TIME Innovation

Five Best Ideas of the Day: March 20

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. The prison system is costly and rarely rehabilitates prisoners. Imagine a better way to transition inmates to freedom.

By Mark A.R. Kleiman, Angela Hawken, & Ross Halperin in Vox

2. Lawmakers should listen to the budget hawks, not the defense hawks.

By Robert Gard and Angela Canterbury in Defense One

3. For teenage girls, it’s possible to shift “attention bias” — literally focusing them on happy faces instead of sad ones — and fight the risk of depression.

By Jennifer Kahn in Pacific Standard

4. The next generation of American workers isn’t prepared to take over the jobs of departing baby boomers. The cost of this failure will be enormous.

By Jennifer Bradley in the Brookings Essay

5. As a four-year college education slips further out of reach, community college has some important lessons to teach us.

By Josh Wyner in the Miami Herald

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY Holidays

Expect Less Green on St. Patrick’s Day

Spending nationwide on St. Patrick’s Day is expected to drop 3% this year, though celebrants will still be plenty enthusiastic.

MONEY Budgeting

5 Bad Money Habits You Can Break Today

Locked up credit card
Corbis—Alamy

When it comes to bad financial habits, there are some serious ones that can cost you thousands of dollars. Which habits are you guilty of committing?

Bad habits. They’re pesky, aren’t they?

Every once in awhile I catch myself in a bad habit. They almost seem inevitable. But I’m always determined to squash them as soon as I recognize them. I’m sure you’re in the same boat.

When it comes to bad financial habits, there are some serious ones that can cost you thousands of dollars. Which of these habits are you guilty of committing?

1. Spending With Credit Cards When You Can’t Afford It

Credit card interest rates are regularly well above 10%. That translates into a lot of interest charges if you don’t pay off your credit card every month. Worse yet, many people get stuck in a cycle of credit card debt – a habit that seems to just not go away.

Many people make what they consider to be “educated” guesses as to whether they can afford to put new clothes or high-tech gadgets on their credit cards. The problem is that those who do often don’t really know their future expenses.

If you’re living paycheck to paycheck, even small emergency expenses can be enough to make you late on your credit card payments. And if you’re late once, it’s so easy to push off paying your credit card debt until you’re really hurting. Furthermore, late payments can hurt your credit, and if your credit score drops low enough it can mean higher interest rates for you in the future. (You can see how your credit card debt is affecting your credit by getting your credit scores for free on Credit.com.)

Unless you’re entirely sure you can pay off your credit cards every month, you may want to seriously consider not using them.

You may be asking, “Hey Jeff, I’m not sure how to stop using credit cards – I can’t afford to live without them!”

That’s a difficult situation, no doubt. In that case, you’re going to have to look at both your income and expenses to determine where you can make improvements so you don’t have to depend on credit to make ends meet.

2. Not Tracking Your Transactions With a Budget

One of the best advantages of tracking your transactions is that you can see very clearly where you spent your money over time.

Try tracking your spending for a month (there are free budgeting software programs that can help with that, too). If you haven’t ever given a second thought to spending, this exercise will certainly help you do that.

When the month is over, categorize and add up your expenses. Many people overspend on the following categories:

  • Groceries
  • Clothing
  • Entertainment
  • Eating Out

These are categories you should monitor carefully.

Once you know how much you’re spending in your categories, make a few goals. Try lowering how much you’re allowed to spend in your problem categories incrementally, month by month.

Over time, because you’ve been tracking your categories and paying attention to your spending habits, you’ll find you can lower your budget category allocations – saving you thousands of dollars.

3. Waking Up Late

I’m convinced that waking up late affects your finances. Allow me to explain.

All of us are pressed for time. If you’re like many out there, you dread the alarm clock and reach for the snooze button too many times (that is, more than zero times).

But I bet there’s something you’d love to do if only you had more hours in the day. Maybe you’d exercise, start a side business, or take some online classes. These are all activities that can either directly or indirectly result in more income.

