Jeremy Quittner: Welcome to Teach Me How To Money. I’m your host, Jeremy. On this week’s episode, we’ll be talking with personal finance expert and author Bola Sokunbi, but before we get going, our term of the week: is pay gap. The pay gap is essentially the difference between what two people earn often for doing the same work, but it’s more commonly a term associated with the differences in pay by gender, i.e. the difference between what men and women earn. So if you were to total up the median earnings of men and the median earnings of women over their lifetimes, you would find a pay gap. Simply put, men tend to earn more money than women. In fact, the Bureau of Labor Statistics, a federal agency, has reported that women on average tend to make only 83% of what men do, and they can earn significantly less than men for doing the same work in some of the most highly paid professions like doctoring and lawyering. Here’s something else to think about. The pay gap can be even more pronounced for women of color who tend to earn less than white men and white women. The pay gap is an important concept to think about when trying to understand your own experiences with money and the experiences of others.
So that’s our jargon hack for the week. Now, let’s get to the interview.
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Today we’ll be speaking with Bola Sokunbi. She’s the creator of the blog, Clever Girl Finance, and she has a new book out by the same name. In her book and her blog, Bola encourages women to talk more openly about money and to take control of their finances. We’ll be speaking today about that and how financial issues can be different for women and especially for women of color. Welcome, Bola!
Bola Sokunbi: Thank you so much for having me. I’m excited to be here.
Jeremy: We’re excited too! So your family moved from Nigeria then to Austria and from Austria to the U.S. and I was wondering if you could describe what some of the main financial challenges were that you faced growing up and being the daughter of immigrants and how that factored into your financial challenges.
Bola: Yeah, you know, growing up, moving from Nigeria to Austria, as a young child, I didn’t really think about money. It wasn’t something that was top of my mind. I was more so worried about playing with my friends and things like that. But, you know, I realized that, in retrospect, thinking back, that being able to move to another country, my dad getting that opportunity allowed us to explore a new country. It also gave us a life of comfort to a degree. So my parents were not rich, but my dad had a good job.
Jeremy: What was the job that your father had taken? And this was in the U.S. right?
Bola: No, so my dad was a diplomat and he worked as an econometrician in Austria. So he was a mathematician and then he got this position to move to Austria with the Nigerian government as a diplomat to work as an econometrician. So while he was there, we had, a number of privileges. We got to live in a nice neighborhood. My parents got to participate in the activities with the United Nations, which the headquarters is in Vienna. So, we lived a life of comfort. My parents were comfortable. My dad was thinking about how to give his children the best education. We went to a really good school. And so I didn’t really think about, you know, money or financial challenges, anything like that. And so we moved back to Nigeria. But then, when I actually started to pay attention to money, it was just watching my mother. My mom was a stay-at-home mom and she got married very young, didn’t go to college. And I would observe, you know, remembering this, that she would be having conversations with her friends about just money and her friends would be going through divorces or they would lose their spouse. And they would have just basically no idea about the family finances. Some of them would have nowhere to go, no options. And I remember my mom having those conversations and it kind of, you know, one of those first memories. And then my mom decided that she wanted to go back, she wanted to go to college and get her college degree so that she would be able to make her own financial contribution to the family. And so she did that. And that was another thing that stuck with me because I remember her saying that she wanted to do that so that she could make her own money.
Jeremy: Right. So she was a template for you to sort of look at your own life and make some decisions about what you were going to do. And I’m wondering, looking at your mother and the actions that she took with regard to setting up a new career for herself, how did that affect you? What did you start to do? What did it, what kind of light bulbs went off in your head that, you know, you could change your life or make some sort of an impact in a similar kind of way.
Bola: So it basically showed me that, having my own money, as a woman would give me options. So in my mother’s marriage, my parents are still married today, in the earlier stages of her marriage, like I said, she got married at 19. She had to ask my dad for everything, everything she wanted to do and watching her friends getting divorced, she just didn’t like the feeling of, if that ever happen to her and her not having any options. And so it definitely set the stage that having my own money, getting my finances together, achieving financial wellness would give me options. And when you have options, you don’t have to stay stuck in a situation or a job or relationship that you don’t want to be in.
Jeremy: So tell me specifically how you took it to heart. What did you do then? Did that affect the course of your studies? Did you start a side business so that you could make money?
