Smart Money Podcast: ‘The Color of Wealth’: Emotional Trade-Offs of Wealth Building

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.

This week’s episode is dedicated to a conversation about how Black women can balance the emotional trade-offs of building wealth.

Check out this episode on any of these platforms:

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Our take

Putting money away for retirement is something people start doing at different stages in life. If you’re able to put enough money away before having kids, it can make saving for your children’s future easier. However, saving early isn’t something everyone is able to do, especially Black moms.

They may find themselves in a position of having to choose between saving for their kids and saving for retirement. It can be a difficult choice to make and bring about anger and guilt. Some moms may feel overwhelmed when they’re barely making ends meet and don’t believe they have enough to invest at all.

Shifting your money mindset to one of abundance is one way to move past those emotions and start building wealth. Beginning with small amounts — $10 or $20 a week — can add up to a lot over time.

It’s also important to remember that putting on your oxygen mask first is a way to set your kids up for financial success. Once you’ve reached a level of financial security, you may decide to set aside small and consistent amounts for your kids in a 529 college savings account.

More about financial planning on NerdWallet:

Why Managing Your Money Starts With Your Emotions

How to Set Financial Goals

How to Save Money

Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.

Episode transcript

Sean Pyles: Welcome to the NerdWallet Smart Money podcast, where we typically answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Sean Pyles. This episode, we are continuing our series called "The Color of Wealth," where personal finance Nerd Elizabeth Ayoola talks with money experts about how Black women can build wealth, including the challenges they face and how to balance motherhood with money goals. Welcome back to Smart Money, Elizabeth.

Elizabeth Ayoola: Hi, Sean, and hi, everyone listening. Thank you for the warm introduction.

Sean Pyles: Of course. Who are you talking with this episode?

Elizabeth Ayoola: Well, this episode I'm going to be speaking with Dasha Kennedy, the founder of award-winning financial advocacy group The Broke Black Girl, which she happened to found in 2017. So Dasha is a financial activist and millennial financial coach who has helped over 70,000 African American women and counting with the culturally relevant financial education they need to start their personal finance journeys. So one of her primary objectives is to help bridge the wealth gap, and I think she's doing an excellent job so far.

Sean Pyles: Very cool. What are you guys going to discuss?

Elizabeth Ayoola: We're going to be talking about the emotional challenges that Black mothers face when they're managing money. So this can include how to balance trade-offs like saving for retirement and also building your kids' financial lives as well.

Sean Pyles: Great. Well, I can't wait to hear how this goes. I'll let you get to it.

Elizabeth Ayoola: Awesome. Well, welcome to Smart Money, Dasha. How are you and what are you looking forward to this year?

Dasha Kennedy: I'm fine; thank you so much for having me. This year, I really want to prioritize my health. I get so caught up on my financial goals that I neglect to give that same energy to my health. And I mean, I want to be around to enjoy my money, so I want to really focus on my health this year.

Elizabeth Ayoola: That is a word, and that was actually one of my goals for this year, too, to just slow down. So if you're healthy, then hopefully you have a lot longer to do all the things you want to do, but it's really important, I think, to be present. So I'm with you on that.

Dasha Kennedy: Yeah, I agree.

Elizabeth Ayoola: OK. We can start the conversation by you maybe telling me how you started your journey towards saving for retirement or building wealth. And I'm also curious about whether it started when you became a mom or after.

Dasha Kennedy: I really started working in the finance industry when I was 19. I heard a woman say something about a 401(k), and I had never heard that term before. And so I was intrigued. And so for the first time, I'm hearing women and men as well that were in their 30s and even some in 20s said that this was money they were putting to the side to live off of when they retired. That's what I knew that was something that I wanted to do. So I started to invest into a 401(k). Still did not know what I was doing, and I really didn't get serious about it until I had kids and I knew that I did not want to be a financial burden to them when I became of age and could no longer work.

