In this webinar, Ignacio Mas discusses his views about the financial lives or the poor and their coping strategies. He starts by reminding us that people are not poor because they made bad decisions, but because of circumstances. We should not be making judgements about the strategies implemented and decisions made, nor should we assume that ‘our’ ways of managing finances are better.
Generally, we all have three concerns:
- where is income coming from
- how can I keep paying……. (e.g. rent, school fees, food)
- what if…. (e.g. illness, death)
For those with a regular, stable income there is less risk to receiving income and paying the regular bills and budgeting is done infrequently. For those with informal and/or irregular income the risk is much larger and therefore the flexibility of money and the budgeting required is much higher.
Ignacio discusses the three strategies that he sees being used to provide this flexibility and manage the risk – income shaping, liquidity farming and animating money. He argues that traditional bank accounts and products offered do not give the multiple purpose and flexibility that are used by the poor, and new thinking is required to attract them to using formal financial services.