Artists and money have a love/hate relationship. For those of us who grew up in underprivileged and even middle-class families, the word money both sounds like a curse word and the Holy Grail at the same time. I grew up with the ideas that money was scarce; that money only existed with a select few; that money was corrupted (or rich people were corrupted and immoral); and my favourite, that money didn’t buy happiness. I couldn’t agree and disagree more with the latter mention. No, money doesn’t buy happiness – nothing can, actually. Just like solely making art without earning or sharing with the world won’t make you happy – Ain’t that right, Van Gogh? It is so easy to fall in the common trap of false belief that we constantly hear at home and in school – that as an artist, you shouldn’t expect to make any money; that by choosing the path of the arts, you will definitely be poor forever and never make it in life with your art.
Look, I’m not going to Tony Robbin-you and make you believe you can become the next Jim Carrey or Grimes. Let’s be realistic, you might never be able to earn a shit-ton of money with your art – and you know what – that’s OK. Who cares? You love doing this, it’s your life purpose to be a creative. Just like me! It doesn’t mean you’ll fail as an artist and it doesn’t mean you’ll fail in life. The most important thing you need to understand is that simply by becoming financially stable, you can keep working on your art for a long and sustainable time. I know, I know – what does financially stable even mean? How am I going to achieve this? Believe me, it’s not complicated.
Why should you listen to me?
Well, I’ve worked in the financial industry for a few years before quitting the corporate world and making the jump to running my art business full-time. While I worked in a world where everyone around me knew what an RSP account or index fund was, it pushed me to learn about… well, finance. I realized that such a small part of the population was lucky enough to be financially stable because they had investment accounts, knew how to use taxes to their advantage and ran their personal finances like an actual business. These people were comfortable and had a safety net. If they would lose their jobs or become ill all of a sudden, they were still able to pay their bills and bounce back financially. Thanks to my learning experience and knowledge accumulated over the years, I was able to do the same. Today, thanks to the below steps I took, I had the financial freedom that allowed me quit my day-job to pursue a full-time career in arts.
But I realized that so many artists, no matter how much money they earned, lacked this financial literacy in contrary to the people I came across in my previous career in finance. Many do not know the principles of budgeting, investing in securities or even saving! It is terrible that society has failed creatives in this lamentable manner because of a common misconception that since creatives have unstable or lower income, there is no use in trying to save for retirement or for other big life investments such as buying a home. I believe that anyone can achieve financial success and that includes artists and creatives.
The Four Pillars to Financial Stability
Here are 4 simple steps to become financially stable:
- Get rid of ALL debts and liabilities
- Earn money
- Track your expenses
- Save for an emergency fund
But first, you need to tackle the big monster. That unhealthy belief you might have about money. Repeat that mantra, every day:
“I can be an artist and be financially stable.”
STEP 1- Get Rid of ALL debts and liabilities
You got it – Get rid of all your debts and liabilities. Got a credit card debt for all the art supply, an Ipad and acting classes or a big trip you’ve done 3 years ago? I don’t care if you need to earn extra money by cleaning the floors of shopping mall washrooms; or make yogurt deserts behind a counter; or work overtime, pay off your debts as soon as possible. Imagine debt as being this monster trying to drown you in the ocean: the bigger it becomes, the more difficult it’ll be for you to stay afloat in your life and finances. Eventually, if you let this take you down, you will give up on your art and spend the rest of your life miserable at a job you hate because you had to declare bankruptcy (Not by yelling, Mr Michael Scott). Pay off your debts and do not wait.
STEP 2 – Earn and save your money
Now you’ve paid off your debts, you suddenly feel lighter and freer – amazing feeling, isn’t it? But there’s no money left in your bank account. Before you reach out to your credit card, go get a job. I don’t care if the job is in your creative practice, say freelance writer or comic artist, and I won’t judge if you take a day job in an office environment. There’s nothing wrong with either options, as long as you never lose sight of your art and your long term goal: I can be an artist and be financially stable.
STEP 3 – Track your expenses
As you earn more and more money, it might be tempting to buy more stuff and treat yourself more often. Don’t make that mistake. It is called lifestyle creep and most of the working population fall in this trap. As you earn a bigger salary, you feel this social pressure to buy more expensive clothes, unnecessary art gear or a bigger apartment. As you keep buying and buying you’ll be back to square zero with yet another debt. Worse – you’ll get so hooked up on this new “lifestyle” you won’t be able to escape this job that was only meant to be temporary. Believe me, I’ve been there. It’s a golden prison with cushy handcuffs that will only make you miserable over time. Avoid this at all cost.
Instead of buying more stuff, you should track your expenses. This will allow you to see where your money goes every month and to plan your financial future. Also, entering each of your daily expenses and seeing how much money you spend on crap like Starbucks double-mocha lattes and useless internet subscriptions will make you feel so terrible about yourself that you’ll think twice before taking out your credit card to buy this cute hello kitty themed video game keyboard. Here’s a free expense tracker template that I personally use for my daily expenses. The tracker even calculates the percentage of each expense category for the whole year. I think it can be very useful to track all expenses for at least one year and do an annual review at the end to determine where your money tends to be wasted. Rent and food are usually necessary expense, but if you find the total amount spent on Starbucks is equal to the amount spent on your cellphone and internet subscriptions… then it might be time to cut back on mocha lattes and invest in a nice coffee machine for the studio.
The most important part of this exercise is to allow you to have an idea of your monthly expenses. When you know exactly how much money you spend, you’ll have a better idea of how much you need to earn to stay afloat financially and how much you can save up for the future.
STEP 4 – Save for an emergency fund
As you start to keep track of your expenses, something magic will happen – you will stop spending your money on useless crap and you will save more money than ever. This will allow you to create an emergency fund. What’s that? Nothing fancy – it’s basically an amount in your bank account (or your pink piggy bank if you’re into that weird stuff) that would allow you to pay all your bills and rent for 2-3-6-24 months. As you start to save and see that bank account grow, you will start to feel powerful. You’re no longer just floating on the sea, you’re full-on directing your ship. You have a safety net.
If you got to this step, then you’ve made it. You proved to yourself that you can be an artist and also be financially stable. Now, I want to show you that you can be even more than that. You can also become financially successful as a creative.
Don’t believe me? Stay tuned for my next posts.