The act of performing complex mathematical calculations and tracking your finances is an inherently dull concept, particularly for creative minds. But let’s get honest here. If you are trying to make a career out of your art, managing the monetary aspect can get tricky.
With proper creative financial planning, you will be able to stay on your dream career path in the long run. So, jump into this article without further ado to gather some valuable financial planning tips to survive in the creative industry.
The importance of financial planning for creative professionals
Creative individuals are not required to focus on financial planning for luxury. Instead, it can be deemed as a necessity. The creative industry demands proper financial planning for the following reasons:
One word that best describes the professional creative space is unpredictability. While everyone might be talking about your creations one day, you are likely to struggle for inspiration the next. You will notice constant fluctuations in your income while working in the artistic field.
This inconsistency will be higher when you work on a project-to-project basis, which makes managing finances as a freelancer utterly complex. Only proper financial literacy will help you navigate the ups and downs in the industry seamlessly.
Financial constraints often chain artistic individuals while they are trying to conceptualise their next masterpiece. The idea behind financial literacy for creatives is to help these individuals gather the right resources and undertake projects that captivate their hearts. With adequate savings to rely upon, you don’t have to worry about taking projects that will sustain your pockets and not the creative desire of your soul.
A lot of artistic minds have to withdraw themselves from the creative space because they are no longer able to sustain themselves on a mediocre and inconsistent income. True financial empowerment for creatives refers to the act of staying in the industry and not changing paths when the steady income source disappears.
- Peace of Mind
Proper financial planning creates a safety net for you. Therefore, you can quit worrying about everything else and simply focus on producing art. It will definitely bring down your stress and trigger an increased amount of creativity.
Financial planning steps for creatives
A major part of financial literacy for creatives is understanding how to manage their funds. Learn about the intricacies of wealth management in the creative field, right from budgeting to tax savings.
- Identify financial goals
One of the biggest creative industry financial advice is understanding your goals. Begin with imagining your life a few years from now. Consider where you want to live and what endeavours you intend to pursue. You need to consider your long- and short-term goals to develop a clear vision for the future and make plans accordingly.
- Budgeting and expense tracking
Effective management of funds requires budgeting for creative professionals. While your income might not remain consistent, you will have certain fixed expenses every month. If you are spending more than your income, find areas to cut back on.
One of the most frequently overlooked artist budgeting tips is sticking to one. Remember, it isn’t supposed to restrict you. Instead, proper budgeting allows you to utilise your funds more wisely and control your spending.
- Debt management
Creative professionals are not alien to the concept of debt in different forms, including credit card bills and loans. Financial literacy enables creative individuals to handle their debts without feeling a heavy burden. Debt management begins with understanding how much you owe.
A smart way of handling debts is always paying more than the minimum amount you owe. It helps in bringing down your interest rates and economic distress with time. Moreover, focus on repaying your high-interest debts first to save in the long run.
- Investment planning
Being aware of where to put your money is a paramount aspect of financial planning for creative individuals. Investing can help you reach your financial objectives, increase your wealth, and develop a passive income stream.
The stock market is undeniably one good investment choice. Buying stocks carries a higher risk but can yield significant gains. If investing is new to you, you might want to look into exchange-traded funds (ETFs), which offer a diverse portfolio and are professionally managed.
Creative minds can also invest in bonds, which are safer than stocks. They return the principal amount at maturity and pay interest over a certain length of time. If you’d rather have a consistent income with less risk, they might be a suitable fit for you.
The real estate market is also a promising investment avenue for creative professionals. This field can offer a steady income source through capital appreciation or rental income. But it might not be the right avenue for struggling artists because of the upfront investment costs.
- Tax planning
Having proper freelancer tax strategies up your sleeves is a pivotal part of financial literacy in the creative industry. As a creative professional, you need to have a proper understanding of your tax bracket.
Most artists have no clue about the fact that a part of their expenses are tax-deductible. It can include anything from the cost of your supplies to your software premiums. You need to track all these expenses to bring down your taxable income.
While focusing on tax planning, setting aside funds for paying off these expenses is necessary. You can make a separate bank account to deposit a part of your income so that you can pay off your taxes seamlessly. Additionally, consider getting in touch with a financial expert to take advantage of artist tax deductions.
Formulating a proper strategy that meets respective needs and goals is a necessary part of creative financial planning. Since the creative industry requires a specialised approach toward wealth management, understanding its nuances, including its inherent inconsistency and high competition, is necessary for steady growth. With proper planning through smart decisions and expert advice from professionals, creative minds will be able to sustain themselves in the industry and secure their future at the same time.