Bola Sokunbi's Smart Money Podcast: Developing Your Financial Intelligence

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Welcome to the Smart Money podcast from NerdWallet, where we generally tackle your real-world financial questions.

Bola Sokunbi, a financial educator and author, is the guest on this week's program. Kim Palmer, a personal finance nerd, talks to Sokunbi about her new book, "Clever Girl Finance: Ditch Debt, Save Money, and Build Real Wealth." They also talk about Sokunbi's financial education, which
began with her mother, and one of the best methods to achieve financial stability, according to Sokunbi: beginning a side hustle.

We have an opinion.

Reflecting on the money lessons we learned as children can help us take care of our own financial education. Parents mold our initial notions about how to make and handle money by setting an example. Then, if we have children of our own, we may strive to teach them all of the things we wish we had learned so that they don't make the same mistakes we did.

Our financial education is sometimes built on the backbone of our blunders. Whether we overspend, accumulate debt, or damage our credit, we can almost always get back on track. Forgiveness and reflection on where we went wrong are the first steps.

Making apologies is frequently the next step. If you've made a credit error, this might involve paying off high-interest debt or gradually restoring credit by making on-time monthly payments.

Starting a side hustle can also benefit since it can create extra cash on top of your regular income, giving a safety net in case you lose your work unexpectedly. You can also utilize the additional cash to pay down debt or save for a rainy day.

Our recommendations

Teach your children about money: Because children generally acquire their first lessons about money from their parents, it's important to consider what they're learning at home. Talking about spending, saving, investing, and donating may help put everyday financial decisions into perspective.

Learn from your money errors: When you're initially learning how to handle money, it's easy to make huge blunders, such as accumulating debt or going on a shopping spree. Learning from your mistakes might help you make better decisions in the future.

Consider starting a secondary business: Earning money on the side in addition to full-time employment might improve your financial security by reducing your vulnerability if your primary job is lost. It also has the potential to make it feasible topay off debt or save more.

Transcript of the episode

Sean Pyles (SPYLES): Welcome to the NerdWallet Smart Money Podcast, where we answer your personal finance concerns and help you feel better about your financial decisions. Sean Pyles here. We've got a special episode for you today. Kim Palmer, a regular Smart Money guest and personal finance nerd, kicks off the first episode of our new Book Club series, in which she interviews writers of personal finance books about their recommendations for managing your money. Who are we talking about this episode, Kim?

Kim Palmer (Kim Palmer): Bola Sokunbi, a special guest, is with me now. "Clever Girl Finance: Ditch Debt, Save Money, and Build Real Wealth," is her book. We'll ask her about her book, some of her own financial missteps, and what you can do right now to improve your financial stability.

Sean: That's fantastic. So, I'll let you handle it from here.

Kim: Thank you very much. Welcome to Smart Money, Bola.

Thank you very much for having me, Bola Sokunbi. I'm quite happy to be here.

Kim: I'm in the same boat. Well, one of the most striking stories you relate, and one that really impacted me, is how much you learnt about money from your own mother. Would you mind bringing us back to your childhood and explaining why and how she had such an impact on the way you think about money now?

Bola: Of course. My mother married at an early age. She was 19 years old when she married my father, who was in his early 30s at the time... and this was not unusual at the time; it was pretty much the standard. She didn't even have a high school diploma. Typically, the woman would be the stay-at-home parent, while the father would work. That was a very typical occurrence.

My mother went on to have four children, and as she approached her 30s, she began to notice patterns among her friends: friends who were unable to leave abusive marriages because they had no knowledge of the family finances; friends who had lost their spouses and, once again, had no knowledge of the family finances; or the spouse's family would come in and take over everything. My mother was simply unhappy about not being able to stand on her own two feet financially. As a result, she chose to return to school to obtain her bachelor's degree, and subsequently her master's degree, so that she could financially contribute to our family.

I recall sitting in the corner of my living room as a small child, listening to my mother or seeing her console her friends who had a large argument with their husbands or were victims of domestic abuse and couldn't leave because they didn't have anywhere to go. And there were times when a friend would spend the night with her children because she didn't have any other options. My mother ultimately became a big contributor to our household income, and she finally became our family's earner when my father's financial and physical situation worsened some years later. So she was extremely powerful in terms of  simply financial teachings and the way I thought about money and all of that

Kim: Did she mention that to you as well? Or was it more as a result of you witnessing her go through it?

Bola: Both of my parents have discussed money with me. My mother graduated swiftly, went to work full-time, and then began all of these other side hustles. We would go to a side hustle almost every day after school and on weekends. She opened a Coca-Cola franchise, a bakery, and a hairdressing business. Over the years, Mom had a variety of side hustles, and she would constantly advise me, "You want to have alternatives." You want to be able to get out of any arrangement that isn't working for you. You want to be able to help with your.Family

"You never want to be a liability, not on yourself or on a guy," my father would often warn me. "It doesn't matter who you marry or how much money they believe they have," he would say, "you have to be able to stand on your own two feet."

Kim: That's a powerful statement. I mean, in the book, you really invite readers to consider what lessons they were given as children.