Bola: So, you know, one of the first things that I did was, I hadn’t earned any money prior to getting into college and graduating. And so I was out in the world on my own and I got my first job in New York City. I was earning about $54,000 before taxes. And the one thing, as soon as I got that offer letter and I started working, the one thing that stuck in my mind was that I have to create options for myself. I have to put money aside. I have to make my mom proud. I have to show her that I’m listening to everything that she taught me, especially given the sacrifice that she made to send me to college. And so I just start aggressively saving my money. I started contributing to my employer’s 401(k) even though I didn’t know what a 401(k) was. Coming from Europe and Nigeria, we don’t have any of those things there. I started saving as much of my income as possible to the tune of 40-50%. I saved every raise I got. I saved every bonus I got, I really got lean on my budget. So I learned what it was to budget. I also started a side hustle, like you mentioned, where I had a wedding photography business and I was working after work in the nights and almost every weekend, taking pictures of people’s babies or engagement photos or weddings. So I was implementing all these different things and in order to learn these things, I had to self-educate because given the fact that my parents came from a different background, a society, they couldn’t really guide me that much other than general concepts. So I started reading personal finance books and personal finance blogs and just really understanding how to make my money work for me and how to invest. And how to save.
Jeremy: Do you remember the names of some of the personal finance blogs or books that were most influential?
Bola: Yeah. So, Mr. Money Mustache, “I Will Teach You to Be Rich” by Ramit Sethi. What’s interesting. A lot of blogs I was reading were by men and they were by white males. And so I had to find ways to make it relevant or applicable to me, make it relatable to me as a woman of color. But I read it anyway. A book that was really pivotal was “Smart Women Finish Rich,” again by another male, David Bach. So those are some of the things that I was getting into.
Jeremy: Okay. So you’ve actually brought me to a really interesting part of the conversation, which is how money finance planning for your financial life is different potentially if you’re a man versus if you’re a woman. You were getting advice from these books primarily written by men. So what was the gap that you noticed? What kind of information did you want to find that wasn’t there and how was it related specifically to women and what women need when it comes to understanding money?
Bola: The biggest gap there was that I couldn’t relate to the content. I could relate to the concepts, but just the padding around it, you know, the ideas and the descriptions of the concepts, just didn’t relate to me.
Jeremy: Can you give me an example?
Bola: Yeah. So, a lot of stuff I read was very sports connotated. You know, it was very, macho written. It was very, written without the concept of: okay, what do I do if I am pregnant? What if I need to take time off of work to raise my kids? What about if I’m dealing with different emotions and guys don’t really write about emotions, but women, typically we carry a lot of emotions with us and they impact the decisions we make around money. And guys don’t really talk about, “Oh, you know, this is what you do when you’re pregnant. How to plan your finances when you’re taking time off work to raise our kids.” They don’t talk about that. So there were all these different gaps, and it’s also, what do I do if I’m a single mom and I’m raising different kids or like how do I teach my children about money. And even though guys may be doing these things, they don’t really talk about that kind of stuff. So I wanted to be able to have conversations about money in a way that relates to me as a woman, like talking to a girlfriend the same way we talk about everything else we do, reality TV, getting our hair done, you know, business, all those things. I wanted it to be an easy part of the conversation.
Jeremy: Do you think that there’s a way the women talk about financial wellness that men don’t? For example, you’ve talked about the challenges of raising a family, and having a job, and the idea of that there’s potentially more emotion around money and financial issues for women. So I’m wondering if you could just sort of like dissect that a little bit more for me.
Bola: Yeah, so the challenge there is that we actually don’t talk about it enough, right? So if you were to put five guys in a room, they’ll talk about everything and talk about sports. They’ll talk about, you know, electronics. They’ll talk about business and they’ll talk about money and it’s just a part of the conversation. There are no weird pauses or weird just you know, body language. It just a part of the conversation, no brainer. For women, however, we don’t have conversations about money because when we’re self-judging and we feel like we’re not good with money, then we don’t talk about it. We’d rather talk about everything else that doesn’t put light on any negative situation that we have going on with our finances. So as women are more likely to talk about, you know, like our kids, our sex lives, all these different things before we have the conversation about money. And with women, there’s also that sense of competition, right? Where you don’t want to look bad or your one-upping your friend. And so you don’t ever want to share, “Oh, you know, I’m paying off all this debt” or “I’m not doing that great.” So the conversation about money is not a natural one for us. And when you think about how we are raised, right? As women, especially when you just go back one or two generations. We live in a culture where our grandmothers grew up in an environment where the husband, the man was the breadwinner and he managed all the finances. And so our grandmothers didn’t talk to our mothers, our mothers didn’t talk to us for the most part about money and so we’re just not used to having that conversation.
