Get your finances back on track in 2021

As the last day of 2020 was also coincidentally the last day to file your taxes, you must have given some thought to the question of money, and finances in general. As you move forward with a new beginning for this new year, now is a good chance to get your finances back on track after a year full of new trends, difficulties and ways of working and living. Before we get started on this topic, let us be clear about one thing - getting your finances back on track doesn’t imply a good money management strategy only; although the latter is a subset of the former.

So, how can you get your finances back on track in this new year? By following these five points!

1. Start with a vision

The question of getting your finances back on track arises when there is a gap between the current shape of your finances and the desired shape. What is it that you are unable to accomplish with your current money habits, whether we talk about investments, savings, liabilities, earnings and spendings? More importantly, do you know as to what you need to change in order to get there?
If you are drawing a blank on any of these questions, you need to start with a vision for your financial future. This new year, there is no better way to give your financial journey a new start than committing yourself to a vision - something that you want to see yourself become. Once you have secured a vision, changing the habits that are stopping you from getting there becomes a question of tradeoff, making it easier for you to see what's not working. Here is an example in action: Being a movie fan, is attending that new release worth missing an IPO that you have been waiting for a while now? 

2. Review your annual budget, or start with one.

Although this one should be a no brainer, budgeting your money should be the first thought that comes to your mind on the subject of using your money. This includes being aware of all your income streams, your assets, your liabilities and what your spendings look like in the long run - that’s why, having an annual view of your budget is important. Spending 8k every month on dining might not look as heavy on your monthly budget as 1 lakh would look like in the same category on an annual budget. Moreover, annual budgets also make you aware of expenses that do not recur monthly; consequently, a better planning for these expenses reflect in your monthly budgets. 
Here is the most important question you should ask when reviewing a budget - will your current or desired budget get you to your goals in the long run? Will you be able to save enough money for long term goals, while living the lifestyle that you want in the present? Know the facts about your money first, before making financial decisions. Some people use spreadsheets for this purpose, while others use apps for the same on their phones.

3. Benchmark the performance of your investments

You must have heard of the concept of benchmarking while reading tech reviews and about mutual funds. Basically, benchmarking refers to the process of comparing the performance of something against a top performer or a category average. The same thing applies to investments. And why are we talking about investments? Because investments can have a big impact on your finances in the long run. In your forties, your investments can have an impact on deciding the quality of lifestyle you can afford while making long-term purchasing decisions - like buying a house, property, or even your own retirement.
You can benchmark the performance of your investment portfolio too. If you are invested in stocks, benchmark your performance against the performance of index funds of your stock exchange. It is also important to benchmark the performance of sectors by looking at sector-specific index funds. If your portfolio is weighing heavy on an underperforming sector, review your portfolio, start fresh with fund allocation and take your investments on a new journey. If you are looking for top stock market picks for your 2021 portfolio, then don’t forget to check out this! 

4. Track your progress

Remember when we were talking about having a vision behind your finances? This point will make it clearer to you. Without time-specific goals to work towards, your portfolio’s performance is never bad - and never good either. But if you are working towards time specific goals - like retiring at 50 with a fund of ‘x’ crores, your portfolio’s performance can be measured with respect to your life. Isn’t this the purpose of a number of investments in our financial life?
Keep your investments segregated by purpose, and track their progress every year. This will help you keep your finances aligned to your life goals in the long run. 

Finances are unarguably one of the biggest aspects of our lives, and keeping them on track takes work - but more importantly, the desire to start afresh once again, everytime. This new year, give your financial life a new start, with Angel Broking - open a free demat account, and start giving your financial resolutions a new shape, by leveraging the power of growth with equity markets. 
And don’t forget to check out Angel Broking’s top picks in the stock market for this new year - our gift to you for starting the year with a #smartsauda, that will lay the foundation of long-term prosperity, and help you get your finances geared up for this year. That is what’s imperative to commence on this new journey at the onset of 2021.

Here is us wishing you a happy new year!