This is Bob
For the purpose of illustrating today’s topic, let us look at how Bob manages his money. Bob is a hard worker who freelances in various fields such as music, photography and dancing. Each month, he will have a number of jobs to complete in any of these disciplines. Sometimes, it’s just one photography job, or one dance gig for the month. This means, then, that while Bob has a lot more freedom than those who are in office jobs, he also has less stable income to work with. What can Bob do?
Work With Your Lowest Figure
First, Bob has to be aware of how much he needs to survive comfortably on a monthly basis. He would look at food, clothing, shelter and transportation as his most important needs; then, this would be followed by extra expenses such as eating out, entertainment, gifts, debt repayment if necessary, health care, etc. This will be the amount that he works towards saving and living off of each month, creating a zero-based budget that will take care of all his expenses without reaching into his savings.
Create an Emergency Fund
After being able to meet his financial commitments, Bob would create an emergency fund that would act as his safety net should he run into difficult times. It is important to remember that emergency funds can act as slow money; it is not about putting in a huge amount at any specific time, but maintaining regular payments over a long period of time. A short goal to work towards would be, for example, Budget Leaf’s 3-month emergency fund savings challenge; at the end of the challenge, Bob could pay himself by buying a new pair of dance shoes or a camera as his reward.
Adjust As Needed
The main difference between those with fixed incomes and those who earn irregularly is the time it takes to get paid, and the amount of each payment. Since Bob is a freelancer, he can get paid 2- 5 times for the month, but each payment would vary depending on the job. Once he is able to keep focus and discipline, he could potentially save more money and clear more debt than someone with regular income who is not budgeting or saving. Over time, the tracking of expenses will show where changes can be made, leaving Bob in a better financial standing.
About 40% of Jamaicans earn money informally, meaning that they create their own avenues of income in and beyond their communities, or work with people who do. This is different from traditional work, such as going to a 9-5 office job for a corporate entity. Bob’s ability to earn and save is not limited by his work; he only needs to use the same creativity and discipline that any other worker would need to ensure that his future is secured. In this way, we can all be more like Bob.