For example, if you take some online classes, you can learn a useful and marketable skill that can earn you a raise, promotion or a better job.

Personally, I found that by waking up early I can have a few morning routines that get me pumped for my day ahead. The later I wake up, the less productive I feel, and the less productive I am.

You can also fill those early morning hours with some of those activities you always wanted to get to but never could. You just might find that even if you don’t consider yourself to be a morning person, you could become one.

Instead of focusing on ways to improve your finances through just financial means, look at your entire life – it’s not as compartmentalized as it may seem and can have profound consequences on your money.

4. Consuming to Hopefully Find Contentment

Something deep down in me cringes when I hear businesses call people “consumers.” Sure, people consume, but that’s not all they do. But maybe businesses sometimes refer to people as consumers because that’s what so many do too often: they consume.

Ask yourself if you consume more than you produce. Is your goal in the morning to wake up and say, “I wonder how I can please myself today?” Or, is your goal to serve others?

Albert Einstein was quoted in the June 20, 1932 New York Times as saying: “Only a life lived for others is the life worth while.” There’s so much wisdom to that.

But there are other benefits to serving others above ourselves, as well. Have you noticed that when you’re busy serving others and making money, you spend less? Perhaps you’ve noticed the reverse.

Don’t consume to seek contentment. Contentment isn’t found in consumption, it’s found in servanthood. Follow this advice, and you’ll likely keep more cash in your wallet, too.

5. Using Investment Accounts as Emergency Funds

It happens from time to time. I’ve seen a few of my clients raid their investment accounts to pay for emergencies. Sometimes, it even becomes habitual. I understand why they do it, but the tax penalties can be high.

Also, if you use your investment accounts as emergency funds, you’ll lose all that potential earning power when you have to dip into it for emergencies.

A better plan is to have a high-yield savings account nicknamed “emergency fund” and not touch it unless there’s a true emergency. And don’t fool yourself, you really do need an emergency fund.

There are a whole host of emergencies that can crop up when you least expect it: lawsuits, medical bills, job loss, the list goes on and on.

Here’s one habit you should get into: taking extra money you’ve earned every month and pouring it into your emergency fund. You may even put monetary gifts you’ve received into your emergency fund until you’ve filled it up (I recommend three to eight months’ worth of expenses).

Say Hello to More Money

Bad financial habits aren’t always easy to correct. I’ll be honest with you, it’s often very difficult. It requires a shift in the way you think about money.

You might have some bad financial habits right now you don’t know about. Brainstorm! Find every last one if you can. You can break a bad habit in less than a month if you stay focused.

Do it. It’s worth it.

More from Credit.com

This article originally appeared on Credit.com.

MONEY Kids and Money

The Hidden Downside to Rewarding Your Kids for Good Behavior

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Alamy

Giving your kids treats for getting an A at school or doing chores can come with surprising consequences, a new study suggests.

Next time you want to show your children you’re pleased with their perfect report card or good behavior, skip the visit to the toy shop.

Though your intention might be to reinforce responsible or thoughtful actions, new research suggests that providing treats like money, toys, or sweets can backfire on parents. A study published Wednesday in the Journal of Consumer Research found that children who receive more material rewards grow up to be more, well, materialistic.

“Parents don’t want their children to use possessions to define their self-worth or judge others, yet loving and supportive parents can also use material goods to express their love, paving the way for their children to grow up to be more likely than others to admire people with expensive possessions,” said authors Marsha Richins of the University of Missouri and Lan Nguyen Chaplin of the University of Illinois at Chicago.

By using possessions to reward—or, on the flip side, punish—children, parents may be setting the stage for long-term overconsumption, the study found. Children raised in households where acts of discipline involved giving or taking away belongings were more likely to continue rewarding and defining themselves with material things. They also grew up to admire people with expensive possessions and judge people based on what they own.

If that doesn’t sound bad enough, materialism in adulthood has also been linked to reduced feelings of well-being, marital problems, and financial difficulties, the authors noted.

