Mastering the Art of Budgeting for Creatives
Budgeting is often seen as a mundane task, overshadowed by the allure of creativity and the pursuit of artistic passions. However, for creatives, mastering the art of budgeting is essential to ensure financial stability, pursue their artistic endeavors, and ultimately thrive in a world that often values art but doesn't always pay the bills. In this blog, we'll explore the importance of budgeting for creatives, provide practical tips, and reveal how a well-structured budget can be a tool for artistic freedom rather than a constraint.
Creative individuals often face a unique set of financial challenges. Many work on freelance or contract basis, which can lead to irregular income streams. Furthermore, the unpredictability of creative projects means that you may earn a significant sum one month and close to nothing the next. This financial instability can be daunting and stressful, but it can be managed effectively through budgeting.
What is a Budget?
A budget is simply a goal. It is what you want your money to be used for. Most people think of budgeting as spending or saving a certain amount of money. However, a dollar amount cannot be your goal. What you do with that dollar amount, how you ultimately want to spend that dollar amount, is your goal. So ask yourself: what are you trying to afford? What most creatives want to afford is a life of creativity. They want to be able to wake up each day and be able to create for a living, for their creativity to provide a sustainable life. If that is your goal, then you need to arrange your finances around achieving that goal.
How Do You Create a Budget?
1. Start With How Much You Are Actually Making. In order to create a budget, you must start with how much money you are currently bringing in on a monthly basis. This may seem obvious, but the amount of earnings you include in your budget needs to be the actual amount you are making, not what you hope to be making. Too many people use a higher amount than they are actually earning when creating a budget because they expect to be making more than they currently are. However, there is always the possibility that you do not end up making what you expect, in which case you will not have earned enough to satisfy your budget and will end up in debt. Always base your budget on what you are currently making. That way, if you end up making more you will have a surplus, which is never a bad thing.
2. Prioritize Investing in Your Creativity. If your goal is to create for a living, then you have to start off your budget with how much it costs to be creative. Creatives have unique expenses, such as equipment, studio space, marketing, etc. Too often, people budget backwards. First, they add up all of their expenses (e.g., rent, car payments, clothing, school, etc.) and subtract that from the amount of money they make in order to see what, if anything, is left over. The result is that very little is usually left to invest in your business and creativity. Instead, you should start with the amount of money needed to achieve your goals. Then, the amount leftover gets divided amongst your daily living needs.
3. Create a Flexible Budget. Traditional budgets can be rigid, which doesn't always align with the variable nature of creative income. Instead, create a flexible budget that accommodates income fluctuations. Separate out your essential and regularly occurring expenses, such as rent, utilities, and groceries. These should be covered by a stable income source, if possible. The remainder can be allocated for discretionary spending and savings. This flexible structure allows you to adjust your spending based on your income for a given month.
4. Emergency Fund and Savings. Emergencies can strike at any time, and creatives are not immune to unexpected financial challenges. Building an emergency fund is crucial. Set aside a portion of your income each month to establish a financial safety net. Having savings to fall back on will provide peace of mind and enable you to continue pursuing your creative passions without the constant fear of financial instability.
5. Track Your Income and Expenses. Consistently tracking your income and expenses is essential for effective budgeting. There are numerous tools and apps available that can simplify this process, making it easier to monitor your financial health. Regularly reviewing your budget and financial transactions will help you stay on top of your financial situation and make adjustments as needed.
6. Save Money. In addition to the costs associated with being a creative and you living needs, it is important to save money. Typically, we suggest everyone save 15% of their income. If you make $100, then $15 goes into savings off the top. The primary reason to do this is so that you have liquidity when wealth-building opportunities arise. There are going to be periods when certain investments are available at an historically discounted price. When this happens, you want to be able to invest your money in order to build wealth. The problem is we rarely, if ever, know when market opportunities are going to present themselves, so we need to be prepared in advance for when they do.