Elizabeth Ayoola: Yes. No, I can totally relate to what you said about not hearing anything about retirement savings or how that works until you're a little bit older because I never really got any of that financial education either, and I just thought, "OK, when I turn 40-something, I'm going to be rich, and then I'll just have enough money to live on for retirement." So I didn't have any idea about how to plan for retirement or even how to save money. So I'm with you on that. And then you answered the next question that I was going to ask, which is what shifted for you and made you start saving for retirement? And I think your kids are usually a good wake-up call for that. So can you tell me a bit about what happened when that shift happened for you and what kind of financial things you started doing to put money away?

Dasha Kennedy: So for me, it was really a journey. I found that I was pregnant with my first child at 19, but it wasn't until probably five or six years down the line that I actually started to take it serious. I mean, as you can imagine, being a young mom, I really could not wrap my mind around the idea of taking money from my check and putting it away later when I needed all of the money to survive off of. But that was what I was faced with as what many Black women are faced with.

When we think about saving for retirement, a lot of us can't take from what we have now because it's so little to put it away later. But I figured out probably five, six years down the line, once my son was a little bit older, that you got to put something away. Even if it was like $10, $20, you have to start doing something because I had to shift my mind from, "OK, yes, I need every dollar to take care of him now" to "Something is going to be better than nothing because this time is going to go by anyway. He's going to get older, I'm going to get older, so I have to do something." So I started just testing the waters with small amounts, $20 here, $10 here, and that started to add up.

Elizabeth Ayoola: No, I completely feel you on that. And then I used to have this thing, too, when I first started investing where it was like, "Well, I don't want to just save $20 or $30. I'll wait till I have a thousand dollars to save or $5,000." But I think once, like you said, that shift happens, you really understand the power of compound interest and how a little bit goes a long way when it comes to investing because it's a long-term game most times, right?

Dasha Kennedy: Yeah.

Elizabeth Ayoola: So I wanted to get a little bit more into what you were saying about the feelings around, like you said, many Black women can relate to not having enough to put away and then being maybe sole providers of the family and just different scenarios that we face as Black women. So can you tell me more about the feelings maybe that came up for you when you decided to say, "I'm going to start putting some money away and this means I might not have as much spend on, I don't know, an outing with the kids or an extra pair of shoes or whatever else." What kind of feelings came up for you and how did you deal with that?

Dasha Kennedy: Yes, immediately, and I'm going to be honest and transparent, I was angry. That was not something that I wanted to do. I already felt that I was working a lot. I did not like the job that I had. I felt like life had put me in a position that I needed to do what I had to do, not what I wanted to do. And a lot of it was not choices that I made of my own. It was the family that I was born into. A lot of the things that they had to deal with for generations just as a Black family. So I was angry. I did not want to give up a portion of my check to hopefully needed later down the line because in my community and in my household, it pretty much was like you just deal with whatever is what's in front of you and you face whatever happens down the line later.

It wasn't a lot of preparing for the future, but I think what ended up pushing me towards wanting to actually get it right was I had to care about my son's future more than my fear of what was happening in the present time. I may not be able to do some of the things that I enjoy, but my son is going to be able to overcome a lot of the things that unfortunately my mom could not have prevented from me, her mom could not prevent from her. I can finally break that cycle, and if I can break that cycle with $20 per week, oh, it's well worth it.

Elizabeth Ayoola: That makes me want to know how you started. What was your strategies? So were you saving just for yourself or were you saving for both you and your kids?

Dasha Kennedy: Yeah, in the beginning, it was really just me because I didn't even know saving for my child was an option until I was 30. So that just shows you how much time gets wasted because of the lack of knowledge, lack of awareness. Now I'm still trying to get the understanding of what it means to invest for my retirement, and someone introduced me to a 529 plan as well as other options. But the 529 plan is what led the conversation. My mind was just going wild because I didn't even know that was a thing. So when you think about, I'm 30, I had my first son at 20, so that's 10 years that I completely missed out on simply because of the lack of knowledge. So in the beginning it was just me, and then years down the line it became for both of my children.

