A Little Bit Richer

Iona: Hello. I am Iona Bain and welcome to A Little Bit Richer, brought to you by L&G.

We all have goals in life, whether it's holidays or weddings, buying a home, starting a business, having children enjoying retirement, whatever your milestones are, they need money. And that can be a challenge when it feels like there's not much to spare. So what can we do now to help us afford the life we want in the future?

Well, here to guide us through all this is Bola Sol. Bola is a financial advisor, money columnist, and the author of Your Money Life and How to Save It. She's on a mission to demystify Money Matters with her no- nonsense approach, which has led to her expertise being featured in Forbes, the BBC, the Financial Times, and The Guardian. She's here today to help us build those solid money habits so we can plan for life's major milestones.

Welcome Bola.

Bola: Oh, thank you. What a lovely intro. Thank you for having me.

Iona: It's lovely to have you with us. Having goals and dreams is one thing, but actually being able to afford them is another thing entirely. So, how can we make sure that we've got the money that we need to live the life we want? Where do we start?

Bola: I think what's important is to ask yourself questions first, which is what type of life do you want? And do you have to realize that that may look different for everybody? Such as what type of house do I want to live in and do I want to have a family in the future and what does that look like? Does that involve children and how many kids do I want to have and how do I want to work?

Do I want to be permanently employed? Do I want to be self- employed? So I think what's key is that you start with those questions, so you kind of draw out your particular life and you can use it as a way to somewhat work backwards. And then from there you can say, okay, in order to have potentially that house that would cost me this much, and maybe to live in that area, once you add in all the other bills, it would cost that.

And once you start adding in all of those things, you can start to say, in order to live that life I would need about this much a month and this is how much I'd need a year and so on. And then you can build your life that way.

Iona: How do you know what your goals are and what you're maybe just aspiring to because your family and your friends and society tells you that you should have them?

Bola: Do you know what? As the youngest of six children, it's taken me a lot to say what life I want for myself. I tend to observe them and I look at, oh, I'd like this, I wouldn't like that. Not from a place of comparison, but just from a place of observation. For me, for example, am I willing to work let's say 60 to 100 hours a week at a particular job where I'm making good money in order to have the house that I've never had? Or would I be willing to take something a bit more humble for the sake of, should I say, my sanity or my peace of mind?

Iona: So if you have certain goals that you want to achieve, but you are on a particular salary or you have a particular income, shall we say, how do you square those two things? Because sometimes we can have quite ‘out there’ goals and ideas. How do we make sure that we dream big, but that we're also realistic?

Bola: The first thing I think we need is patience. Even I'd say patience before we have a plan because at times we have ideas, but we don't factor in how long it's going to take. If it's things like I want to buy a particular house. And then of course I'd say plan financially where you are right now, even income wise isn't where you'll be in a few years. So hopefully you are looking at could I make more money and what does that look like and what skills do I need to do that?

So for example, maybe at work you could start saying, could I get more training on particular things because you now know you can add that to your CV. So I'd definitely say patience and planning.

And also as well, don't exchange time and energy for money constantly. It's really important that you learn to work smart and not just hard. Nothing wrong with working hard, but at the same time it can't always be the only option.

Iona: Yeah, you can work really hard and earn a really good income, but if you spend all that money on the stuff that doesn't really matter to you, it's not going to count for very much.

Bola: Yeah.

Iona: So how can we build up those really solid money habits in our day- to- day life to help us achieve those milestones that matter to us?

Bola: I think a great daily habit is to check your bank balance. It just gives you a good refresher of where you are. Also, budget. Budgeting is extremely important. No two budgets are the same, I always say that. And what's key is that you are looking at what you've budgeted versus what you actually got.

Iona: Well, let's get into that because the word budget means different things to different people and it's got this quite kind of fluid definition sometimes. What does budgeting mean to you? How would you define it?

Bola: Oh, so I always say a budgeting forecast is a bit like a weather forecast. Meaning, the whole point is you can prepare as much as possible and it gives you a sense of direction as to which way your money's heading. However, you also know that there might be outliers, for example, where you could get a parking fine if you drive and you didn't expect that to happen, but you now know, okay, I can reprioritize my finances accordingly, which is why I always tell people in your budget have a miscellaneous section, could be 50 pounds, could be 100 pounds for things that you didn't expect to cover.

Iona: So understand what your money is doing. But are there specific tools and techniques that you would recommend in terms of how you actually go about organizing your finances?

Bola: Oh yes. So there's the budgeting rule, 50, 30, 20, which is 50% on your needs, 30% on your wants, and 20% on your savings, investments and so on. That's a rule of thumb. Everyone doesn't have to cover it in the same ratio. But the whole point is you are able to know the difference between your wants and needs.