Of course, many parents might wonder what they can do to reinforce good behavior without using material rewards. While the authors caution that using experiential rewards (say, a trip to Disneyland) can also make kids more materialistic, teaching your children to be grateful can mitigate the negative effects of any rewards you provide.

“One viable strategy might be to encourage gratitude in children—reward children, but also teach and encourage them to be thankful for the people and things in their lives,” they wrote. “Gratitude has been found to increase the value placed on connections to people, mindful growth, and social capital.”

For help walking the fine line between giving your child too much and giving them just enough, see how first-time dad and MONEY writer Taylor Tepper learned the secrets to not spoiling his child.

MONEY

How Social Media Sites Are Making You Spend More

Pinterest on mobile phone
Anatolii Babii—Alamy

Social media provides the opportunity to connect with people and gain inspiration from them. It can also lead us to find many ways to break our budgets.

When I ran a Facebook ad recently for a nonprofit where I volunteer, I was surprised how specific you could get in targeting potential customers.

If I wanted to advertise the event I was promoting to women between the ages of 24 and 26 in my city who were unmarried and educated, who watched Girls, owned a dog and liked designer purses — I could do that.

Being able to target ads to a specific market can help a seller reach the people who want or need their products and services. Unfortunately, that means buyers may also be encouraged to spend more than they should if they’re not mindful.

There are many ways that we spend money or time that we didn’t before social media — ad targeting is just one of the potential spending traps we can fall into. We may also feel pressure to keep up with the social media images of our peers. Add to that the aspirational nature of sites like Pinterest, and it’s safe to say that one can encounter many budget-breaking temptations by spending time on social media.

Your Inspiration Station

Pinterest might be the perfect place to score a killer recipe for Pumpkin Cream Cheese Muffins or instructions for how to DIY a fabric headboard, but it is also the biggest tempter when it comes to making us spend. According to RichRelevance, an e-commerce consultant, Pinterest shoppers will spend an average of $170 per session whereas Facebook shoppers only spend $95 per session and Twitter shoppers spend just $70 per session.

So while some people use the site to find fun DIY projects that are cheap or repurpose other items, they might not necessarily be coming out ahead, either. The downside comes if they choose to spend money on projects they hadn’t budgeted for. So the key to keeping your inspiration – and aspirations – in check is to make a little room in your monthly budget for your projects… and then stick to it.

Keeping Up With the Joneses

Perhaps the most insidious ways social media influences our spending is through social pressure or suggestion. Did your friend just tweet, Instagram, Pin or share their delicious meal from that new brunch place? Now you’re craving those waffles and you have to go! Sure, a meal out here or there may not set you back too much. But what if your friends are sharing pictures of their new house, their kitchen renovation, or their new car – and you start to feel a nagging sense that you need those things, too? Things that break your budget, or aren’t even an item in your budget to begin with?

In the social media world, you aren’t just tempted to try to keep up with your neighbours or co-workers, but also the friends from high school you don’t see anymore, and the girl or guy you once met at a party. By expanding our networks, we expand our temptations… and maybe our sense of competition.

Viral Marketing

Another social medium luring us into the spend-more trap is viral content. Lately, I’m seeing more of my friends sharing funny article lists that are actually subtle ads for various products and how-to articles written by brands. Content marketing, a marketing strategy that uses videos and articles to reach consumers, has been growing as companies look for new ways to target potential shoppers and get them to share content online.

These subtle ads may persuade us to buy things we might not need or to spend more on a brand that we have a good association with. For example, I might decide to spend a few more dollars to buy a name product rather than a generic brand because I liked their viral video. This might not seem like a big deal given that it’s just a few dollars. But it can add up, especially if it’s something that involves a larger financial decision. For example, say you’re in the market to buy a car and a particularly charming viral video persuaded you to make a more expensive choice.

