Financial Goal Setting for the Year.

2021 Financial Goal

We are in the New Year 2021 and it’s time to get things organized for the year ahead. One of the most vital aspects of setting your financial goals is the Pay yourself first system.

I know you’ve heard that a lot but it is the best thing to do in order to get yourself started.

Financial goal for 2021

You sure need to have your investments and savings in order for a comfortable present and future.

Often we believe that we are not making enough money and tend to postpone saving to a time when we will be earning sufficiently. However, this concept needs a correction-the habit of saving must start the moment you start earning!

Guideline to get started with pay yourself first system.

how to pay yourself first

When you think about saving a certain amount monthly, it does not have to be a large sum of money. 

You can start with an amount as low as $20. The idea is to build your corpus with regular sums of money. These savings can later be invested in profitable schemes.

The question that most people ask about savings is, “How much should I save?”

The amount to be saved depends on the age of the individual and the stage in his career.

It is safe to save approximately 10% of income for someone who has just started saving money. 

Let me break it up further for you.

So if you make a hundred thousand dollars a year, 10% is $10,000 that you will be saving. 

If you’re getting paid once a month, it’s $800 a month that you’re saving. 

If you’re getting paid twice a month, that’s $400 that you’re saving. 

If you’re getting paid weekly, you’re probably close to around $80 to $100 dollars that you want to put away.

Paying yourself first means that the money you set aside goes to a savings account or an investment account.

15% is a good way to get started for those in their early 30s.

Those who have not started saving until the age of 35 should think of allocating 20% of their income for savings.

Essentially, the older you get, the higher percentage you need to save!

So, people who are in their 50s and have not started savings might have to look at 40-50% of their income!

As is apparent, the numbers go up with age! So, it is recommended that one starts saving from an early age.

The corpus you build with regular savings is what will make you future ready! Saving and investing regularly helps plan early retirement.

Developing a habit of saving from an early stage in life is beneficial in more ways than one. It makes your life easy and offers more choices. Besides, it reduces stress and makes you feel secure.

The amount you set aside for saving should be the first thing you do with your income. This should go into your savings before you spend on even your house rent! When you pay yourself upfront, you are essentially building your savings, your retirement fund, or your investments.

So, make sure that when you are setting your financial goals, you pay yourself First before you pay anyone else!

If you need any help in planning your finances, connect with me, Veronica Karas!

I Own a Business…. Now What?

I Own a Business…. Now What?

Financial planning for entrepreneurs/business owners is a bit different than planning for all of us who get paid by an employer. When you own your own business there is no retirement plan already set up for you that you just get to stash money away into. So if you’re an entrepreneur – this one is for you!

Savings options for the self-employed:

  • Self-directed 401(k)
    • You can open one with almost any investment bank and it works the same way as a regular one except you choose all your investment options and you’re the trustee for your own account. It’s important to create a good, well-diversified investment portfolio for yourself. This is a solid choice for business owners and their spouses who are able to set aside a significant portion of their earnings. With a solo 401(k), as an employee, you can stash away as much as $18,500 (for 2018). As the employer, you can contribute another 25% of compensation, up to a ceiling of $55,000 for 2018, including your employee contribution. If you’re 50 or older, you can toss in another $6,000 extra. Total savings: a whopping $61,000.


  • SEP IRA (Simplified Employee Pension Individual Retirement Account)
    • Simplified employee pension. You set this up for yourself and it’s great if you have a few employees too, as you can help them out a bit. You set up the plan with your investment bank and then you have your own account, which you can manage exactly like any other IRA account. The maximum contribution cannot exceed the lessor of 25% of total compensation or $55,000 for 2018. Compensation up to $270,000 in 2017 of an employee’s compensation may be considered. Contributions are pre-tax so this is a really easy way to save for retirement if you’re a one man show.
    • Bonus: you don’t have to fund the account until you file your tax return.


  • Defined Benefit Plan
    • These cost a couple grand to set up usually but are SO worth it to reduce income especially as you get older. A defined-benefit plan is an employer-sponsored retirement plan where employee benefits are computed using a formula that considers several factors, such as length of employment and salary history. Of course, if you’re setting this up for your self and you’re the only employee, it works wonders to reduce your income and help you save money for retirement, since you can set up all the rules. This is great for retirement planning and for tax planning.


    • A.K.A. a savings incentive match plan for employees. A SIMPLE IRA is designed specifically for small businesses and self-employed individuals. If you have a few employees, say, less than 10, who make more than $5,000, but far from six figures, and want to offer a plan for them as a perk, this is probably the one for you. It was designed for firms with no more than 100 employees.
    • This one isn’t for moonlighters–you can’t contribute if you’ve already maxed out employee contributions to a 401(k) at your day job. Also, if you need to make a withdrawal from a SIMPLE IRA plan within two years of its inception, the 25% penalty is significantly higher than the 10% fee you’d be charged for early withdrawal from a SEP IRA.

