The year 2020 did not go as planned for a lot of people. The Covid-19 induced lockdowns and the stress around the pandemic did disturb many goals that people had planned for themselves at the beginning of the year. With the economic recovery stronger than expected and the vaccine just around the corner, we are hopeful of a much better 2021. Financial planning plays a vital role in all our lives. The pandemic has reminded us of the importance of being financially healthy and money management.
Let us look at five things that we can do to reach our financial goals in 2021:
- Make a Plan - No goal can be achieved unless one has an action plan. A goal is incomplete unless accompanied by a reasonable and time bound project. Understand your financial goals and work out a method to achieve them. Figure out how much you need to save each month and the returns you can expect from those savings. Do the math and come up with exact numbers. Keep both short term and long term goals so that it is easier to track progress.
- Be Frugal - Yes, you read that right. To achieve one’s financial goals fast, one must practice strong financial discipline. We all have multiple wants that we wish to spend on. However, it is essential to understand that the money we earn can only be spent once. So, you will always have to prioritize how you want to spend it. If you wish to reach your financial goals faster, you will prioritize investing overspending on something you desire.
- Invest Before You Spend - One of the best habits that you can teach this new year that will surely help you reach your financial goals sooner is the practice of saving before spending. As soon as your salary comes, separate a pre-decided amount, and invest it in whichever investment instrument suits your financial needs best. If you leave it for the end of the month, there is a big chance that you will not be consistent with investing and end up overspending on things you didn't even want.
- Hustle - To reach your financial goals sooner, it is also essential to work on your income streams. Find what you are good at and look for ways to monetize it. Find a part-time that you enjoy or learn a new skill that could get you a raise at your current place of employment. Accomplishing great things requires significant effort.
- Work Towards Maximum Return Output - We often spend so much time working on earning money that we do not focus on managing the money we have already made. This negligence comes at a considerable cost. Check where your money is currently parked and if it is fetching you the returns that you deserve. Find out if your bank is offering you the best interest rates at the moment. Find out if your CA can save you the maximum taxes that you can. These small efforts add up to considerable amounts in the long run.