Elizabeth Ayoola: No, I know the feeling. I only recent — just this year actually, admittedly — I opened a 529 for my son. I just remember having similar feelings to you, but feeling like when my son was born, well, I want him to have at least some kind of savings or money because I didn't get any money from my parents, and I would take all money from his birthday and from his christening and things like that, and I put it into an account, but I knew nothing about investing, and it's still sitting in the account, unfortunately depreciating in value because of inflation. But had I known what I know now, I definitely would've put it in a investment account like a 529 or a custodial account.

Dasha Kennedy: Yes. That's why I think it's important that we have those conversations because I do think about that a lot, that the 10 years that I could have really been taking advantage of saving and investing for my son's retirement, for his education had I simply known.

Elizabeth Ayoola: Right. But I still think, even though I know how that must feel like, "Oh, I wasted 10 years," but obviously you don't know what you don't know. But I still think it's really commendable that you even thought, "OK, let me put some money away from myself." So like you said, I'm not a burden on my son when I'm older because I think in the Black community, and I hear in other communities of color as well, this is a common theme. You have money or you're trying to build wealth, but then maybe you can't get as far because you're expected to care for your grandparents or your aunties or even your siblings who aren't doing as well. And then that really impedes you from being able to grow wealth. So even if you may have lost out on those 10 years for your son’s savings, you still in some ways help him get ahead because he doesn't have to worry about taking care of you financially when you're older. So I still think that's a win.

Dasha Kennedy: Yeah, I agree. I completely agree.

Elizabeth Ayoola: So you talked about the feelings of anger that you felt when you realized that you had to start putting away money for retirement and you explored some of the disadvantages that make it so that you have to do this. So how much do you think it has to do with your upbringing and maybe your relationship with money, some of those feelings that you felt? I know you only mentioned anger, but are there any other feelings and how much do you think this also has to do with your relationship with money growing up?

Dasha Kennedy: Yeah, so outside of anger, I think anger was the knee-jerk reaction. But outside of that, once I got past that, I was happy that now that I know so I can do better, I was excited to see what my son's life will look like in the future. My son doesn't have to have the same relationship with money as I had, which is the same relationship that my mom had, the same relationship that her mom had. We don't have to keep repeating it.

Elizabeth Ayoola: Yes, I'm with you on that. And it's interesting because the other day I was talking to my mom, and my mom is actually very financially savvy, and she was able to retire early. She started investing early and all that good stuff. So I'm like, "Why did you never tell me about any of this stuff? Because till today I've learned all these things, just look Googling and things like that." And she just paused, and she's like, "Well, you never asked." And I'm like, "Well, I couldn't ask you what I didn't know because I didn't know anything about it." And she's like, "Well, you know what, I'm sorry." And then she's like, "OK, well this is what you do, and this is what you do." So all that to say, why do you think sometimes with Black families, I don't know how it works with other families as well, that we don't have these discussions around money, that even when maybe they do have some of the financial information, it's not passed down to the kids?

Dasha Kennedy: I think that sometimes money can be such a taboo conversation that it almost seems like it's just a conversation for adults where sometimes our parents can feel like maybe we're too young to be invited into those conversations. And I don't think that it's something that they do intentionally. I think that it's something that has just been passed down for generations. I think my grandma in her 60s. So just think 60 years ago, the climate of the country, what my grandma had to endure. I think sometimes not talking about money for the older generations in the Black community is a sign of protection for them because someone can't take from them what they don't know that they have. Now, it is just something that we don't talk about. And I think that's kind of what it was with my mom, it just was normal.

Not talking about it was normal. Not asking my mom about bills or money or, "Mom, what's the budget?" Even now at 35, I couldn't fathom asking my mom, "Mom, what's the budget? How much do you make?" Because it just would have seemed to be something so out of the norm. Whereas in my household, me and my boys talk about that all the time. They know how much money I make, they know how much the rent is, how much we spend on things. We're going to talk about it because I have normalized it in our household. So I don't think that it's always we don't have the conversations because we don't want to teach our children; sometimes we really just don't know. And when you grow up, it can be hard for someone to say, "Yeah, I know your family has been doing this for generations, and on the surface you think that it works, but it really doesn't work."

