As a college student who will graduate within a year, I have spent much time reflecting on my future career and my goal to gain financial independence as quickly as possible. In recognizing that this is my goal, I am also aware that bad money habits can preclude me from accomplishing it. If you are also attempting to secure your financial future, here are three bad money habits you should identify and break:
1. Not Contributing Enough To Your 401(k).
If you’re only putting around 3 or 4% into your 401(k), some financial experts would argue that you’re committing a bad money habit. According to financial planner Claire Emory, “Ten percent is the minimum for anyone in any situation.” She goes on to point out that funding retirement is even more important for women given that they spend fewer years working and have longer life spans than men. If you can’t devote at least 10% to your 401(k) now, you might try bumping up your contributions by 1% each month until you make it there.
2. Credit Card Balances.
Woman’s Day cites CreditKarma as noting that the average credit card balance for 2011 was $6,576. Given that the average interest rate is almost 17%, this means you’d owe more than $1,100 in interest each year. In recognizing these realities, financial planner Ted Toal notes that it would be prudent for you to pay down your credit card debt. To make this happen, you can try a “snowball” plan which entails paying the minimum balance on each of your cards except whichever one has the smallest balance. You should also pay as much on the one with the smallest balance as you can until it’s paid off entirely. When the card with the smallest balance is paid off, devote time and attention to paying off the card with the next highest balance. Follow this pattern until all cards are paid off.
3. Silence During Raise Time.
Although the old expression that says those who don’t ask don’t get is a bit trite, this doesn’t mean that it isn’t true. And, in fact, it often is. With respect to raises, Woman’s Day notes that the majority of individuals who ask for one attain something, whether it be an incentive or salary bump. They also note that the more often you ask for a reasonable raise, the more money you’re likely to make over time. This additional cash translates into great things such as retirement savings, college savings, and/or a higher Social Security check. So the next time raise season comes around, don’t be so quiet.
Although most of us are probably interested in growing our wealth, maintaining bad money habits can preclude us from doing this very thing. If you have found that you’re currently committing any of the behaviors I’ve listed above, you should stop engaging in these bad money habits so that you can become financially secure. Good luck! :)
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