Being a creative entrepreneur can be an incredibly time consuming undertaking. We spend many hours creating a product or service and building a brand, all so we can get paid and work for ourselves. Sometimes we get so overwhelmed with the process, we sweep something as simple as money under the rug. Are you guilty of this?
I recently watched “Make More Money and Discover Your Worth” on Creative Live. If you have a chance to purchase this lesson or catch it when it is on air for free, I highly recommend it. Amazing glamour portrait photographer Sue Bryce and money guru Tiffany Angeles teach you about money blocks, and how to give and receive money in your life. I guarantee you have a block or two, and you don’t even know it.
Below are five money lessons that I think are important as creative professionals.
Budget – As a creative entrepreneur, it is so important to have a realistic budget. You don’t have a recurring paycheck to pay bills, so you have to learn to live within your means. One month you can be rolling in the dough, and the next there isn’t anything come in.
I have been using the “budget to zero” plan, and it has been perfect. Budgeting to zero means you give every dollar a job. Every last penny. Even if that job is “carryover to next month” you assign every dollar to do something. A great program for this is You Need A Budget (YNAB, for short). YNAB is amazing. First, they start you off with a 34 day trial. This gives you plenty of time to truly get familiar with the software and try it out. After that, its $5 a month. That’s one latte, people. It’s worth it. Here you can watch the how to video.
This has been so great, because once I have spent the money in my budget for each item, I’m done. Oh no, you spent $20 out of your $20 budget on coffee this month? Looks like you are making your own until next month!
Make sure you are realistic. Enter all your monthly bills first, and assign your dollars to them. Then if there is something leftover, give it a job. Your dollars are dying for a job! If it’s spoken for, you won’t use it carelessly.
Don’t Chase Money – When you chase money, it runs away. You can decide, “OK, this month I just need $2000 to cover my bills” and think that’s enough. It’s not! You need to factor in what YOU are actually going to pay yourself. They say that realistically you end up with 20% of whatever your business makes. 20% people! But, it makes sense. There is the tax man (more on that below), the bill people, the business expenses, the things you need to pay for yourself since you don’t have an employer to do this for you (health insurance, retirement accounts, etc). If you choose to chase an amount of money, you are going to push it away. Decide what you want to make that month. Then, decide what you are worth and calculate how many clients it will take to get to that number. It’s less daunting to say “I need 10 clients this month” then to say “I need $10,000.”
Don’t Avoid Money (or your responsibilities) – Do not avoid money, or it will bite you in the end. If you owe money for expenses, you need to pay your bills. If you are making money, then you need to pay taxes. And it’s simple. Once you get paid, calculate your tax that would be do and move that money aside. It’s not your money, so move it immediately. The IRS is not going away anytime soon, so get to them before they get to you. Otherwise when its time to pay your taxes, and all you have left in your savings is enough to pay your tax bill you are going to be standing there saying “Well, where is my money?”
And at the same time, don’t avoid asking for money! You did a service, or provided a product – you deserve to get paid. There is no shame in asking for money when it is owed to you. Don’t block yourself from something you are entitled to.
Money Honesty – Find someone to be honest with about money. Because people lie about money. Trust me, in the past I was a huge liar about my money. I covered it up, and made excuses and never had an honest conversation with anyone about my money issues. I needed to have that honest conversation with someone and say hey – I am making some good money, but I have nothing at the end of the day. Where is it going? What am I doing wrong?
These days I am filled with joy managing my money. I get a slight thrill seeing money come in, money going out and money staying put. I have chosen not to lie, I now post my side income online every month. You guys are my accountability. You get to see my trials and tribulations. When you put it out there with someone, you are more likely to make the right decisions.
Get Creative – “You are a creative. Get creative with income.” Diversify it. As a self employed person, you need to think about having a few income streams. Some people offer a service, why not thing of a product to go along with it? Some people offer products, think about maybe investing some of your income as well? And speaking of investment, after you have paid the bills, and set aside money for savings don’t be afraid to take some of your leftover money and invest in you. Invest in your business. Educate yourself even more about your trade or niche, because most services are constantly growing.
I am sure there are so many more lessons we can learn about being a creative entrepreneur but this is a good easy start! Don’t forget, value yourself and your service or product. Own it, and show people that you believe in what you do or sell. And watch the dollars come rolling in! And don’t forget, Creative Live has a TON of great classes to watch for all kinds of creative niches!