That's a hard reality to accept. I think that my mom did what she thought was best. She handled business. She was a great mom, took very great care of us. So in her mind it could have been, "Why is there a need for me to talk to her about how I handle money? She see how I handle money. She got a roof over her head, she's fine." So I think it was that setup versus when I became an adult and I became a mother, I was clueless. I was clueless about money saving, investing, budgeting, debt, credit. I was completely clueless. And I think sometimes we don't consider that this time is going to fly by. My son is 14; he'll be 18 in four years, and at that point, the financial world would be swarming around him as far as credit, debt. So I have to make sure he's prepared so that he doesn't waste 10 years like I did simply because I didn't know.

Elizabeth Ayoola: And I'm with you on that. So I also want to ask from some of the things you were saying, I think money mindsets are really important, and I think potentially for you to be able to switch from "I want to keep all of my paycheck and spend it on what I want." Usually there's a belief that is driving the things that we do financially in our money habits. So what would you say was your money mindset before now and then what kind of shift in your money mindset helped you start to transition towards saving for retirement?

Dasha Kennedy: Yes, and so in the beginning, my mindset was if I am working 40 hours a week, I'm spending my money on what I want to spend it on. I want to spend it all now because I worked for it. So to me, it was cut and dry. When I get my check, I do what I want to do with it. I'm not thinking about the future. I'm not preparing for the future. I'm more so focused on today. Now my mindset is investing into the future me, it's taking care of me right now because I can do the things that I want to do and I can relax and I can coast.

I don't have to be anxious about everything because future Dasha is secured, future Dasha is OK. So my mind has shifted where it's like, "Yes, I'll give up some money today because I know that I'm giving it to Dasha tomorrow." Time is your biggest component to drive your investments. So if you can store it early with small amounts and just be consistent with that. And when you see how far this is going to take you when it's time to retire and you sit back and you say, "OK, I really built this off of $20 from my paycheck." So now my mindset has completely shifted. Now when I think about the future and I think about getting old, I'm excited. I'm excited about getting old and retiring because I know that I will be OK.

Elizabeth Ayoola: Yes, I always say that I can't wait for my 40s. I'm 34 now, but I'm like, I can't wait for my 40s because they're going to be my 30s, and I'm going to live my best life. And a lot of that definitely has to do with me making, I would say, smarter financial choices now, and then I totally agree with you in terms of I feel like everyone in a class or in their home should have to show their kids a compound interest calculator because I think that's when it really clicked for me because I'm like, "Oh, I'm saving," like you said, "$20 a week, that's not going to do anything." But once I saw what that could do over 10 years, 20 years, 30 years, then I was like, "I got to start investing now, not tomorrow, now." So I think that definitely makes all of the difference.

Dasha Kennedy: Yeah. Oh, yes, my son is 14. I have to be more aggressive with the conversations, whereas I just can't say, "OK, hey, son, I think that you should probably put $20 to the side," like you said. No, I have to sit down and show you how powerful that $20 really can be. Let's look at some graphic, let's look at some calculators, let's look at some numbers so that you really can get an idea of what investing for the future, what it looks like.

Elizabeth Ayoola: Absolutely. So I know that you work with a lot of Black moms, so can you tell me maybe some themes in terms of emotional responses to kind of saving for the future and what we're talking about that you see other moms? Are there any patterns that you notice?

Dasha Kennedy: I think some of it is a lot of the same of what I experienced when I was first introduced to investing or just saving for the future. A lot of them feel overwhelmed by the idea because it is taking from what little they already may have. The other day, I talked about this actually on my Instagram, that the average monthly salary for a Black woman is $3,000. So when you are considering that on that average salary, they're having to pay rent or a mortgage. And if you have children, that's added in school and day care fees, they're having to survive off of a average of $3,000 per month. And now you're coming in and saying, "OK, yeah, I need you to still put some of that to the side for the future." That is overwhelming for anyone to hear, especially when we think of investing the way that it has been largely presented to us online and offline.