Those are the basic ways you can save for retirement. I would generally advise seeking the council of a financial planner to help set all of these up. How you actually retire and leave the business is much trickier than saving for retirement.

What Goes Up, Must Come Down

What Goes Up, Must Come Down

What Goes Up, Must Come Down

I think it’s time for us to touch upon INVESTMENTS! There are so many different investment types and investment vehicles out there. But let’s all be honest, the average investor really has the same type of investments in their portfolio. Most people have heard all of the below terms before, probably hundreds or thousands of times, and I constantly come across people who don’t know what they are. So.. here you go.

Stocks (or equity)

A stock is a share of ‘ownership’ that is issued by a Company to raise funds. Stock represents a claim on the company’s earnings (and losses). Many people confuse owning shares of a company with actually owning a piece of the company, this is incorrect. The chairs and tables at the corporate office still belong to the corporation – not to the shareholders. Owning stock gives you the right to vote in shareholder meetings, receive dividends (which are the company’s profits) if and when they are distributed, and it gives you the right to sell your shares to somebody else.

If you own a majority of shares, your voting power increases so that you can indirectly control the direction of a company by appointing its board of directors. Not so relevant to the average person, but very relevant when a company buys over another company.

Stocks are issued by companies to raise capital in order to grow the business. By buying shares of the company, you’re essentially betting that you will make money because the company will grow or profits will increase. Just keep in mind, companies don’t always grow, and very often they go bust – so you know, you’re risking losing all of your money as well.


Bonds are fundamentally different from stocks. Bonds are a personal loan that purchasers of bonds are giving to a company, government, or municipality. Bondholders are creditors to the corporation, municipality, or government, and are entitled to interest as well as repayment of principal. Creditors are given legal priority over other stakeholders in the event of a bankruptcy and will be made whole first if a company is forced to sell assets in order to repay them. This inherently makes them significantly safer, and less risky, than stocks. Shareholders are last in line and usually receive nothing, or a few pennies, in the event of bankruptcy.

On the flip side, bondholders are ONLY entitled to receive the return given by the interest rate agreed upon by the bond, while shareholders can get great returns generated by increasing profits, theoretically to infinity.

Bonus point: many municipal and government issued bonds are tax advantaged. For instance, a New York City (NYC) resident owning a NYC school bond will pay not taxes on the interest received from the bond.

Mutual Funds

A Mutual Fund is an investment vehicle made up of a pool of monies collected from many investors for the purpose of investing in securities, such as stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund’s investments and attempt to produce capital gains and/or income for the fund’s investors. A Mutual Fund will usually have a stated investment objective and as such, the investments are made to align with the stated objective.

When thinking about how these operate- just remember – MUTUAL. All the expenses are shared, all the costs are shared, all the gains are shared, and, of course, all of the losses are shared. The amount of each that a shareholder of the fund will experience is directly proportional with the amount of the fund that the shareholder owns. When you buy a share of a mutual fund, you are actually buying the performance of its portfolio.

A mutual fund is both an investment and an actual company. This is strange, but is actually no different than how a share of AAPL is a representation of Apple, inc. When an investor buys Apple stock, he is buying part ownership of the company and its assets. Similarly, a mutual fund investor is buying part ownership of the mutual fund company and its assets. The difference is that Apple is in the business of making computers and smartphones, while a mutual fund company is in the business of making investments.

Exchange Traded Funds (ETF)

An ETF is a type of fund that owns the underlying assets (shares of stock, bonds, oil futures, gold bars, foreign currency, etc.) and divides ownership of those assets into shares. Shareholders do not directly own or have any direct claim to the underlying investments in the fund, but they do own these assets indirectly. ETF shareholders are entitled to a proportion of the profits, such as earned interest or dividends paid, and they may get a residual value in case the fund is liquidated. The ownership of the fund can be easily bought, sold or transferred in much the same way as shares of stock.

An ETF is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike Mutual Funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes through the day as they are bought and sold and typically have higher daily liquidity and lower fees than mutual fund shares.

By owning an ETF, investors get the diversification of an index fund as well as the ability to sell short, buy on margin, and purchase as little as one share (there are no minimum deposit requirements). The expense ratios are significantly lower than those of the average mutual fund.


There are like 23074896237894678236 different types of investments and investment vehicles out there by these 4 are usually the core of any diversified portfolio and the core of most newspaper articles out there. So now when someone talks about Mutual Fund expense ratios in Investment News, you know a little more about what they’re referring to and why it matters.