“- Where are you going Granny Ant?
- Running around for food, my dear Cricket.

And you, where are you going with that gadulka*?
- The ladybug is being a bride today and
I have been invited to play some music.

- And when it starts to snow, in winter,
what are you going to do?

- I will ask, shame or not,
for some of the grain that you have collected.

- And I shall not give any to you,
you old lazy Cricket”.

*a traditional Bulgarian bowed string music instrument

You surely know the fable about the Ant and the Cricket. We hope that it did not prevent any talented tomorrow’s musician from making a career in that field. Because, contrary to the artistic implication that the Cricket is wasting his time while the Ant is working, entertaining the guests at a wedding is indeed a serious responsibility for which the musician shall receive a remuneration. Thus, independently as of whether this remuneration is small or big, if the Cricket manages smartly what he has earned, he may however have the resources to live through the winter with dignity, buying his food from the Ant.

What may the Cricket do to ensure his subsistence in the periods when he is not working? What should each of us – a musician, a journalist, a salesman/saleswoman & consultant, a programmer, a teacher, an employee, a director, an astronaut… do in order to feel more confident and successful when it comes to the money?

We are speaking about that in the series of publications in the UniCredit Bulbank blog: “Finances for non-financiers: practical ideas for managing our money smartly”.

Today we are about to tell you a short story about the money of two average 30-35-year-old managers – Zhorzheta and Panayot. We cannot say that they are rich, but they have a good job and they earn a little above the average that people of their age with a solid education are earning.

Zhorzheta saves 5% of her salary each month. If for our convenience we consider her salary to be 1000 Bulgarian leva, this means that she saves 50 leva monthly and invests them with the help of her banker. Moreover, Zhorzheta has turned her hobby to cook into a small internet business which she develops during her leisure time. She has made a blog with recipes and each week she shares with her readers some yummy stuff. She invested in a good camera, attended several photography courses (there are also some free ones available on the Internet) and little by little her photos and recipes were shared by hundreds of followers. Thus Zhorzheta has also an additional income from her hobby and that income is not big, but it is regular, as well as the earnings from the investments that she has made thanks to her banker. She and her family don’t look like they are rich people but they do live well. She drives a convenient and safe city car, purchased with a five-year lease, which she has also managed to repay. She is ambitious to grow professionally in her work and to give good results there, nevertheless she does not exclude the possibility to dedicate herself to her own business one day and to extend it.

Panayot, working at a similar position and with a similar salary has chosen to take pleasure in living his life by spending largely his whole monthly remuneration and by not saving a single Bulgarian lev, because YOLO (a popular US expression meaning “you only live once”). He does not have another income from any additional activity, but he feels OK even without any. He drives a magnificent red Porsche which he proudly parks in front of his home – well, he is part of the group of the “educated and successful” indeed, he always has the latest smartphone, etc. A serious part of his remuneration goes for the repayment of the Porsche lease, the smartphone and the huge television in his living room. But this is his choice, it makes him feel good.

What would happen, according to you, if a friend of both of them offers them the opportunity to invest in a new business which is likely to have a good potential for a good return? Zhorzheta can easily speak to her banker and collect the amount for the investment, while Panayot is about to have difficulties. Despite being convinced in the success of the business, he does not have at his disposal any savings for the investment. Panayot will probably miss this great opportunity.

We fast forward the tape with 5 years. The economy enters into a recession, the industry where Zhorzheta and Panayot are working is in crisis and both of them have been left unemployed. Panayot is waiting in the queue of the unemployed, going there by public transport, as he has missed to pay some of the installments on his Porsche lease and it has been taken from him. Zhorzheta is not feeling very well in that situation either, but she has dedicated herself to her external business and is using also the profitability from the investments she has made some years ago. She also turns to her savings. But she manages to maintain a good lifestyle for her family.

We fast forward the tape with another 20 years. Zhorzheta and Panayot are already 55-60 years old. Zhorzheta has earned and saved enough so that she can now think of early retirement. Panayot… will have to continue working.

So what is the moral of the story about Zhorzheta and Panayot:

- If we have a plan for our money we can live well while at the same we are being better prepared for unexpected turns – economic crisis, loss of work, new investment opportunities, health, education, etc.

- Planning the unexpected events is as important as it is to plan the savings. Why? Because it turns out that the “unexpected” events happen quite frequently during the life of a person.

- The key part of every financial planning is to think of various income sources. In the next articles we will tell you how to think of such.

This material was written by an author, nevertheless ideas and recommendations from the lectures from the course “Managing your money” by the online training platform Coursera have been used. If interested, anyone can take the training free of charge… or save 6 hours of video lectures and tests by reading the most important parts of it for 5 minutes here. The online training modules have been drawn up by Prof. Peter Navarro, holder of Ph.D. in Economics from Harvard University, who is a Professor at the University of California, Irvine, as well as the author of global bestsellers in the field of economics.

About “Finances for non-financiers”

This article is part of the series of financially-oriented expert materials in the corporate blog and the digital channels of UniCredit Bulbank – facebook, twitter, etc. - on the topic of “Finances for non-financiers: practical ideas for smart money management”.

More information for media:

UniCredit Bulbank, Identity & Communications Department

Viktoria Blajeva, Phone: + 359 2 9264 993, wjlj/ebwjepwbAvojdsfejuhspvq/ch