Cash. Dough. Kajinkas. Money, let’s face it, is not something many people want to talk about. However, artists are often self-employed and it’s not like the industry is exactly rolling in dough at the moment, so it’s really important to learn the basics of managing your money.
For me, I’m realizing that money=artistic freedom. I can choose the jobs I want, when I want. And if you can fund your own projects *gasp* then that’s even more freedom for you!
The standard advice for saving is the rule of “paying yourself first,” originally from the book The Wealthy Barber, by Dave Chilton. With each paycheck, before you pay your bills you automatically put away 10% in your savings. That way, you never really notice living without it because it’s gone before you even start!
Is this foolproof? Not always. Sometimes I’m not always able to put it away because of unexpected bills or new art projects. But it’s a good start, and if you can save more often than not you’ll be ready to fund that next project sooner than you think.
I also opened up a Tax-Free Savings Account (TFSA) through my bank. Your savings are tax-free (obviously) but the advantage for me is that it takes about five days to transfer the money out of the account — I have to ask myself if I really want to go through the trouble of taking it out. Your local bank representatives should be able to offer a few other options to you as well, like Canada Savings Bonds or high interest savings accounts.
Next, take a look at your expenses and what you can cut down. In the past few months I decided to stop drinking coffee and buy tea instead. But I found that even buying a tea every day at Starbucks still worked out to nearly $100 a month! So, knowing I’m not a morning person and won’t get up early enough to make the tea before work, I bought a $5 kettle, a little one-serving loose leaf tea cup and some loose leaf tea to leave at work. I paid about $25 for the tea and it lasted me over 3 months.
Getting out of Debt
In debt? Me too. Damn you, student loans/credit cards!
While it can feel overwhelming to have debt, no matter what the amount, just remember that it will take time and patience but you will pay it off someday. My father once told me, “you can’t save yourself into prosperity,” as in, in most cases, you’re never going to get out of debt just by cutting costs. Try to find additional income where you can — freelance with a publication outside of your field, pick up extra shifts at your day job or get a part-time gig at an art museum or concert venue. It’s not going to be pretty as you try to be creative when you’re grumpy and sleep-deprived, but you’ll pay off your debt way faster.
Another big motivation for me to pay off my loans was finding out the interest rate I was paying and what it actually ended up being per month. On a student loan of about $10,000, the interest works out to about $40 per month. However, my minimum payments are only $120 a month, meaning about a third just goes towards the interest alone! Remembering that, when I see a cute top at the mall, really helps me to stay focused on paying it off.
Something else to keep in mind is how the interest you’re paying on your loan versus the interest you’re making off your savings account balances out. Chances are, your loan interest is higher, so now may not be the time to save since overall you’d be losing money. Consider putting your 10% towards your loan instead.
Is It Worth The Investment?
When it comes to upgrading or purchasing new equipment, think to yourself “is this worth the investment?” I would really love to upgrade my Macbook to a sleek and shiny new iMac desktop, but it won’t improve the quality of my work right now. Is it a want or a need to get a new camera? Can you afford throwing on another $1000 to your existing debt? Finally, is this really going to make you any money?
A lot of artists (including myself) are guilty of falling into the trap of “well, if it’s new and shiny, I’ll definitely use it!” Force yourself to use your crappy equipment for a while longer until it becomes a habit and you know the upgrade will be really worth it.
Get Your Taxes Done Right
First off, it’s often a good idea to register yourself as a business to potentially save a ton on your taxes. There’s the possibility of writing off a percentage of your home used for business purposes (office/art space), coffees and meals with potential employers or collaborators, or saving the tax on art supplies and electronics for your business. It helps to speak with a tax adviser familiar with small business tax laws and have them help you with your taxes when tax season comes around.
I know this call sounds very Mickey Mouse elementary, but a lot of this took me some time to understand to make money management a habit. It’s really worth it in the end though, so hang in there and it will pay off!