Authored by Saurav Basu

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The New Year – 2021 has already started on a high note. With India approving two vaccines for the coronavirus disease and the IMF and ICRA becoming positive about India’s growth trajectory – What is there to even worry about this year?

2020 was a year that pushed every individual to an edge. From savings to expenditure - even the minutest expense was accounted for and contemplated. However, in the ‘New Normal’ that we lived – some things still stood unchanged. Pandemic or no pandemic, there were money mantras that stood the test of time. Nonetheless, there were also ‘rules’ that were followed biblically, that are absolutely irrelevant now in the new world order.

So what aspect of financial management still works in 2021 – and what doesn’t?

What Works!

Start saving early:

Personal Finance in 2021 is nothing but a marriage of millennial technology and old-world ideas. Thus, birthing the concept of saving early. Preferably from your first salary itself. Saving early will not only help you meet your financial goals sooner, but the corpus you accumulate over time might also just end up pleasantly surprising you in a situation of financial peril. Moreover, cultivating a habit of saving is not even a challenge any more thanks to the availability of technology and digitized services that financial service providers bring to their consumers today.

Diversify:

With respect to investments and general financial management, the saying – ‘Don’t put all your eggs in one basket’ holds true even today. At any investing stage – even if the funds that you seek to invest are small, you must always strive to diversify your funds. There are two benefits to this 1) You are invariably hedging yourself from any risks that may occur to the investment tool that you subscribe to and 2) you give yourself an advantage of making profits from two sources of income streams instead of just one.

Adapt, Adjust and Adopt :

This, by far is the most important rule in the book. To adapt to the changing circumstances. As said by the Greek philosopher, Heraclitus, ‘Change is the only constant’. Economic environment, business mindset, political climate and the stock market – all these factors that intimately affect your personal finances stand to change almost every day. Thus, at any given point you must be swift to adapt to changes and adopt new investment avenues as soon as you see them. You must make yourself mentally agile enough to switch from one market to another as soon as you see higher profits.

You must have a rigid attitude towards financial management, but not towards avenues of investments.

Health Matters:

The new normal is also about managing your health and doing all that it takes to be fit. However, uncertainties can’t be predicted! So this is the time to safeguard yourself and your family with adequate health insurance. In fact the healthier you are, the younger you are, a plethora of insurance options await you. So take that wise step and stay insured!

What Doesn’t

Live in the moment:

As ambitious as YOLO sounds, the pandemic has jolted us back to reality. Living each moment like it’s the last is the perfect attitude to life. However, you must be practical here and remember to save a decent amount of money for future emergencies/ contingencies as well.

Invest in aggressive revenue-generating tools instead of insurance:

Undoubtedly the most underrated investment tool, it’s finally time for insurance to take the center stage. No matter what stage of the life you belong to currently, an insurance component in your portfolio to secure you and your assets from any unforeseen circumstances is a non – negotiable. In fact, financial service providers have been quick to assist their consumers here with a bouquet of insurance policies hedging investors from an array of issues. From accidents, infectious diseases, natural disasters to even pandemics. There is an insurance product now to suit every individual’s needs.

Digital Money should be avoided

We’ve heard the ‘anti-plastic money’ squad propagate this for a while now. However, with contactless payments becoming the norm, digital finances are the way to go. This also has its own share of advantages. Like the schemes that banks have on credit cards, special offers that brands offer for specific bank account holders and of course the cashbacks you receive through e-wallets.

Having said this, the most fundamental rule for personal finance now is that there is no rule at all. Save 10 percent of every paycheck for retirement? No! Save 5% if your expense- income ratio is higher. Save 15 percent if it’s lower. Take calculated risks, try newer avenues. The market today is changing dynamically and financial service providers are going the extra mile in innovating products that suit every investor’s attitude. Hence, research your options well and always speak to a wealth manager to make the most judicial decisions about your financial goals.

Saurav Basu is Head - Wealth Management at Tata Capital Financial Services Limited. Views are personal