Yes, Bola.

Kim: Do you believe that influences how we handle money as adults?

Bola: Without a doubt. What we see and hear about money has a significant impact on how we handle our own money as adults, and it's not always positive, and there are often significant gaps. My parents, for example, often talked to me about, "You'd like to be able to stand on your own two feet. You don't want to end up becoming a liability." But they didn't say anything to me about it "Here's how to get started. Here's how to set up a budget: "As an example, there was a void in my personal financial knowledge. And it's not simply that disparity; there are also variances across nations. My parents had no knowledge of the American credit system or what a 401(k) was because they were immigrants from Nigeria. That's hardly anything to be proud of. they grew up with.

Simply being able to recognize where gaps exist is critical in assisting you in creating your own financial path or strategy. Also, being able to let go of the negative ideas about money that were instilled in you so that you can create a positive plan for yourself. Because I speak with a lot of ladies who claim that they were taught as children that being affluent or wealthy was bad because only evil, terrible people had money; or that money was bad; or that they could never be successful because no one in their family had ever been successful. "We're all intended to be in debt," they were informed, or "We're all meant to be in debt."

It's the way the system is set up." So letting go of negative money concepts that have been given to you, or that you have witnessed or that have been instilled in you in some manner is also critical so that you can create a strategy that you can implement.

Kim: You also make a lot of mention of the fact that there are still distinctions between men and women when it comes to money. You point out that on average, women earn less than males, and the wage gap is considerably wider for women of color. Do you believe that financial education, to which you've devoted your career and books, will be able to solve some of these disparities?

Bola: Without a doubt. People prefer to argue that when it comes to money, everyone is on an equal footing, but this is not the truth. Moms were homemakers in your mother's generation, or your grandmother's generation, depending on your age, right? They ran the house and they would prepare dinner and educate their daughter about all the amazing foods; and the dad will come home from work and pull his boys away to speak about business; and as a consequence, there is that gap. We didn't grow up talking about money at the dinner table with our parents, so it's not natural or organic for us to talk about it now.

Fast forward to today's age, when women earn more than their moms and grandparents, notwithstanding the salary disparity. Women are opting not to get married. Women are the only providers for their children. Women are the breadwinners in their families. We've arrived at a point where we must pay attention to our finances in order to maintain our financial well-being. When you consider that we live longer on average than males yet are paid less, and, as you indicated, when you split it down by demography, the numbers are much worse.

But the income disparity between men and women is one thing; there's also a tremendous investment gap, which means that because we're earning less, we're investing considerably less, or not at all. So, empowering ourselves with financial education and understanding why it is important will not only help us change the narrative when it comes to building wealth for ourselves, but it will also help us change the narrative when it comes to raising our daughters to be financially successful and raising our sons to understand that a woman's place is not just to be a homemaker. You don't have to be scared by a successful woman, thus financial knowledge is a must for women.

Kim: Within three years of graduating from college, you managed to save over $100,000, I believe. Could you explain how you achieved it?

Bola: When I finished from college, I was able to save more than $100,000 in just over three and a half years. I began saving when I was approximately 25 years old, and by the time I was 28, I had accumulated $100,000. Basically, I became quite inventive. I had to teach myself a lot of personal financial concepts. My parents couldn't explain the credit system to me, and I had no idea what a 401(k) was. However, I had an opportunity to earn $54,000 before taxes.

I believed I was wealthy, despite the fact that it wasn't a lot of money in New York City — but it was the most money I'd ever made. And, knowing the sacrifices my parents had made for me and my siblings as we grew up, I wanted to accomplish something meaningful, and I believed I could manage my funds well enough. So I started learning about budgeting, credit, and investing, and I started doing those things, being extremely frugal, starting a side hustle that helped accelerate my savings, maxing out my 401(k), saving my tax refunds, and any small bonuses I received, and that really helped push my savings forward.

Kim: Side hustling is something you mention frequently. You also mentioned it to your mother. On that issue, you've published a whole other book. Do you believe it's critical for everyone to consider pursuing a side hustle?

Bola: It's something to consider, in my opinion. Isn't it true that side hustles aren't for everyone? However, I feel that there are some things that you may accomplish for a short amount of time. It was really difficult for me to run my photography side business while also being a full-time mom to newborn twins. However, it was for the purpose of assisting me in achieving particular financial objectives at that time period. I believe that side hustles have the potential to significantly increase your income., to help you achieve your objectives faster; and it must make sense to you.

You don't have to perform a side business for the rest of your life. It might be something you undertake for six months, a year, or five years because you are serious about paying off debt, saving money, relocating to another country, or expanding your business, or whatever your objective is. However, I believe that if you decide to start a side hustle, you should be very thoughtful about what you want to do with the money you earn since you are exchanging your time for this money – time away from your family, time away from your children, time away from sleep.

As a result, you don't want it to be a waste of time. However, I believe that a side hustle is worth exploring for anyone who is stuck in their income, or who is seeking for ways to increase their income or expedite their objectives.

Kim: In the book, you also discuss some of the mistakes you made, such as taking out a high-interest credit card. Tell us more about it. Was it necessary for you to learn some of these lessons the hard way?

