As 2021 kicks-off with better expectations and hope, have you made any fresh promises? New Year resolutions especially those made with a lot of sincerity keep us motivated and hopeful. Why not it be related to your finances this time?

Here are some of the new financial beginnings you can make this year and be one up on finances:

Start saving

Many of my friends want to save but don’t make an effort. They promise year after year and yet fall flat. One of the reasons for their failure is the inability to articulate how much they would be actually saving? 

To keep yourself motivated, you need distinct saving goals. For instance say, I will save 20% of my salary this year. This in turn will give quantifiable goals to achieve month after month and resort to course correction if need be. 

Introduce a budget 

To support the saving goals, you need to resort to a good budget.

Do you know how your financial inflows and outflows have been during the year? Or you are just in the race to match the two? Surprisingly, it doesn’t take a lot of effort to start making a budget. Just pull out your credit card and bank statements and start categorizing spends for the year.

 Convert them to budget percentages so that you know where the big spends are. By comparing the share of each expense vis-à-vis its recommended budget percentages, you will know whether you are crossing the limit.

Accordingly, start axing expenses till you reach the savings target. Alternatively, you can increase your income by starting a side hustle or job change. All these tweaks are possible only if you keep track of flows and maintain a budget. You can make a course correction only when you know you are off-track.

If there is one lesson that the pandemic has taught us, it is that of uncertainty. And that one needs to provide for contingencies like medical emergencies or a job.

Initiate debt reduction

Running a loan? What better way than to reduce debt for the year. How about cutting 50% of your debt on the books? Repay loans – especially those carrying a high interest makes ample sense – as it otherwise could snowball into a debt trap. So, cut back initially on personal loans, credit card balances or even car loans.

If you have multiple cards running debt, pay the minimum dues of all while repaying those with higher interest rate and in that order. Apart from your home and education loan, all the debt can be done away with.

Reducing debt, in turn, frees up money for saving purposes. 

Start an emergency fund

If there is one lesson that the pandemic has taught us, it is that of uncertainty. And that one needs to provide for contingencies like medical emergencies or a job. If you don’t have it, start building it. While ideally, it needs to be up to six months of your expenses, don’t try to accumulate it all, especially if you are struggling to save at this juncture. However, make a small beginning. You might save less in a month and more in others. Keep continuing with your effort till you build a robust kitty. Regularly invest your monthly savings into a liquid fund till you hit the target.

Start planning for retirement

It’s nice to live for the moment. However, have you made up your mind as to how you are financially planning to retire? Building a robust retirement nest is the best way to retire peacefully. And ideally, it should be 25 times that of your current annual expenses, adjusted for inflation. 

The earlier, you start thinking financially about retirement, better it is – letting the power of compounding do the wonders. Equity with its, historically, the inflation-beating growth rate has the best ability to create wealth for you. 


A New Year resolution should not only be a stretchable target but also come with a good chance of accomplishing them. This year choose a distinct financial goal and set yourself up for future growth.