There's nothing like the start of a new year to make you swear off bad habits and embrace your inner fitness junkie. But before you commit to spending money on a gym membership, think about whether doing so really makes financial sense.


Are you throwing your money away?

Fueled by New Year's resolutions and extra holiday weight, countless Americans flock to the gym each January in the hopes of making up for their bad habits. According to the International Health, Racquet, and Sportsclub Association (IHRSA), more than 12% of gym members join in January, compared to just 8.3% a month during the rest of the year. But the IHRSA also reports that gyms typically expect only 18% of members to use them consistently, which means most of us who join are really just throwing our money away.

But it's more than that. When you pay for a gym membership you don't use, you're not just tossing out the amount you spend; you're also missing out on the opportunity to put that money to work for you. There's a reason $1 today is worth more than that same $1 in the future. Thanks to the beauty of compounding, you can invest that $1 and grow it into a larger sum over time, and the sooner you do so, the more you stand to gain.

Imagine you sign a one-year gym membership contract that costs $60 a month and you basically never use it. You might think you're just losing out on $720 by throwing away your money for the year, but that doesn't take compounding into consideration. If you were to instead save that $60 a month for a single year and invest that $720 for retirement, then 30 years from now, you'd have over $7,200, assuming your investments generate an average annual 8% return.

Now let's take things one step further. If you were to save $60 a month every year for 30 years and invest it at that same return, you'd have $81,000 more to your name. And that's money that could go a long way in retirement. 

Better uses for your money

Even if you don't take your gym money and invest it for the future, there are certainly more important uses for that cash. It's estimated that 69% of Americans have less than $1,000 in the bank, which is far below the level most of us need for emergencies. If you're behind on short-term savings, the money you'd spend on a gym could help bridge that gap. Furthermore, if you're carrying credit debt, using that cash to chip away at your balance could save you a chunk of money on interest charges.

Now all of this isn't to say that gyms aren't worth the money. As long as you can afford your membership and actually use it, taking care of your health today could not only extend your life, but save you money on medical care down the line. In fact, in a study published by the Journal of the American Heart Association, researchers found that getting enough exercise can save you $2,500 a year on healthcare costs. But you don't need to pay for a gym membership to reap the benefits of exercise. There's no charge to run in the street, for example, and you could always revert to an at-home workout with online instruction when the weather doesn't cooperate.

Furthermore, if you are going to spring for that gym membership, check your health benefits to see if your insurance provider offers some form of reimbursement. You might get a portion of your membership fee back, though you may need to meet certain criteria, like visiting the gym a specific number of times per benefit period, to become eligible.

Finally, remember that not all gyms are created equal. You don't need that fancy towel service and pool if it costs you $30 extra per month. Stick to the basics, and with any luck, you'll get in better shape without hurting your finances in the process.