A new year is like receiving a brand new notebook. It gives you a clean slate to start afresh. With 2020 behind us now, we look towards the brand new year of 2021 with much hope. In hindsight, 2020 was an eventful year for all of us. Many of exclaimed at the idea of working from home as it gave us more time with our families. While others lost their jobs and had no choice but to stay at home and dwell on the volatile nature of the economy. But all in all, it gave us time to introspect and align our goals to plan for a more financially stable future.
But the big question is, what are we going to do with all this insight? With the job market opening up and the economy steadily increasing, we are looking forward to having our old lives back with a new set of goals. It’s up to each of us how we utilize this brand new notebook that we’ve received and what we make of the year 2021.
To get you started here are 5 financial mantras that you need to follow religiously:
Automate your savings
One of the easiest ways to build your savings is automating your salary. When you automate your savings, you won’t have to worry about how much money you have to set aside each month or be tempted to put less into savings. Most employers allow you to divide your paycheck so that different amounts go into different accounts. If not, then you can set up automated transfers with the help of your bank. Regardless of which option you choose, make it a priority to automate your savings.
Invest Your Money
While it is a good idea to have your money parked in savings, it’s even more important to invest. Many of us refrain from investing because of fear or lack of knowledge. When you invest money, what you are doing is either buying a portion of a company or a commodity with the belief that the value of that company or commodity will grow over time.
However, a word of caution. Investing is not a get-rich-quick-scheme, but it’s a way to consistently grow the wealth you already have. The good news is that even though investing is a way to grow your wealth, you don’t have to have a lot of money to get started. It all comes down to the power of compounding. Selecting the right investments and investing diligently will turn your small sums of money into fortunes over time.
Create a spending plan
Can’t stick to a budget plan? Try a spending plan instead. The concept of creating and living off a spending plan can give you the freedom and peace that a budget plan lacks. It allows you to choose what you want to spend your money on instead of restricting your expenses. Start by determining your monthly fixed income and then decide what categories are important to you.
As a rule of thumb, you should start with a semi-fixed bucket that includes expenses such as rent, utilities, groceries, and automated savings. After you’ve determined your crucial expenses, then you can create your fun buckets and decide where you will be spending the rest of your income. The end result is the same as a budget list, minus the restrictive rules.
Improve your credit score
Your credit score plays a critical role in determining whether you get access to financing. It influences how much interest you pay when you get a loan. Higher the credit score, lower will be your interest rates. While there’s no one-stop-solution to improving your credit score, you can start by following these tips:
- Pay all your EMIs on time and in full
- Avoid taking too much debt at one time
- Review your credit history regularly throughout the year
Look for ways to boost your income
While you may be saving, cutting back on expenses, and investing diligently, you may still not be getting close to your financial goals. In this case, maybe it’s time you start increasing your income.
Find a side gig that you can do along with your current job. For example, freelance work is a good source of side income if you have a specific skill to offer. You could also sell your wares if you are good at baking, crafts, or designing. There are many ways to passively increase your income, it’s just a matter of finding what works for you and your situation.
If we have a key takeaway from 2020 it is how unstable our lives our. Having an additional source of income can not only help you increase your revenue streams but it can also offer some protection if you lose your primary job.
A new year brings with it a whole new set of opportunities. However small you think the opportunity may be, every opportunity can be a life-changing one if you work towards it. With these 5 financial mantras, we hope you are equipped to take on newer opportunities and get one step closer to achieving your goals.
