CRISTINA ROSE 0:03
Just this information is intended to be educational and general in nature and does not take into consideration you the listeners personal circumstances. Therefore, it is not intended to be substituted for specific, individualized financial, legal or tax advice to determine which strategies or investments may be suitable for you. Consult with the appropriate qualified professional prior to making any financial decision.
Hey, friends, welcome to this week’s episode of “Not Your Momma’s Podcast”. And today, I’m so excited. We have Kari, a seasoned certified financial planner with 17 years of financial service experience. She’s passionate about providing financial planning, advice, and carry founded her own firm adaptive financial design, prioritizing flexibility for families and offering guidance without minimums or strict account management guidelines. Thank you so much for coming on the podcast today. I think this is such an important topic for families, especially in today’s economy.
KARI POLASEK 1:06
Yeah, thank you, Christina, I’m so happy to be here.
CRISTINA ROSE 1:08
So how can individuals with varying income levels start building a solid financial plan for their future?
KARI POLASEK 1:17
Well, let’s be honest, financial planning is probably not something that that’s on the top of your to do list. And if you’re a busy mom, it probably doesn’t hit the top five. But to make it more enjoyable, you can start by having a goal Section, Session, excuse me, it’s fine. Your financial goals to a financial plan is something that’s absolutely crucial. So set some time aside and set some short term goals, maybe taking a vacation, starting to save, paying off some debt, have some midterm goals, like buying a house or paying off your student loan debt. And then some long term goals which generally we think of as retirement or legacy planning. Finances are something that are often set aside because it’s not very exciting. But if you map out your goals and align them with a financial strategy, you’ll be far more likely to stick to your plan, knowing that there will be payoff in the end. If you have a partner, you can do it separately. And then share your goals and maybe make combined goals. But it’s important that you’re on the same page. It is crucial to have goals in place to stick to your financial plan, because really otherwise, why are you doing it?
CRISTINA ROSE 2:32
Yeah, totally. You got to stick to your plan. And I like it’s like, do increments like do you know short term plans and then have like you said, like your legacy plan and the big picture thing, you know, and always have to work on it little by little. And you know, you were talking about debt? You know, how do you recommend someone handling debt? And what strategies can individuals use to work towards that financial freedom?
KARI POLASEK 2:55
Yeah, well, the first step is to understand your finances, right. So sometimes you just shove everything in the closet, and you think ignorance is bliss, I’m not going to think about it. So I would want you to dig up all your accounts, dig up, all those old debts really get organized, put in an spreadsheet, you can even use like a free app like mint.com, or something, just to get a clearer picture of what you all have out there. You know, heck, you can even put pencil to paper and track it manually. And sometimes that’s actually the best because you’re putting in so much time doing it, that you become really aware of your finances, finances, tracking your spending, and I’m gonna say a word you’re probably not gonna like but potentially budgeting is super important. This can help you cut expenditures, and it’s the basis for a financial plan. So don’t skip it. But it’s not something you need to do long term, right? It just gives you the building blocks of okay, here’s where I am today. Here’s how much discretionary finance, finance, I have to set aside to saving or to paying down that debt. But it’ll give you kind of a baseline pay down high consumer debt, right. So this is outside of like a mortgage or a car loan or something that’s tied to a tangible asset, think credit card debt, or personal loans. This can be upwards of like 30% in interest, right. So when we think about it in the financial planning world, we use a general rule, you’re likely to get 6 to 7% investing in the stock market over a long timeframe. So if your debt has a higher interest rate than 6 to 7%, you should be making that a priority to pay that off as soon as possible. Yeah, again, not to say that you shouldn’t be saving in addition, but it should be your priority to pay that off. They have a ton of systems out there that can help you do it. One of the ones that I kind of like is undead it. You just plug in your accounts, the interest rates, and it’s going to be really eye opening because it’s going to tell you what you’re paying And on a monthly basis for interest, but it’ll put together a plan to show you how you can pay off your debt and as quick as possible. Yeah, so there’s a lot of different tools out there to help you with that.
CRISTINA ROSE 5:13
Yeah I know credit cards now. It’s like, what? 26% It’s crazy. I’m like, How can anyone even like catch up and like, pay it off? You know, I mean, if you can’t do like the full payment, sometimes on the payments, it’s like, if anything, you’re spending more on interest than you are on the actual products you’re buying. So it’s, it’s pretty overwhelming, especially in today’s society, you know, prices are going up. But you know, salaries and things are all staying the same. So it’s kind of a struggle right now, I think a lot.
