Traditional Jamaican proverbs are wonderful sources of folk wisdom that can provide people with insight into various aspects of everyday life. I like to use these adages in discussing money matters, as they often reveal essential principles of proper money management.

Recently, the rains have given us a welcome break in the prevailing drought conditions in Jamaica, but we are still experiencing severe water restrictions. This brings to mind the Jamaican saying, “Rain a fall, but dutty tough,” which means that although rain is falling, the ground is still dry and parched.

This proverb has a deeper meaning when applied to a person’s finances, as it could refer to the all-too-familiar situation in which income is being earned, but it is just not enough to cope with all the bills. Your money evaporates as soon as you get it, just like a drizzle of rain in the arid desert.

As prices rise and earnings stagnate, many people are reeling from inflationary pressure on their spending power. If you have been suffering from a prolonged money drought and this Jamaican adage resonates with you, the following strategies may help to revitalise your financial situation.

Consider all expenses for a year

Many people experience the payday phenomenon where their salary finishes even before they get it. To overcome this problem you must first get a clear picture of all your bills by making a budget. Planning for your spending needs will help you to know how much you need to earn ahead of time.

Write down all your regular monthly expenses such as groceries and utilities. Next, estimate the annual cost for compulsory bills that are not due every month, such as cooking gas or school fees, and work out reasonable amounts for non-essential expenses such as entertainment and gifts.

Try to recall what you spent in past years on unplanned costs such as home repairs or medical bills, and assign a monthly amount to put aside for these emergencies. Finally, list things you would like to spend money on but may not be doing now, such as savings or vacation.

Convert expenses into monthly averages

When you make a list of all your expected bills for a year, you will see the big picture of what your lifestyle costs. However, you need to convert these expenses into monthly figures to determine the average amount you need to earn every month to maintain your lifestyle without financial stress.

If you buy an item every day for a month, multiply the cost by 30 to get the monthly allotment, but if you only purchase it on weekdays, then multiply by 20. Your weekly bills should be multiplied by four, while you should divide annual expenses by 12 to get the average monthly cost.

Although you don’t actually pay out money each month for yearly bills such as car insurance or property tax, you still need to provide for these expenses in your budget. The average amounts will tell you how much you should put aside every month to pay these bills when they are due.

Create a written budget

Take time to go through all the possible costs that may arise throughout a year; if you leave out some of your expenses, you will not be able to create an accurate budget. You can download a spreadsheet at www.financiallysmart.org which can help you to identify all types of expenses.

Your next step is to record all your regular and average monthly costs into a written budget. Don’t try to keep the figures in your head, as you may need to make calculations and adjustments throughout the initial budgeting process and if changes occur in your lifestyle during the year.

Next, record all your sources of income. Use your salary figure less statutory deductions such as income tax and pension, but add back any deductions for loans or savings. If your income varies, use the lowest estimate. Then calculate the totals of all your expenses and income sources.

Calculate your budget position

To find out if you are earning enough every month to pay for all your expenses for a year, subtract the total expenses figure from the total income figure. If your income is more than your expenses then you have budget surplus, while a negative balance indicates that you have a budget shortfall.

A budget shortfall means that you are spending more than you can afford, or that your income is insufficient to pay for your basic needs. To address this issue, you need to let your rain (income) supply a smaller area of ground (expenses), or increase the amount of rainfall to satisfy all your needs.

With a budget surplus, your water supply is more than adequate to nourish your ground, and you should put the extra cash into a reservoir for the future. If you really don’t have extra money on hand, go back over your budget to identify forgotten expenses such as lending money to friends.