What You Can Do

If you’re trying to cut back on your spending, or just don’t want those pesky laser-targeted ads, consider opting out from ‘online behavioral’ and ‘interest-based’ advertisements by registering your IP address with the Digital Advertising Alliance. It won’t make the advertisements go away, but it will make them less tailored to you. And while there are some ways to block ads on social networking sites, it’s ultimately better to be aware of the larger issue: There will always be ads, as will the temptation to spend beyond your means.

It’s during these times that you need to remember to ask yourself:

  • Is this a want or a need?
  • Do I have it in my budget to spend on this?
  • Can I plan for this expense by creating a savings goal?
  • Is there a better way to spend this money (say, paying down your credit card debt)?

Staying conscious of your financial goals can help you overcome the urge to one-up your friends and followers. In fact, if you need a different kind of motivation, consider joining other social media groups focused on saving and paying down debt. Also start checking your credit regularly to see how much your debt is costing you. You can get a free credit report summary updated monthly on Credit.com, so you can keep an eye on a major factor of your financial health.

More from Credit.com

This article originally appeared on Credit.com.

MONEY credit cards

Check Out the Insane Rewards Offered by this New Credit Card

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Rudyanto Wijaya/iStock

You can get 3% cash on everything you buy, at least for the first year.

We don’t get too excited about new credit cards around these parts. So the fact that I’ve personally already signed up for Discover it Miles should tell you something about this card.

The new addition to Discover’s “it” platform, announced late last month, is geared toward consumers who want to earn travel rewards without having to participate in specific airline loyalty programs. To that end, it’s joining into a competitive pool that already includes the Capital One Venture, the Barclaycard Arrival Plus World Elite and others.

Discover it Miles rewards program is unusually generous, but not in the way it’s marketed. According to my analysis, this travel rewards card can actually provide the best cash back value of any card on the market. At least for a year.

What “it” Offers

Discover it Miles is positioned in the non-branded travel rewards credit card space. That means that rather than earning miles for, say, United or American’s loyalty programs, customers instead rack up miles on their card that they can then transfer as a statement credit for travel purchases.

Such cards typically offer better value for your charging dollar, since airline programs have been devaluing miles and making it harder to redeem for tickets.

With Discover it Miles, cardholders earn 1.5 miles for every dollar spent, no cap. Every mile earned is worth one penny, so $10,000 spent equates to $100 in rewards.

Most travel cards offer some kind of signup bonus as an incentive. For example, if you spend $3,000 in three months on the Capital One Venture, you’ll receive 40,000 miles.

But Discover it Miles doesn’t do this. Instead, the card doubles all of the miles you’ve earned at the end of the first 12 months. So $10,000 in spending translates to 30,000 miles, or $300, after a year.

Other perks include no annual fee, no foreign transaction fee, and up to $30 in credit for in-flight Wi-Fi charges. Discover also waives late-fee charges on your first missed payment.

How “it” Compares as a Travel Card

To be fair, the Discover it Miles offers better terms than other no-fee travel cards.

But if you’re someone who spends at least $475 a year, and you’re looking for travel rewards, you’re generally better off going with Barclaycard World Arrival Plus Elite, one of MONEY’s Best Credit Cards.

While Barclaycard holders endure an $89 annual fee after the first year, they also receive a 40,000 signup bonus, two miles for every dollar spent, and a 10% rebate when miles are used for a travel credit. The signup bonus alone is worth $440 if used for travel purchases.

So $10,000 spent on the Barclaycard would net you 60,000 miles (including the signup bonus), which equates to $600 off on travel statement credits. Throw in the 10% rebate, and you’re looking at $660 for that first year. That’s far more than what you can get by using the it Miles as a travel card.

How “It” Compares as a Cash Card

But you shouldn’t think of Discover’s new card as a travel-rewards product. Think of it instead as a cash-back card that nets you 3% (!) on all purchases for the first year.

How? Besides letting you redeem the miles on your statements for travel purchases, the Discover it Miles lets you claim them as a direct deposit into your bank account. So if you accrue 30,000 miles, you get $300 or 3%.

