5 Ultimate Money Habits To Master In 2021 While you may have ambitious money goals, the key to reaching them is building a collection of smaller daily habits

It's never too early to start making smarter financial decisions. With some reading, anyone can begin a good fiscal regime for themselves in their twenties and cultivate these good habits as they progress in their lives and careers. However you haven't begun yet, it's not too late to start.

While you may have ambitious money goals, the key to reaching them is building a collection of smaller daily habits. Taking baby steps that become second nature over time is key to improving your financial situation. Here are some money-related habits that you can master in the coming year to help your money grow. Begin by folding some or all of the following five practices into your life; your future self will thank you for it.

Pay down debt

Make a point of paying down any debt as aggressively and as early as possible to avoid paying multiples of the original amount later in life. This will likely take some amount of effort and a whole lot of self-control to minimize your impulsive splurges. You might have to skip night outs with friends, scale back on your vacations, or even get a second job, but in the end you'll be glad you didn't put off paying off your student debt or credit card debt.

If you're in the nasty habit of only paying the minimum on your credit card balance, it's time to start a new and healthy habit. Start paying extra on your debt to get your credit card debt paid off faster. Even if you don't have a lot of extra money, a few hundred or thousand rupees can make still make a difference. To make sure you use your money for debt instead of being tempted to spend it on other things, try making extra payments to your debt any time you have any extra money in your bank account.

Set up an ECS mandate for key goals

Setting up automatic transfers is one of the easiest ways to save and grow your net worth. To make headway on your goals, auto-transfer a dedicated amount of money into your savings instruments each month. For instance, if you're trying to save INR 100,000 as the down-payment for a car you'll buy in 2021, set up an ECS mandate to transfer around INR 10,000-15,000 every month into your savings.

Create a budgeting plan

You may have gone to the trouble of drawing up a budget or downloading some app to help you keep on the financial straight and narrow, but that won't do any good if you don't actually use them. Use the tool that you like the best to make sure you're not spending more than you're earning.

Set aside some time every month to see how much progress you've made on your money goals. This should include how much debt have you paid off, and how much headway you are making on saving for a major incoming down payment, or for that dream trip next year after being home-bound all year round. Seeing real results will help you stay on track with your financial goals, and give you a boost in motivation.

Automate your finances

One of the best things you can do for your finances is to automate them as much as possible. We all have hundreds if not thousands of small decisions and things to keep track of every day, so if you can automate something important like your finances, you'll have one less thing to worry about.

It's smart to set up automatic bill pay for all of your monthly recurring bills using your bank app or website. You can do the same for your investments and your other financial goals, in general, to help save even more.

Start investing

Just like paying yourself first, you also need to make sure you've taken care of your future self by investing for retirement and other major future needs. The easiest way to get started investing is to start a retirement fund.

You should also have long-term monetary goals for savings and growth. In case you don't right now, come up with some and download easy to use personal finance apps to set up an emergency fund, start saving for retirement, etc. Don't forget to start putting away the maximum amount possible every year towards your retirement as soon as you have that flexibility. For most people, the times of sticking with a company for 25 years and getting a pension are long gone, which means investing in tax-friendly financial instruments such as NPS, ELSS and so on are more important than ever before.