Jeremy: Earlier on you talked about creating your own financial plan and sort of this amazing number that you were able to put away, up to 50% of your income. This could be very interesting for our listeners to know about. How did you do that and is that a plan that anybody could put into place?
Bola: I think when it comes to getting your finances in order, it’s not just about aggressive saving, it’s about consistency and habit and following through and setting the intention. And so for me, you know, saving half of my income and every raise and all of that stuff was really from the intention that I wanted to do this. I had a goal that I wanted to put aside six figures. That was the first one. The second thing was educating myself. So there was so much I didn’t know until I was like, okay I have this goal but I don’t know how I’m going to get there so I need to learn how to do this. And that’s where I started reading those blogs and those books and figuring stuff out on my own through trial and error. And then you know, I figured out what it meant to set broader financial goals. So short term goals, mid-term goals, long term goals for my retirement. I figured out what it meant to save for an emergency in the event that I had to, buy an emergency plane ticket or I lost my job this way I wouldn’t have to get into debt. I figured out what it meant to invest, which is essentially putting your money to work for you and how to get started doing that. And then I figured out how to create multiple streams of income. So a financial plan is not all about aggressive action all the time. Because sometimes not everybody can save 50% of their income. That was a unique situation for myself and I was in that position where I could, but it’s more so about the consistency and the habit and the follow-through so that you can continue doing it over time and then start to reap the rewards.
Jeremy: Interesting. In your book, “Clever Girl Finance”, you talked about saving $100,000 in three years and that was a really big milestone for you. Can you explain why that was such a big milestone and what kind of insight did that give you?
Bola: So for me, that number was a big milestone because you know I was earning $54,000 before taxes after taxes, is about $40,000, so that was one thing.
Jeremy: So you saved that much money on that salary.
Bola: On that salary, in addition to the raises I got over that time. And in addition to the side hustle income I got, and then investment return. So it was a combination of multiple things. So that was one, it was thinking about where I came from. I’m just remembering all of the observations. Sitting in the corner of the living room watching my mom console, her friends who were getting divorced and had to spend the night in our house because they had nowhere to go. That was like, okay, I want to make sure that no matter what happens in life, I have options where I don’t have to go begging my friends, “Oh, can I sleep here tonight because I have nowhere to go.” It was also knowing the sacrifice that my mom made, going to college, saving money, working aggressively to start all these side hustles and then at the expense of her own retirement, supporting me through college. So these combined factors were why that number was a big deal for me. Cause I wanted to prove that I could do this. I wanted to make myself proud. I wanted to make my parents proud and I wanted to give myself options.
Jeremy: So after $100,000, what was next?
Bola: So when I got to the $100,000 mark. And just complete answering your question is you said, you know, what were the learnings? I learned that saving money is really hard, really hard. You know, when I talk about the story it sounds really like, oh yeah, she saved a hundred thousand dollars but it was really hard.
Jeremy: How do you set financial goals and does having financial goals specifically allow you to achieve them? I mean is it you know, you’re going from something that might be cloudy, uncertain, amorphous and then you set a specific financial goal, then you work towards it and achieve it. Can you just tell me a little bit about how that works? So you’ve also talked about paying yourself first. How that’s kind of an interesting or important thing to try to follow. And I’m wondering how all these things sort of like fit into place. Like if you are taking the money that you’re earning, taking it seriously and having a plan for it, you can achieve certain kinds of goals. But can you just talk a little bit more about that?