This is a major boon for consumers looking for cash back. Right now, the highest flat-rate uncapped rewards comes from the likes of Citi Double Cash and Fidelity Investment Rewards American Express Card, which offer 2% for all purchases. The Discover it Miles is a full percentage point better.

That’s a big deal. For $10,000 in spending, the Discover it Miles earns you $300 vs. $200 for the 2% cash back cards.

There are mutual funds on our MONEY 50 list that haven’t returned 3% over the past year!

The doubling miles feature is only good for the first year, so the card is less valuable than other products after the first 12 months. After that, you’d be better off using Citi Double Cash. But since there’s no annual fee on the Discover It Miles, there’s no harm in getting the card, using it as your primary for a year, then holding onto it.

You might actually see your credit score improve, especially if you keep your spending at the same level: A lower credit-utilization ratio is a major plus in the FICO scoring formula.

More from Money.com:

5 Things You Didn’t Know About Using Personal Email at Work

How I Made $100,000 Teaching Online

10 Smart Ways to Boost Your Investment Results

MONEY financial skills

Who’s Worst With Money: Baby Boomers, Gen X or Millennials?

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Alamy

Older and younger generations alike face financial challenges, but they share different concerns.

A new report confirms what we all fear to be true: Americans, no matter their age, are generally terrible at managing their money. In short, we all need to save more. A lot more.

This insight comes from Financial Finesse, a think tank geared toward helping people reach financial independence and security, in its 2015 generational research study released today. Financial Finesse’s assessment of each generation’s financial health is based on employee responses to its financial wellness questionnaires, which is used at more than 600 companies in the country.

In this study, generations are broken into millennials (employees younger than 30), Generation X (30 to 54) and baby boomers (55 and older). Based on what people reported about their financial situations, no group gets bragging rights or much room to criticize their older or younger counterparts. As for how they scored, it’s pretty even: On a scale of 0-10 millennials got a 4.6 for financial wellness, Gen X a 4.7 and boomers a 5.7.

Millennials

The youngest segment of the workforce seems to do pretty well with the in-the-moment financial decisions. Essentially, these consumers were scarred by the debt problems they saw in the recession, and they’re more likely to spend within their means, have plans to pay off debt, pay their credit card balances in full and avoid bank fees than Gen Xers.

Despite being in the best position to prepare for retirement (the earlier you save, the easier it is to reach your goals), millennials listed it as their third most important priority, after paying off debt and managing cash flow. The other generations had retirement planning at the top.

The debt issue is really what sets millennials apart. More of their income goes toward student loan payments than it did for other generations when they were younger, and those payments may be cutting into savings potential. The lifetime cost of debt calculator shows how even low-interest debt can impact your savings.

Generation X

Gen Xers have a higher median income than millennials, but they have a harder time managing the bills. This report attributes that to having so much going on, with managing their own finances, supporting children and caring for aging parents taking up a lot of time and resources. At the same time, the report identifies this generation as focused on improving their credit, despite the trouble they have paying bills on time and spending within their limits. (You can see your credit scores for free every month on Credit.com.)

With so many demands on their finances, Gen Xers generally don’t have enough savings to fall back on, sometimes leading them to take money from retirement funds in a pinch. With each passing year, it gets harder to catch up on retirement savings, which could really hurt Gen Xers as they near the end of their careers.

Baby Boomers

With insufficient retirement savings threatening the financial stability of many older Americans, boomers need to focus on analyzing their investments and adjusting their living standards to meet their resources. There’s not much time to make up for poor retirement saving earlier in life, so boomers may have to re-evaluate one of the few things they can really control: Their expectations.

We’re not all doomed for financial ruin, but this report highlights something that cannot be emphasized enough: Setting long-term goals and sticking to plans for meeting them should dominate your financial planning. Do it your own way — there are many effective approaches to balanced money management — but don’t dismiss the importance of planning ahead.

More from Credit.com

This article originally appeared on Credit.com.