KARI POLASEK 5:43
That’s why having a clear budget is so important. And doing your best to stick to it again. I mean, it’s like calorie counting, right? You would go crazy, if you counted every calorie everyday that you ingested, I’m not saying you have to do that. But having an understanding of okay, I should be eating out once a week, I’m going to save, you know, this handbag that I’d like to buy myself for my birthday and save up for it, those type of things are just like, I don’t know, things you can put into place that are just super simple and easy, that are really going to put you ahead of the curve.
CRISTINA ROSE 6:19
Well it’s great practice to like those little things, small bag, you know, like for your birthday, or whatever, you know, it’s like having those little small tangible goals, like we’ll just cross over into, like everyday managing your finances. And so, you know, we were talking about, you know, saving and doing those things, you know, so what are some practical steps people can take to actually save and invest their money wisely.
KARI POLASEK 6:45
Yeah. So the first thing I’m going to tell you is to save right away, right, so don’t assume that you’re going to wait until the end of the month to put that money in an investment account, have that swept directly out of your paycheck, maybe to like a 401 K or other employer sponsored retirement plan, set up an ACH, so it goes directly to an IRA or brokerage type of an account. But saving that money right away is going to make sure that you actually do it, otherwise, you probably won’t, it’s basic psychology that you’re probably going to spend what you have. So if you don’t save first, you’re probably not going to save. Now, if your partner works, or if you work, and every time you get a raise, you can invest a portion of that into your savings. So let’s say you got like a 3% salary increase this year, I would say okay, as a goal of mine, I’ve already established my budget, I’m going to take 2% of that 3%. And I’m going to increase my savings by that amount. Yeah, in the US, there’s a general rule that 15 to 20% of your income should be saved so that you have enough for retirement, that is crazy. That’s such a huge amount. Yeah, and most people are only saving between 3 and 6%. So what you want to do is just slowly chip away to increase that I’m not saying tomorrow, you have to go from 3% to 20%. But maybe you put a budget into place and say, Okay, next month, I’m going to increase my savings by 1%. And then the next month after that, you increase it by 1%. And now you’re tapped out, but you know that you’re gonna get a raise at the end of the year. And so then you wait until you get that, you know, 3 to 5% raise, and then you add that to the amount that you’re saving. So that slowly over time you build to that 15 to 20%, which is again, kind of a golden rule of what you should be saving.
CRISTINA ROSE 8:41
Yeah I think it’s important to set it and forget about it, like you said, when I mean just like have it already automatically deducted from your, you know, income account and stuff like that. So you just forget about it, and you just don’t touch that money. And I think that’s the crucial.
KARI POLASEK 8:57
Then you’re not even thinking about it. It’s kind of like the easy button, right? It’s just automatically done on your behalf, you can set it up to invest, you know, in an s&p fund or, you know, time based fund, something like that that’s, you know, appropriate for you. And you don’t even have to worry about it. Another thing I would say is to set three to six months worth of expenses into an emergency fund, right, like a high yield savings account. Yeah, because life is gonna happen, right? Your car’s gonna break down, your roof is going to spring, a leak, all these things are going to happen and just think about how much stress you’re going to remove from yourself. If you have that emergency fund set aside, that we are not going to have to tap into your 401 K you’re not going to be stressed about Okay, where am I going to pull this money from? So once you’ve again set that budget got that baseline, you can start building that savings with 3 to six months worth of expenses that will really put your mind at ease.
CRISTINA ROSE 10:00
So what advice do you have for parents looking to secure their children’s financial future, considering your own experience as a mother of three?
KARI POLASEK 10:09
Yeah, so lead by example, right. So just like your kids are, we’re gonna get to repeat that swear word you said in rush hour traffic, they’re going to get your financial habits are like sponges really and truly. So teach your kids about money and budgeting early, give them chores, and an allowance. This helps them understand that money just doesn’t grow on trees. So when I take my kids to target, I make sure they understand that we have a list and we’re here to get groceries and household items, and they can help me pick those out. And then if they’re good, they can spend 10 minutes in the toy aisle, but we’re not here to buy toys. And I will set a timer and I’ll say, Okay, you have 10 minutes. And then I’ll take pictures of the things they want, you know, then we’ll go to pictures. And I’ll say, Okay, if you save, you know, three weeks or six weeks of your allowance, you’ll have enough money to buy this. And that really enforces good saving habits and really empowers them to that they’re in control, and they can buy them things themselves. So cute when they go to like the counter, and they have their money, and they’re paying for it. And they’re so proud of themselves. I mean, that’s something that you can really teach your kids that is super helpful for them. Yeah. And then lastly, I would say if you are interested in helping your kids with higher education, invest in a 529 plan. So this is a tax deferred account. It’s intended for educational purposes. And there is, you know, if you don’t use it, for educational purposes, there can be a tax hit for that. But there are varying tax benefits state by state. So some states allow, you know, people who contribute to take a deduction from their taxes, it just depends on where you live. But it grows tax deferred. So you put the money in it grows tax deferred, and then your children can pull that out for you know, books, or computers, or even tuition for college expenditures. You know, people love this, because when we’re having like a birthday, and my parents are like, well, what can we get the kids, instead of me saying like, you know, go buy them the next toy at Target and they’re wandering around trying to find it, they can just write a check, which is super easy, they can potentially get a tax benefit. And then I don’t have this annoying shrieking toy around my house that I have to like, pick up and it stubbed my toe on it, and then eventually have to throw it away. So it’s really a win win for everybody, if you invest in a 529. And like I said, anybody can contribute to that. It doesn’t just have to be you.