Bola: Setting financial goals is so key. It has helped me accomplish everything I’ve accomplished with my finances and just in life in general. And for me, the way I look at it is that when you’re setting a goal, it has to do specific things. It has to be a goal that you can measure. So you can track your progress. It has to be a goal that has a timeline around it. So you know exactly what you need to do by when in order to accomplish the goal. And it has to be something that is challenging, right? That will get you outside of your comfort zone, but at the same time realistic. Something that you know that with some additional effort, you know, doing different things you can actually be able to accomplish. So it’s really, really key. And what I like to do is when I set a goal for a year, so let’s say I set a goal for the next 12 months, what I like to do is take my goals and chunk them down into, okay, this is my big 12 month goal, but based on that 12 month goal, what can I do every month to get closer to that goal and what can I do every week to get closer to my goal for that month? And then what can I do every day or every other day to get myself closer to that goal for the week. So what this allows me to do is by chunking them down this way, it allows me to make progress on a smaller level, daily, weekly, monthly. And by making that progress on a smaller level, I’m getting quick wins and it keeps me motivated to continue to chase after that big goal.
Jeremy: Right. So one of the things I think our our listeners could be confused about or have questions about is like how do you actually do this? So you have a stream of income. Most people are, are dependent on the kind of wage that they earn. Do you set money aside in buckets for example, say you know, you want to make this $100,000 goal that you did in three years. Can you describe how you could chunk this out, to you as your terms, by week to make sure that you actually get to that hundred thousand dollar milestone.
Bola: So let’s say you want to save $100,000 in three years, then you want to take that $100,000 and break down to how much do I need to save every year and then how much I need to save every month. And then how much do I need to save every week, for example. So you then you will have these numbers that you need to aim towards and this timeline of three years. So knowing what you’re pursuing, you need to then step back and say, okay, what is in the way of me getting into this weekly, monthly goal chasing habit where I can accomplish these things? Is it having high interest debt? Okay, then what can I do to pay down this debt?
Jeremy: What are some of the things that typically get in the way?
Bola: So, looking at your expenses and saying, okay, what expenses can I cut back on to free up some money that can go towards this debt payoff or this savings goal? For example, one thing to keep in mind though is that there’s a lot of talk about cutting back on expenses and you know, creating a budget, which is all really awesome, but there is only so much of your expenses that you can cut back on. After a point, you’re gonna reach a ceiling where you just, you can’t cut back anymore because you have to pay specific bills. The next thing you want to start thinking about is that, okay, this is my income. These are my expenses. I’ve cut back as much as I can. What else can I do to increase my income so I can start to pursue this weekly, monthly, annual goal? And so when you start to strategize your finances that way, thinking about ways to not just cut expenses but also to increase your income, then you increase your probability of being able to reach your goals. And so that’s what I did. That’s how I chunk it down. So I said, “okay, this week I need to save $200 so I’m going to cut back on this expense. But then let me look in my closet, you know, do I have any clothes that still have tags on them? Do I have any kitchen appliances that I don’t need? Is there something that my kids have used that they’ve outgrown that I can sell online on eBay or something and bring money,” and you have to start getting really, really creative. “Can I start a side hustle? Is there something that people compliment me about that I’m really good at doing, that I can start to charge for this service and put that money towards my weekly or monthly goal?” So again, it’s getting out of your comfort zone. Doing these things is not fun because sometimes you have to go to work a part-time job that you know that time could be spent doing other things at home. But you have to think about the end goal as you’re working towards it.
Jeremy: So I’m wondering if you could help us with our listener question. This person wrote in to say, “I don’t have enough money to invest or save and investing seems to be only for the rich. What about for the rest of us?” There’s a lot to unpack there, but I thought you would have some good insight into answering that question. I mean, do you need to be rich to invest? And then separately, if you don’t have enough money to save or invest.
Bola: That’s actually a great and very common question. And there is this misconception out there that you have to be wealthy making six, seven figures in order to invest. But that’s actually not the case. You can actually start investing in a small way. Fractionally. There are lots of tools now and apps or even bank accounts that will allow you to invest fractional amounts. Every time you make a transaction they will invest the cents for you. And so you can definitely start investing. Stash, I believe offers that feature as well. So investing is not about being rich. It is about consistency and habit and those small amounts, those small dollars through cents over time with the power of compounding and some patience, they actually add up into a big deal. So start leveraging automated tools that can help you invest in a small way until you get to the point where you’ve increased your income and you can invest in a bigger way. But don’t wait.
Jeremy: Excellent. Bola, thank you so much for speaking with us at Teach Me How To Money. This has been such a fun conversation. I wish you all the best. And people who are wondering the name of Bola’s new book is called, “Clever Girl Finance,” and it’s also the name of her blog. Bola. thank you so much!
Bola: Thank you!
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