MONEY Gas

Here’s What Americans Are Doing With the Gas Money They’re Saving

Gas nozzle and money
Tim McCaig—Getty Images

The government's Energy Information Administration estimates the average household will spend $750 less on gas this year. So where's that money going?

Americans are enjoying a nice raise at the moment, in the form of dramatically lower gas prices. The government’s Energy Information Administration estimates that the average household will spend $750 less on gas this year, which is like getting a roughly $1,000 raise, since the savings aren’t taxed. For a little perspective, the 2008 economic stimulus package passed by Congress designed to save America from the worst of the recession sent a maximum of $600 to American households.

The gas price drop means even more to struggling lower-income earners: the bottom fifth of earners spend 13% of their income on gas.

That’s the good news. The bad news? Retailers aren’t seeing much, if any, of that money.

Americans spent $6.7 billion less on gas in January than November, but retail spending actually fell slightly during that span. That means lower gas prices are not acting as a surprise stimulus plan for the economy.

So where is the money going? To the bank.

The Federal Reserve Bank of St. Louis recently reported that Americans’ notoriously low personal savings rate spiked in December, to 4.9%, from 4.3% the previous month. The cash that’s not going into the gas tank is going into savings and checking accounts instead.

Few Americans save enough money, and many have insufficient rainy-day funds. With the recession fresh in their minds, many Americans appear to be more concerned with restoring their severely damaged net worth than buying stuff.

But Logan Mohtashami, a market observer and mortgage analyst, suspects something else might be at play.

“People don’t think the gas price (drop) is a long-term reality,” Mohtashami said. Despite government predictions to the contrary, he says, consumers aren’t adjusting their spending to a new normal, and instead they’re holding onto their cash for the next rise in prices.

Again, that kind of pessimism is sensible, and it’s good for personal bank accounts, but it’s not so good for growing the economy.

How much are you saving thanks to lower gas prices? What are you doing with the “raise?” saving or paying down debt? Planning a better vacation? Driving a gas-guzzler more often? Let me know in the comments, or email me at bob@credit.com.

More from Credit.com

This article originally appeared on Credit.com.

MONEY Budgeting

How to Start Tracking Your Spending in 7 Minutes Flat

stopwatch with money/dollar on it
George Diebold—Getty Images

If you want to save more or get out of debt, knowing where your money goes now is an essential first step.

As part of our 10-day series on Total Financial Fitness, we’ve developed six quick workouts, inspired by the popular exercise plan that takes just seven minutes a day. Each will help kick your finances into shape in no time at all. Today: The 7-Minute Spending Tracker

Seven minutes is a little tight to create a budget, but it’s enough to tackle the first step: pulling together all your spending info using a budgeting tool such as Mint. You’ll need your credit and debit cards to get started.

0:00 Surf to Mint.com and register for a free account.

0:42 Mint asks for your credit card providers and bank. As you type in each one, a list of possible matches will pop up. Select the right one and enter the online login and password you use for that account. (Mint is a secure site and cannot get to your money.)

3:02 Mint will need a minute to pull in all of your transactions, which it automatically slots into categories like “Cellphone” and “Groceries.” Problem is, the app doesn’t always get it right. To fix that, click the “Transactions” tab.

3:34 See those “uncategorized” charges? You can select them to choose a correct label. This is pretty tedious, so tick the box that says “always re-categorize X as Y.” That way, Mint will put all future transactions from that retailer in the right place.

5:02 When you did that, you probably also noticed some charges Mint tried to identify but placed into the wrong bucket. Scroll through those and correct them the same way.

6:30 Grab your phone and download the Mint app. Having the program handy will help you keep on top of charges.

7:00 Now you’re ready to click the “Budgets” tab and create a spending plan. For more help with that, check out our Money 101 stories on creating a budget you can stick to and setting financial priorities.

Previous:

Next:

  • Day 6: Cut the Fat From Your Budget
  • Day 7: Find Ways to Save More
  • Day 8: Boost Your Earning Power
  • Day 9: Learn How Better Health Can Help Your Finances
  • Day 10: Shore Up Your Safety Net

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