Bola Onada Sokunbi is a Certified Financial Educator and founder of Clever Girl Finance, where she educates women to make the best financial decisions for their current and future selves. We had a chance to chat with Bola about the financial challenges that many women face and how they can overcome these challenges to achieve financial independence.
Tell us a little about yourself. Why did you decide to become a financial educator and money coach?
I decided to become a financial educator and money coach after working in corporate America for several years in the technology industry, doing work that I liked but didn’t necessarily love. I got to a point where I started feeling unfulfilled, and as I began figuring out what path to pursue that would bring me fulfillment, I thought why not combine my passion for personal finance with helping women become successful with their money? My passion for personal finance comes from the way I was raised and the money lessons my parents taught me. It’s something I have always been very interested in.
Even though today’s women are more independent and educated than they’ve ever been, are many of them still struggling with handling money and managing personal finances?
Yes, that is unfortunately the case. Finance and good money management are not topics that are actively taught in school or even freely discussed in many homes. As a result, despite the amazing education and great incomes a lot of women have, many still struggle with their finances.
In addition, even with the knowledge of good money management, by nature women are givers, and we give to everyone (our significant others, children, etc.) before we think of ourselves. We also live longer than men and we earn less than our male counterparts – all of which are factors that impact our personal finances.
Since you managed to save $100,000 in 3 1/2 years, could you tell us what kinds of sacrifices you had to make in order to accomplish that goal?
Saving over $100,000 in 3 1/2 years could not have been possible if I didn’t focus on keeping my expenses low, contributing to my retirement accounts, and starting a side hustle which allowed me to really bulk up my emergency savings. I also made it a point to stay motivated (because it wasn’t always smooth sailing) by surrounding myself with the right influences – from the right friends to personal finance blogs to finance shows on TV. This way, even when I was having a bad day or had slipped up and made a money mistake, I still found inspiration in someone else’s journey – and that kept me going.
When women are on their own for the first time, what are some of the common money mistakes that many of them make? How can these mistakes be avoided?
Some common mistakes include:
1. Not having clear financial goals to work towards
2. Not saving for the long term, specifically retirement
3. Thinking they have time or will focus on their finances when they get married
4. Not having an emergency fund and not having the right kind of insurance (both of which can help buffer unplanned life circumstances)
While these mistakes are all too common, they can easily be avoided by doing the following:
1. Start by laying out clear goals of what you want to accomplish with your finances, whether it’s paying off debt or maxing our your retirement savings or buying your first home. It’s important to clearly lay out your goals and also determine how much your goals are going to cost you.
2. Contribute to your employer-sponsored retirement savings account. If one is not available, set up your own IRA and contribute there. Find out the contributions limits and challenge yourself to max them out. If you can’t max out right away, start by contributing in 1% increments every month or quarter.
3. Bulk up your emergency savings. Start with $1,000 and then focus on putting aside three to six months of your basic living expenses to keep you afloat in the event of a job loss or other unplanned circumstance. In addition, you need to make sure you have the right kind of insurance for all aspects of your life, such as health, auto, life, disability, home and/or renters, personal article, pet insurance, etc.
4. Most importantly, start now! Time is your greatest asset; and once it’s gone, you can’t get it back. The truth is, building real wealth takes time; so the earlier you start, the better.
What is your philosophy when it comes to paying off debt versus putting money away in savings?
I think you can do both, but you need to have a very clear strategy that you stick to.
To start, you should focus on building your emergency fund of at least $1000. This amount covers the most of the common emergencies (like when your car breaks down or water heater breaks, or you need to buy an emergency plane ticket). This way, you don’t have to rely on credit.
Next, if your employer offers a retirement plan where they match your contributions, contribute enough to get the free money. If your employer doesn’t match, contribute 5% to 10% anyway. If you are self-employed, open up an IRA and contribute to it.
Finally, create a budget, keep your expenses low, and get aggressive with your debt – starting with those credit cards! Pick a payment method – smallest balance or highest interest rate – and get to work knocking it down. The cost of debt in terms of interest you have to pay is not worth it; and once you can knock your debt out, you can put the funds towards savings for other goals!
When it comes to planning for a baby, how can a woman estimate how much additional costs that she and her household will have to pay during the first few years of the child’s life?
It’s definitely a great idea to start by talking to other moms and taking an assessment of what their biggest costs were. Based on everything you learn, take what’s most applicable to your own life and start making your own plans by building the costs into your budget in order of priority and adjusting your finances accordingly.
Also, as a mom-to-be it’s very tempting to go out and buy every cute baby item that you see. But a more financially sound way to get the things you need for your baby is to put them on your baby registry; and then after your baby shower, you can fill in the gaps with what you didn’t receive from the shower.
Since you offer a personal finances accountability program, could you briefly describe some of the ways that women can become motivated and disciplined to get a handle on their personal finances?
There has to be a “why.” Clearly defining your “why” is really important because once you know why you want to achieve financial success and have it as a constant reminder, you are more likely to put in the work to actually achieve the success you desire. For some women, it’s their children and giving them a better life than they had. For others, it’s the thought of retiring in style. Whatever the reason is, it has to be well established and worth pursuing financial success for.
Can having a prepaid debit card (as opposed to a standard bank-linked debit card) be an effective tool in helping to control spending?
Yes, absolutely! I love the idea of using a prepaid debit card. It’s almost the same as the envelope system in the sense that you can put a certain amount of money on it to spend, and once it’s done, it’s done. This way, you aren’t impacting your budget and you aren’t racking up debt. The difference is that a prepaid debit card is much safer and you can track your transactions easily.
What are some of the key benefits that come with controlling your personal finances and becoming financially independent?
Peace of mind and less stress when it comes to your finances. Having your finances in order and being financially independent means you can actually start living your life on your own terms – and that is something that everyone wants.
If a prepaid debit card can help you with your personal finances, why not get one today?
The views and opinions expressed here are those of the author and do not necessarily represent the views of Green Dot Corporation.