By Stefanie Tuder, Cosmopolitan editor
Bad Habit: Not sticking to a budget.
How to Break It: Creating a budget may sound like a drag, but it’s actually super easy, says Alexa von Tobel, CEO & Founder of LearnVest.com — just follow the 50-30-20 rule: 50% of your money goes to necessities (rent, utilities, health care, groceries, etc.), 30% is for fun indulgences (a new motorcycle jacket, tapas and mojitos with the girls, a weekend trip with your man), and 20% is put towards savings and debt repayment (if you have no debt, save the entire amount). Then, sign up for Mint.com, a free website that automatically and securely connects to all your bank accounts and shows you how much you’re spending in each category, recommends Catey Hill, author of Shoo, Jimmy Choo! The Modern Girl’s Guide to Spending Less and Saving More. Bonus: Mint also sends you reminders when it’s time to pay a bill.
Bad Habit: Splurging on stuff you don’t need.
How To Break It: The good news: You found the perfect pair of sexy summer wedges. The bad news: They cost half a month’s rent. When you’re faced with a temptation, put it to the need vs. want test. Ask yourself, “Do I need a new blouse for work?”, “Do I need to take a cab home, or is there a cheaper safe option?” or in this case, “Do I really need sandals this expensive?” If the answer’s no, then step away from the shoe rack! We’re not trying to be a buzzkill here, so if you’re pining for it a few days later, reconsider whether you can make it work into the 30% of your budget set aside for guilty pleasures by sacrificing something else—like dinners out—for a bit.Think you still won’t be able to resist? Try going on a cash diet, says Hill. Every week, take out just enough money to last you the next seven days, leave your credit cards at home, and only use cash. (But don’t carry massive amounts of money in your purse—take what you need for the day and put the rest somewhere safe at home.) It forces you to regulate your spending so you can make it through until the next withdrawal.
Bad Habit: Overdrafting on your checking account.
How to Break It: There’s nothing more annoying than being hit with a ridiculous overdraft fee—the median charge is $27, even if you’re only pennies over your balance. You have two options to avoid this: a) Tell your bank to turn off the overdraft capability on your account, so it’s impossible for you to spend money you don’t have. b) Check out FindaBetterBank.com—it matches you with a bank with the lowest fees around, and you can set up text and e-mail alerts that let you know when you’re in the danger zone.
Bad Habit: Not saving enough money.
How to Break It: No one likes to think about it, but the reality is, bad luck can strike every once in a while—like losing your job or getting in a car accident. Protect yourself by setting up an emergency savings account. Stash at least 6-9 months of your overall expenses in there so you have a buffer just in case, recommends von Tobel. That way, if something happens, you’ll have a good amount of time to get back on your feet without scrambling for cash.
Bad Habit: Forgetting about your 401K.
How to Break It: Retirement seems so far away, but putting money aside for it now is one of the most important things you can do to set yourself up for later. Find out if your employer matches any contributions to your 401K (an employer-sponsored retirement account that comes from your pre-taxed paycheck) and contribute at least that much—it’s like getting free money! If your employer doesn’t, consider an Individual Retirement Account (similar to a 401K, but not employer-sponsored) or Roth IRA (retirement account that’s already taxed).Here’s why it’s so key to sign up in your 20s: if you put in $1,000 a year starting at age 25, you’d be sitting pretty on more than $300,000 by the time you’re 65. But if you start at 30, you’d have $200,000, and starting at age 35 lowers that number even more to $130,000, which is serious money to lose out on, says von Tobel.
Bad Habit: Ignoring your credit score.
How to Break It: Your credit rating is the only grade that matters after you graduate—that number affects whether you get loans, hired, approved to live somewhere, and more. It should ideally be above 760, and you build your credit by never missing a payment on anything. Head to CreditKarma.com to get your free credit score in under 2 minutes, says von Tobel.
Source: Cosmopolitan
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