It is exactly what you said earlier. A lot of times we think you need thousands of dollars, $5,000 for it to really make a difference. So what I see the most is that a lot of Black women become overwhelmed by the idea, which is why I always focus on, especially on my platform, just starting with small amounts, small amounts. You'll see that it's more manageable. You'll see that it is actually attainable when you're thinking of, "OK, I can make a sacrifice and give up $20 per week. I can maybe cut out a weekly expense or drop a subscription for a little while to get used to giving up $20 per week to start investing and just letting it roll." So I think in the beginning, what I always see is it is very overwhelming, but I think once we start having the conversation more and I break it down to what investing really is and what it really can look like, more women become open to the idea of it.

Elizabeth Ayoola: Yes, absolutely. I know when I first started out, I felt definitely angry, overwhelmed, kind of all the emotions that you said, but it really made me have to reconcile with my money mindset because one of the sources of the overwhelm was, like you were saying, "I don't have enough, and I don't have enough, and this is making me feel frustrated and this is making it feel unattainable." So I realized that I had a scarcity mindset, and I didn't really have the inherent belief that I could have a lot of money or I could have more than enough, or I could have enough to invest for myself and my son and still enjoy my life. So I really had to start shifting the way I thought about money and think, "Well, why can't I have enough?" And I do have enough, and I have the resources and access to make enough money. And I think that really, really helped shift my investing journey as well.

Dasha Kennedy: Yeah, that's why I definitely think it's important to have more conversations about what investing looks like, especially when we think of the Black community and we consider so many other factors like the issues with income disparities, the racial wealth gap. When we consider all of those things, sometimes we have to have conversations that look completely different from the most trending and popular conversations online. So when I see a lot of investing content online, you'll see, "Oh, if you invest a thousand dollars per month, by the time you retire, you'll be close to a million dollars." And when I see that, it is like a hard pause for me because I can only imagine how many people that are low income, that are Black, that are already dealing with so many other disparities when it comes to money and investing are going to see that, and they're going to feel like, "OK, I’m never going to be able to do that. So why try?"

So when conversations like that take the lead, it can be very damaging. So I always try to focus on how we can do so much and how small incremental changes and amounts can have a huge impact on our future. Even if a person was only able to retire, we were going to say with a couple of hundred thousand dollars, that's way more than most people are retiring with at all. So I say that to say something is always better than nothing, and when you design an investment strategy that works for you, for your income according to your life, I think that is 10 times better than just not doing anything.

Elizabeth Ayoola: Yes, yes, yes, yes, yes, yes. So I have one more question for you, which is do you have any resources or tips you'd like to share for any Black moms or just moms out there who are feeling some of the emotions we named, angry, overwhelmed, they can't do it, they don't know where to start, they don't have enough to help them overcome those feelings and get started?

Dasha Kennedy: So the very first thing that I would say is definitely do your research, especially with us having just resources available online with a click of a button, you can research the topic. What is a 529 account? How do I get started with a 529 account in my state? I think those things are very, very important. Using the resources that are available to you, knowing that a little goes such a long way. And when I think of Black women, especially Black moms, and I say this from the heart, I know that we want to break. I know that we don't want to work forever. So when I'm thinking of investing, even if it's a little per month, it is because I want to give future Dasha a break. I want her to be able to rest. I want her to be able to kick her feet up and enjoy her hard work.

Elizabeth Ayoola: That's right. Those are some excellent, excellent tips, Dasha. So thank you so much. That's all we have for this episode. Thank you so much, Dasha, for sharing all of your wisdom, your experiences as a parent and all of your financial knowledge with us today.

Dasha Kennedy: Of course. Thank you so much for having me.

Elizabeth Ayoola: To share your thoughts on how to budget, pay off debt, or manage finances as a parent, shoot us an email at [email protected]. Also visit nerdwallet.com/podcast for more info on this episode. And remember to subscribe, rate, and review us whenever you're getting this podcast. 

And here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general education and entertainment purposes, and it may not apply to your specific circumstances. 

This episode was produced by Sean Pyles and myself. Liz Weston helped with the editing and Kaely Monahan mixed our audio. And a big thank you to the NerdWallet copy desk for all of their help.

With that said, until next time, turn to the Nerds.