skin (think wrinkles, discolorations, loss of elasticity), and (2) one bad burn significantly increases your chances of skin cancer later in life. Instead of spending big bucks for laser refinishing or wrinkle remover creams later on in life (or worse, have to suffer through the pains of skin cancer), spend some extra time taking care of your skin now.

2. Take care of your teeth

Dental care can add up to thousands of dollars, not to mention hours of discomfort or pain (I don’t know anyone who actually enjoys a dental procedure). By taking care of your teeth now with regular brushing and flossing, you will prevent gum diseases and tooth decay. As an added incentive – if you have healthy teeth, you’ll be more inclined to smile. And smiling, as everyone knows, is a good for your health.

3. Invest

Small amounts of money today can grow into a big pile over a lifetime. Every $100 I can put away now will be working for your financial future. Every $100 I spend on clothes or a new car payment will not. That doesn’t mean we have to live like paupers, but it’s a fact that all things being equal, the dollar that we invest when we are 25 will work so much harder than the same dollar we invest at 40. Compound interest is a powerful thing, so get started investing as soon as you are able to. Educate yourself on what investments are appropriate for your goals and risk tolerance, then let your money work hard for you.

4. Exercise

Regular exercise can not only help strengthen our immune system and help us fend off illnesses, it also gives us happy endorphins. Participating in a wellness program can get you decreased medical insurance premiums. Taking part in a physical hobby (say, running or dance), can help you meet new friends. Sad people are bigger spenders, so being happy and healthy not only improves your mood and help you achieve a more attractive physique, it will improve your bottom-line as well.

5. Don’t smoke

Using tobacco products can cause or contribute to many diseases. But the benefits of not smoking isn’t just limited to the health realm. Cigarettes are expensive! Which means that when we light up a cigarette, we are literally burning money. Legislation has made tobacco products increasingly expensive over the recent years (and all trends point to higher taxes on tobacco products in the future), so in 5 years, it wouldn’t be surprisingly if the same smoker will be paying thousands of dollars for the habit. Even leaving the health effects out of the equation, smoking is a financially costly habit.

Do you have anything to add to this list?

A version of this article was originally posted via BlogHer