In my early twenties, I shared a London flat with a theatre actress. At the time I worked at a bank and coming after some lean university years, was enjoying my fixed monthly salary. In comparison, her income had definite ebbs and flows. However, I often found myself counting down the days towards my month-end pay while she always seemed to bob along fine whether she had work or not. There was one month when I had run short of money and she informed me, modulating her voice to convey both exasperation and wisdom, that “you regular income people would not survive a year in my shoes”. Well, given my situation at that moment, I couldn’t disagree.

After that discussion with my flatmate, I paid more attention to her spending habits and years of living together provided me with a robust guide for good money management. Caro was a master budgeter. She was always acutely aware of every penny spent and planned her expenses months ahead, a necessity given her irregular income, but a habit that I took on board and used to my great benefit. Such a high level of budgeting progresses naturally to great savings habits.

But what I have noticed (and since my return home, I’ve met very many seasonal income workers) is that most people with irregular income streams focus on budgeting and short-term savings and the money management ends there without long-term savings and investment considerations. This results in frequent depletion of savings funds and therefore perpetuates a constant cycle of anxiety about your money running out.

Seasonal and project-based professionals are often found in our creative industries. It’s an injustice that people who work to bring public joy to the masses often suffer personal financial grief. I won’t be discussing the socio-economic changes that can be made to address this issue, but I do want to address the personal power that everyone has, to improve their finances on a long-term basis whether you are a soca artiste, videographer or party promoter; someone in gig or part-time work, if you provide freelance or contracting services, or work in or outside the creative industries.

Seasonal income leaves many people flush with cash and though you *know* it has to last you some time it can be difficult to look beyond a healthy real-time bank balance to the uncertain months ahead. We’re positive thinkers us humans, so our assumptions and projections can be more optimistic than realistic. 

To decrease the likelihood of budgeting based on cashflows that don’t materialise in time, review as many previous years of income as you can to see if there’s a trend to the ebbs and flows. While every year is different, you may be surprised at the commonalities you find when you take it out of your brain and put it in black and white. “I feel is this” improves to “I know it’s that”.

This evidence-based approach to money management increases the likelihood that you never again experience famine because you wouldn’t have gone overboard during your feasts.

You completed a freelance project and successfully managed to budget your expenses so you lived comfortably for the next three months until your next scheduled job began. Very often, we describe the above as having “saved” but we do ourselves a disservice when we conflate cashflow management with savings. There is significant overlap but they aren’t the same. 

Savings means funds that you set aside for future use, “future” typically being the medium to long term and “use” typically referring to something different to your regular expenses. The above example stretched a lumpsum payment over a relatively short term of three months and the funds were used to handle ordinary life expenses. In other words, if at the end of this three-month period, you don’t have any significant funds left over, you may have budgeted well and managed your cashflows, but you have not saved.

When faced with your “feast” of a high-value project payment or bumper seasonal income, immediately place a portion of these funds into a savings account or instrument that you do not have ready access to. This removes it as a potential source of funding for short-term expenses.

In terms of how much to save, this is a question that depends on many variables (age, current savings, dependents, goals and more). That said, the general consensus among financial planners is that you should build an emergency fund which can cover three to six months’ worth of expenses.

I can hear you now:

“Jody, throwing out this word ‘invest’ like it easy to do. Invest in what Jody? Since you so smart. A business? What kind of business? I’m already investing in my own business which is why I’m fighting up with this irregular income, now you coming to suggest I take on somebody else risk too. And next up I’m sure you want to talk about rich people thing like real estate and stocks where my money tie up tie up forever. I hope you coming with some realistic suggestions here. I waiting.”

Ok reader, I accept your challenge. Let’s have real talk:

• Investing is not the exclusive domain of “rich people”.
• Richness is not genetic, therefore regardless of who you are, where you come from, what you studied, how much you’re earning now – you can become one of those “rich people”. 
• Embrace the concept of wealth generation and accumulation. It is for you.
• When you invest in a stock, you are investing in a business. In fact, you become a part owner of that business.
• Stocks can be quite liquid and offer the potential to receive cashflows in the form of dividends (payments made out of the company’s profits or reserves) so your money won’t be “tied up”
• There are many different types of investments which cater for varying starting sums, cashflow needs, tenors and risk appetites. Inclusive of and beyond stock and real estate, there remains a vibrant investing world waiting for you.

So.

I have clients whose incomes are either seasonal or inconsistent and reliant on the next job to come through. I can think of one couple in particular that came to invest for the first time 3 years ago. When they came to me their income was project based but within the oil industry and they had every expectation that the next project was on the horizon. They decided on a moderate to aggressive risk approach to their investments based on their savings and income. 

However, during the worst parts of 2020 when energy prices had plummeted, their project pipeline dried up and I could hear their serious concern when we spoke. We reconstructed their portfolio to allow for a greater allocation to investments which paid interest on a scheduled basis to provide income for the family. In addition, due to the capital appreciation of their portfolio over the three-year period, they were able to live on the interest alone. I firmly believe that if they had left these funds in a typical bank savings account, they would have had to withdraw from their principal (the value of the initial investment) and in so doing, deplete their savings.