And I think putting it into a budget will really put things into perspective. So for example, I need to pay my mortgage this month, do I need a new pair of trainers? I'd like a new pair, but I don't need it and I think it's important to differentiate.

Iona: But it's really tough because we're not really incentivized by the culture around us to think about those longer term gains In that way. You're not going to be encouraged to make over- payments on your mortgage or to put more money into your pension necessarily when you're going about your everyday life, but you certainly are going to be encouraged to go and spend money on clothes or go traveling or do all the things that are fun in life and that we want to create space for.

So how do you try to keep those longer term goals in mind even when they're not really sexy and celebrated in our wider society?

Bola: People think because I speak about money that I must be so excited to go all the time. Yeah, let's go. And I'm like, no, some parts are not sexy at all. Some parts are very mundane. But one of the things I tell myself is there's going to be a reward at the end of this particular season. It could be a quarter, for example. And I'm like, I'm going to do something really fun to celebrate that. And I think we all need things to look forward to.

Iona: Treat yourself within reason.

Bola: Exactly. Because I constantly have this feeling of what does the future look like and have I prepared for it? When you are younger you hopefully have people guiding you to say, have you done this? Have you done that? But as you get older they get quieter and there's a sense of trust. So part of me always says I don't want to let them down but I don't want to let myself down. So sometimes I'm like, Bola, what were you doing?

Iona: You've got to be the grown up in your life.

Bola: I love that. Literally, you have to be the grown up in your life because no one's now marking you. It's just you.

Iona: Yeah. And if you don't get things right, the only person who's going to suffer is you.

Bola: Exactly.

Iona: And Bola are there practical things around building up an emergency fund and looking more closely at your income and managing your credit that will help with you achieving your longer term goals?

Bola: So everyone needs to have an emergency fund no matter how much money they make. And what we classify as an emergency varies person to person. It could be a family bereavement, it could be a job loss. But having three to six months of expenses is imperative because it stops you, in my opinion, from panicking. It allows you space to think and to say, right, okay, this is what I'm going to do first, but at least I know I can cover this for this amount of time.

And then review your outgoings. Sometimes we don't know how many subscriptions we have or what we're paying for, or sometimes we realize, look, we don't really need that, but we're still paying for it because we can afford it. Just because you can afford it doesn't mean you should pay for it. Ask yourself what's the use there? And of course, managing credit is vital. It's good to show that you could manage different forms of credit as well.

Iona: Because actually you need to show that you can borrow smartly so that you can do things like take out a mortgage in the future. But people can develop credit phobia, which is very understandable.

Bola: Yeah, absolutely. But go into anything with discipline. Some people can say, oh, I'm going to spend 15K on a credit card because I know that I'm being paid 5K a month for the next few months. And I'm like, do you?

Things change. And when they do, whether that's through your work or through life circumstances, so don't throw caution to the wind when it comes to credit, but I believe how you manage 25 pounds is the same as how you manage 250 and 250,000. And of course those seem like, oh, at 250, 000 I'd manage money differently. But it's about the habits that you set and what's important.

Iona: How does our money mindset play a role in creating our habits for better or for worse?

Bola: I always say it's important what you tell yourself about money internally and also externally, what you say to other people. I try to tell people all the time, do not have negative self- talk when it comes to your money. It does two things. One, it may make you less confident with how you use your own money, but it also can give you an excuse to continue to make bad mistakes, knowing you could make better suggestions and solutions to your own life and money.

So even if you're not having the best time with your money, you can say, I'm getting better with my finances every day.

And getting better doesn't necessarily mean that you never have a debt or anything like that. It more means that you are now making better conscious decisions. So I think how you talk about your finances in relation to yourself is incredibly important.

Iona: I completely agree. But when we are thinking about the future, we can get quite anxious about how much things will cost, which is very understandable in this world where everything is incredibly expensive seemingly, and sometimes those goals and dreams that we have can seem impossible. So how do we reduce that anxiety that we might feel around money and the future?

Bola: Start with good habits, which is budgeting. But also if there's someone who can hold you accountable, whether it's a friend, a partner, maybe someone that you speak to finances about on a regular basis, so you can say, oh, how's that going?

Another thing, I actually think more people should look into coaching. Sometimes just talking to someone can really make the difference. If we had a fitness goal and we felt we couldn't get there on our own, maybe we'd get physical trainer. I think the same needs to be done with our goals. I have clients where we work together once and that's all they need.

Maybe they'll be back in a year or a year and a half or never. But the whole point is that conversation has now given them a sense of direction. Again, the budgeting is great, good habits are great, and so is accountability, but don't be afraid to have a conversation.

Iona: So it's also about accepting that you can't necessarily do it all on your own. There's a lot you can do, but actually you don't have all the answers. You need to know where to go to get the answers, and that could be a coach or it could just be going online and getting more informed that way.

