2021 is the start of a new decade. A fresh start brings fresh hopes and aspirations. And making new resolutions also come as a tradition with the new year. Though the resolution differs from people to people, common ones are about physical fitness, eating habits, and very few make resolutions about savings, changing their spending habits, or being financially fit.
Last year pandemic has taught us many lessons and one of them is to be financially prepared. We never know when the unexpected might hit us.
So, I will be discussing the 8 most important money resolutions you should take in 2021:
Insurance is important
For the financial security of your dependent, you need to have life insurance. Health insurance is very important and a must for all the family members in order to take care of their hospitalization or other medical needs. Medical cost is extremely high and considering the invasion of Corona, every individual is under threat. Until the vaccine reaches everyone properly, it’s necessary to have insurance to be financially fit.
2. Invest in ETFs
It’s never too let, to begin. Everybody has and you will also have different lifestyle goals such as a home, car, early retirement, etc. To fulfill all these, start your investment with a small amount. Most of us have limited income and in order to meet the financial needs in the future, ETFs are one of the best options to start with, in 2021. Its expense ratio is lesser compared to other mutual funds.
3. An emergency fund
We never know when we will be hit by a medical emergency. A situation like 2020 has made this very clear that we should always be ready to face the unexpected. An emergency fund always comes in handy in such situations. You can keep it in the form of bank deposits, liquid funds, savings, etc. which can easily be used when the time comes.
4. Pay your debts on time
In this modern era, loan has become a lifestyle. It provides easy funds for all your financial needs. Not paying it on time can always take a toll on your financial health. So, start paying because defaulting on a loan not only causes heavy interest outgo but will also hamper your credit score.
5. Diversified Portfolio
Uncertainty comes along with the market. To maintain the balance, you should invest in both debt and equity funds depending on your income and risk appetite. Your portfolio should be unique as per your need and requirement. A balanced and diversified portfolio helps you to remain financially healthy.
Budgeting is the most important of all. it will help you understand the actual expenses over your income. It will help you know your disposable income that can be invested. Start making a budget if you have not started already. Budgeting is important for every expenditure not only for monthly ones.
7. Boost your income
You should have plans to boost your income. Sticking to a single source of income is not a very good idea. Freelance is one of the best options. It is a very good source of income for those who have specific skills. Likewise, if you know to trade, that can also be a good source of side income.
8. Resolution to follow all your resolution
There is no point in determining if you are not following it. Make a resolution to stick with them.
Once you have decided about your resolution, write it out and stick it somewhere where you can have a glance daily. This will remind you and give you the necessary discipline to follow it every day.
Making a resolution is easy and following it is hard. I would suggest – Initiate and half the battle is won. Being financially healthy is the need of the hour. Making some resolution around it and following it dedicatedly will be the best way to welcome the new year 2021.