CRISTINA ROSE 12:47
Yeah I know, that’s something I have set up for both my boys and grandparents to help them the best and things like that, and we can put money in. So I think that’s a great way to, you know, think about like your children’s financial future. And, you know, education. And what’s great about it is like it’s a they don’t want to go to college, like you said, you can take it out, probably get a tax hit. But at least it was like a chunk of money for them, you know, when they’re adults to get going.
KARI POLASEK 13:13
Yeah, and you can also transfer it to other beneficiaries. So if one of your kids chooses not to go to school, you can transfer it to your other child. But it can be used for a number of expenses that can even they started to allow you to use it for private school. So if your child is like in a private high school, you could potentially use it for that, too. So don’t just think it’s just for college tuition. There’s a number of you know, things you can use that 529.
CRISTINA ROSE 13:41
Oh that’s good to know, private school, high schools and things like that. That’s awesome. That’s good to know that.
Well, it is time for the Power Mom Chronicles and I cannot wait to know what your answers are. And my first question to you is what’s a game changing lesson life has taught you?
KARI POLASEK 13:58
Yeah, so for me, and this is gonna sound really cheesy, but every situation can be a positive one, right? You can reframe it as a learning experience and do better than next time. But good judgment comes from experience. And sometimes experience comes from bad judgment. So look for positives and try not to beat yourself up too much.
CRISTINA ROSE 14:20
Love that. And then my second question to you is reflecting on your journey, what practical lessons or insights can our listeners apply to improve their own lives?
KARI POLASEK 14:29
Yeah, so every day is a day to do better and become a better person. It’s really a clean slate and a fresh start. But also every day your best is going to look different. So you’re not going to knock it out of the park every day and that’s, that’s okay, that’s actually for the best. So do things that stretch you and bring you out of your comfort zone because this is really how you grow.
CRISTINA ROSE 14:53
Love it and offer a piece of wisdom for moms or anyone striving to find their Strength and voice.
KARI POLASEK 15:02
So the hardest things are generally the most worthwhile. Decide who you are and who you want to be and set goals to get there. Make sure you celebrate when you’ve achieved those have that glass of champagne, go to dinner, buy that handbag, whatever you do to treat yourself, if you’re achieving those goals, and then invest in female friendships and empower other women. Being a mom is so hard and you want to be able to have someone to text when something happens, like for example, the other day at Target. I know I’m saying target a ton, but we live there. My son slid under the bathroom stall, and there was a stranger in that stall doing a number two, and I was mortified. Right. And so I immediately got on the phone and texted some of my girlfriends. And they were like, oh, yeah, that happened to me. And here’s this and here’s that. And so it really makes you laugh at the situations and puts everything into light. You’re really never going to have a funnier or more understanding group of cheerleaders than your female friends.
CRISTINA ROSE 16:04
Yeah. And that’s great. And then my last question is the best advice you’ve ever received.
KARI POLASEK 16:08
Okay, so stay with me here. It’s a super obscure movie quote. But in the late 90s and early 2000s, I worked in a video store and watched every movie made during that time. One of the movies I watched was sugar and spice, which is about a group of high school cheerleaders that become bank robbers. Have you seen a Christina?
CRISTINA ROSE 16:29
You know what I don’t think I have a breaker and Battlin.
KARI POLASEK 16:35
Okay well, put this, put this on your must watch list. I mean, who is just okay, but there is a line in there and it really stuck with me and they repeat it over and over and over. And it’s really it’s this, so no one got ahead by sitting down there behind. I just really love that.
CRISTINA ROSE 16:50
Yeah well, what’s true, you gotta like, you really gotta go out early bird gets the worm. You know, you can’t just sit and wait for opportunities. You got to go out and grab them. So that is that is a good. That’s good advice. Well, Kari thank you so much for coming on this week’s episode of “Not Your Momma’s Podcast”. All of her links are down below in the show notes. Don’t be shy. Go say hi. And I hope to see you all in the next one. Thanks for listening.
KARI POLASEK 17:18
Thanks so much Christina.