Bola: Yeah, absolutely.

Iona: And also people who have been in debt or are still in debt can feel a lot of shame. How important is it to try to strip that back so that you can start to make more positive decisions?

Bola: Debt is a part of your finance journey, it's a part of life for many people, and I think there's too much shame around it. This idea that we should always have everything together and have no debt, especially in an ever- changing economy, is really hard. But it's about how does it make you feel and do you feel bad or do you just feel like, look, I'm going to get out of this. It's going to take me a while, but I have a strategy in place and I think more people need to do that and give themselves grace.

Iona: And compassion.

Bola: Yeah, absolutely. But also strategy. You don't want to live in a state of being in debt either. You don't want to just say, oh, this is the norm. You kind of have to find a balance. And I think what's key is anyone who has any debt, especially debt that's not, should I say, urgent, try not to build on that debt. And I speak to many people who the debt grows and it grows, and I'm just like, you have to find a way to stop.

If you cut up that credit card, you wouldn't be able to spend anymore, and that's what you now need to do. And also maybe you now need to be in a season of saying no because you genuinely do not have it, and that's probably better long- term than building up that debt.

Iona: So much of this is about just trying to take those calculated risks but not do so in a way that's actually going to put you in a worse position in the future potentially.

Bola: Yeah, definitely.

Iona: What are your thoughts on lifestyle creep? Because that is something that can definitely sabotage our longer term goals. As our income goes up, then our lifestyle can adapt to become more lavish and become more expensive with that higher income.

Bola: If your income goes up by 50%, could you make sure that your lifestyle only creeps up by 20? Leaving a buffer. Some people truly make the mistake of let's max everything out, but where does that leave space for the future? Then there's a change in the economy and it's like, oh my gosh, we can't afford that. So I would say be aware of lifestyle creep.

Doesn't mean that you shouldn't treat yourself. I'd say always keep things underneath maybe 40% of the total of what your income has been raised by because you just don't want to be in a position where you are essentially then living pay cheque to pay cheque again to keep up with that life.

Iona: And if we hit a setback in terms of achieving our goals, how did we bounce back from that? How do we ensure that that doesn't cause us to spiral and give up on our future?

Bola: I always say, when you are going through a setback, take time to grieve that setback. Don't go straight into, okay, let's just move on. Because when you don't process that setback and ask yourself everything you need to within it, that setback can happen again because you haven't actually learned from it. Sometimes you need to sit in that feeling and sit in, what caused this? If this were to happen again, would I deal with it differently?

And from there, you can now say, how do I want to move forward?

Because in life, we all have setbacks. No one is exempt from them. And those people who are willing to fail and learn, whether privately or publicly are the ones who are able to dust themselves up and get up again. But I'd say make sure you deal with it and realize that that thing was a failure. You are not a failure. Do not make it so personal and about you.

Iona: Yeah. Whatever your past mistakes are, the most important thing is that you say, whatever happens, I'll be able to manage and I will cope with it and we can move forward.

Bola: Yeah.

Iona: So Bola, what are your top three tips for staying motivated and making sure that you are on track to achieve your goals?

Bola: I would say romanticize the discipline, not the dream. Because so often it's easy for us to think about the dream and not the discipline that's required to get there. Whether it's you waking up super early and you're not a morning person. You have to stay on top of the discipline and people say, follow the plan, not the mood, especially with your finances. Sometimes you don't want to put money away every single month for maybe a debt repayment or a future financial goal, but it's key that you do for the sake of where you want to get to.

Number two, keep building good habits and keep refreshing on those good habits. So just always remember, it's a marathon. It's not a sprint. It's so important to keep learning and to keep growing.

And my third tip is understand which season you are in and learn to give yourself empathy based on that season. You have to be so kind to yourself when the economy changes or people can have plans, and then maybe they're made redundant from a job. People could have plans to buy a house and maybe they found out that they're with child earlier than expected and know it will all work out.

When you look back, you'll be like, hey, this worked out. But it's about how did you treat yourself? Sometimes there's seasons for you to rest more and there's seasons that you need to come out swinging and fighting and making sure you're working hard. But no matter what, give yourself grace in the season you're in.

Iona: I love that message. Bola, thank you so much for joining us.

Bola: Thanks for having me.

Iona: Thank you so much, Bola. We got so many good ideas there for how we can plan our financial futures. Next time, financial content creator and advisor, Rotimi Merriman- Johnson will join us to give us some great advice on how to start building your investment portfolio.

I'd love it if you could follow the podcast, leave us a review and help others get a little bit richer too. You can keep up with the show on TikTok and Instagram at Legal & General, where we'll be sharing loads of behind- the- scenes content and you can catch our full video episodes on YouTube.

Thanks for listening. Until next time, see you soon.