Bola: I believe we must all make our own errors. I had never before used a credit card. I hadn't even realized what a credit card was. This was time when corporations could attend employment fairs and advertise credit card services. Isn't that no longer permitted? They'd give you free T-shirts and pens and tell you great stories about how this credit card will improve your life — and that's exactly what happened to me. They had really lovely T-shirts and pens, and they said they were going to give me $2,000 and I wouldn't have to worry about it, which sounded almost like free money — plus a free T-shirt.and a free pen

I contacted my mother and said, "Oh, guess what? Someone offered me a credit card that is completely free." "I don't see what you could possible need in your life at this stage that you need to buy on credit," my mother says. "Get away from that table," she says. Don't even think about getting it." So the following time the career fair came around, I walked over and said, "My mom thinks this is a poor idea, OK?" "Okay, your mom doesn't have to know," the lady says. We'll just deliver the bill to your dorm room, a friend's residence, or someplace on campus." I was all like, "Oh, great. Let's get started." As a result, I did it.I received my $2,000 credit card and nearly maxed it up inside the first two weeks. I had no idea what I was doing. I probably purchased clothing and food, but largely clothes, a heap of garbage.

After that first cycle, the bill arrived 30 days later, 40 days later, or whenever. I received a bill, and I recall glancing at the interest rate, which stated 24.99 percent, and I was shocked ""What?" you might wonder. This is insane. 25% of the time... So, what did I get?" That was my first encounter with credit cards, and it taught me a valuable lesson. I had to tell my mother about it, and she was like, "I'm sorry, but I'm unable to assist you. It's up to you to find it out." I was working part-time on campus and had a job that paid me $116 every two weeks, which I used to pay my phone bill and purchase food, and I needed to pay off that $2,000 credit card.every two weeks, from that $116 salary And I was successful.

Wow, Kim. It is to say, I believe it also relates to the atmosphere prior to the Card Act of 2009, since I believe that was a widespread experience.

Yes, Bola. But you know what's really interesting? I don't think it was all that horrible back then. It wasn't great, but in comparison to now... Because while I was in college, the only time I saw that credit card business was at a career fair, and if I didn't attend to the fair, I didn't see them at all.

Kim: Not to linger on your errors, but here's another one I thought was really intriguing, if you don't mind sharing: You mention that you, too, spent a lot of money on luxury handbags. And, in fact, I believe you did sell them, and it was a lucrative transaction. But you still label it a mistake since you might have spent the money on anything else. Could you also inform us about that?

Bola: Of course. I was a huge fan of designer handbags. I still believe that. There's something about the leather and how lovely they are., and other such matters. And while not everyone gets that, that's my thing. It may be watches, vehicles, trips, or anything else for some individuals. I'm a huge fan of handbags. I reached a stage when I had amassed over $100,000 in savings. I believe I had accumulated around $130,000 or $140,000 at that point, and I was consistently investing. I was still putting money aside. "You know what?" I said. I've put forth a lot of effort. "I'm deserving of a reward." So I went to Chanel and bought a purse for $2,800, which I wore all the time. I received my cost-per-wear and had no other handbags. That was the only handbag I had. I enjoyed it since I wasn't buying all these other weird items. To  me, it was worth it.

But I'd reached a point where I thought that one wasn't quite enough. I've got a black one. I'll be able to acquire a blue one. I'll be able to obtain a white one. I can buy a — whatever color was popular at the time. So, instead of saving more, I would not save for a few months and then go out and purchase a new handbag. And that makes sense to certain folks. As I previously stated, you are wearing your clothes and your cost-per-wear is decreasing. You're getting good value for your money. That's fantastic. But it didn't make sense in my case because the only bag I was actually using was the first one I bought, and the rest were just stacked in my closet - basically dollar store bags.bills stacked up in my closet.

I went back and forth, as if to say, "Should I put them up for sale? They appeal to me greatly." "Listen, this doesn't make any sense," I finally said one day. My partner at the time, my husband, was like, "These bags are from a long time ago. They appear to be dreadful. They're really unattractive. I have no idea why you have them." So I decided to sell them, and for individuals who are aware with the luxury handbag business, we know that there have been outrageous price hikes. So the purse I bought for $2,800 now costs around $10,700. But I was able to sell it for around... $5,000 or $6,000, I believe. I sold each of the bags I had, therefore I made a profit.It didn't bother me that I earned a profit. Sure, I quadrupled my money on a few of them. I did get the cost of the bag returned for the one I had used – the original cost of the bag. But, according to some internet calculators, if I had put that money toward my first handbag into, say, Amazon stock, I would have had roughly $30,000 to $40,000 in that investment instead of $4,000 or $5,000 from the sale of the handbag. So it was a mistake in my opinion, because I could have put that money to greater use if I hadn't used the products.

. If I was truly utilizing the products, then it was well worth the money to me since I was receiving my money's worth. But I wasn't, and I thought it was a mistake. I'm lot more conscious of how I purchase in general now. We're not going to get it if I'm not going to utilize it, if I'm not going to wear it at least 30 times soon.