5 Money Resolutions For The New Year That Can Make You Wealthy

Laveta Brigham

© Provided by BankBazaar.com Photo: Pixabay.com The past year provided us the crucial lesson that nothing is certain in life and we should always be prepared for financial emergencies. So as we enter a new year, let’s acknowledge the importance of money management, and work towards ensuring we are always […]



Photo: Pixabay.com


© Provided by BankBazaar.com
Photo: Pixabay.com

The past year provided us the crucial lesson that nothing is certain in life and we should always be prepared for financial emergencies. So as we enter a new year, let’s acknowledge the importance of money management, and work towards ensuring we are always ready to fight through the vagaries of life.

Here are five resolutions you can make for 2021 that will keep you on top of your money game.

Start With Saving And Budgeting

If you haven’t been saving till now, the beginning of the year is the best time to get started. Try to save at least 20% of your take-home monthly income. This would be a good initial target. You would be able to save better with a budget which helps you visualise and control your spends better. When you spend within your means, you’ll also find ways to save more, and therefore become better prepared to mitigate financial stress. Automate your savings. Open a recurring deposit with your bank. This will automatically divert a fixed amount every month from your savings account into a deposit.

Regular And Smart Investing

Your next important resolution this year besides saving should be smart investment. You may have savings. But to grow your money, you need to invest it. And you must invest in a  disciplined way over the long-term to grow your wealth meaningfully. Topping up your Voluntary Provident Fund, making monthly deposits in your PPF, or starting a mutual fund SIP are just a few ways to start investing. Aim to invest at least 10% of your take-home pay.

Create An Emergency Fund

Covid-19 hurt incomes in 2020. Job losses, pay cuts and businesses closing down became the norm. However, those with savings were able to manage through this emergency. Aim to save at least 6-12 months of your take-home monthly income in a fixed deposit. It will help you tackle an emergency such as this.

Protect Yourself By Buying Adequate Insurance

Insurance is that safety net which protects you and your family from life and medical emergencies. While term insurance provides your family financial independence in the unfortunate event of your demise, a health insurance plan ensures that high medical costs don’t drain your savings in case of hospitalisation. You should go for a health insurance plan despite being covered through employer group insurance cover. So if you haven’t yet bought these protective covers, do so at the earliest in 2021. If you buy them before March 31, you’ll also be able to declare the premiums as tax deductions. Adequate coverage is important. Consider a health cover of at least Rs. 5-10 lakh and a term cover of at least 10x your annual income.

Pay Off Your Debts

Loans can become a weight around your neck in financial emergencies. Therefore, always proactively pay off your dues when the going is good. Pay off high-interest debts such as credit card dues first. With long-term loans such as home loans, try to proactively pre-pay whenever you can. The sooner you are free of debts, the quicker your income would free up for investments, wealth creation, and discretionary spends.

These are the basics of personal finance which will keep you steady in difficulties. Beyond the basics, try to plan ahead for goals such as retirement, home buying, or children’s education. When in doubt, consult an investment advisor.

The writer is CEO, BankBazaar.com, India’s leading online marketplace for loans and credit cards.

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