Creatives and finances, that’s not always a very natural combination. As creatives we think in images and words and sound and beautiful ideas to bring to fruition. Many of us are not a fan of numbers, and have terrible money blocks. We tend to avoid thinking about money at all, other than chasing up an invoice and doing our annual tax return. Oh, and we often undercharge… We either keep struggling, or trust that it’ll somehow appear. But is this enough? Does it cover everything and a bit more? And as most are not part of an employment pension scheme, are you planning for your future? Here are some tips for financial planning for creatives.
Financial planning for creatives: where to start?
Immediate disclaimer right here: I am not a financial planner, so please don’t take any of my tips as professional financial advice. It is just some advice on how to keep things simple, and not feel scared by it.
You start with the here and the now. Your current situation. This includes collecting information about your income, expenses, debts, assets and financial commitments. Do this in as much detail as possible so that you get an accurate picture of your financial status.
Step 1: Current financial situation (example)*
*These are completely random figures and not based on any type of business, location or currency. It is purely to demonstrate the items that could make up this overview. You can add any items personal to you, of course, such as debt payments or other financial commitments. It also does not include investments in business software/training/equipment, as this is not usually a monthly occurrance.
| What | Amount |
| Annual revenue last year | 50,000 |
| MONTHLY IN | |
| Average monthly revenue | 4166 |
| MONTHLY OUT | |
| Rent / mortgage | 1000 |
| Utility bills | 300 |
| Phone/internet | 50 |
| Subscriptions (Netflix etc) | 25 |
| Food | 600 |
| Health insurance | 200 |
| Taxes | 300 |
| Childcare | 600 |
| Personal allowance | 500 |
| TOTAL | 3575 |
| LEFT | 591 |
Now, the situation above would be a great situation to be in. It is a healthy balance at the end of the month. In an ideal month, you will have excess money to save, invest or start putting away in a pension scheme. In reality, as a sole trader or business owner, we know that this will fluctuate a lot, especially when starting out. We often end up with a negative balance. You will have months where you have to dip into your savings to pay the monthly bills. This is pretty common, and nothing to feel ashamed about. As the years progress, and you consistently build and grow your business, this should become less and less the case.
Step 2. Set your short and long term financial goals
Now you have an overview of your monthly outgoings and current financial situation, it is time to set some goals. What do you want to improve for yourself, in the short term and in the long term? Sure, you want to increase your monthly income. But what else would give you a good feeling to have in your financial plan? How much would you like to save or invest? The sooner you start putting money away in a pension plan, the more comfortable you will be once the time comes to slow down in life. Make sure your goals are specific, realistic and measurable.
Below are two examples (again, random figures!!) of how simple a plan can be. Of course, yo can make it way more detailed and specific than this.
Short term financial goals (end of this year)
| Goal | By when | What needs to change? |
| Save 10% of my monthly income, consistently | By the end of this year | Set up an automatic transaction to your savings account |
| Increase income with 1000 a month | Sell X amount of services at X price Reach out to X Take action X |
Medium/long term financial goals (3 years)
| Consistent 10k a month | By end 2027 | Increase prices Keep working consistently Sell X amount of services per month at X price |
| Save 10% | By end 2027 | Set up automated transaction |
| Invest 2% in pension scheme | By end 2027 | Research pension schemes, investment schemes and talk to financial advisor |
Step 3. Automate, simplify and stay motivated
Now that you’ve established your goals, it’s time to develop a strategy to achieve those goals. This includes identifying potential financial instruments or investments you can use, as well as determining the actions and timelines needed.
Reflecting and setting savings goals are the first steps, but the most important step comes next: staying consistent! How will you make sure you keep that promise to yourself? Think about how you can make it easier for yourself and what happens, for example, if you don’t achieve your goals for a month.
By setting up automatic transfers to various online piggy banks, saving becomes less intimidating and your savings will not remain in your checking account for an unnecessarily long time. This means there is less chance that you will be tempted to spend it, too.
Step 4. Have a regular ‘date’ with your money
We tend to avoid looking at our cash-flow and bank accounts when we know there is not much coming in. We stick our head in the sand, and pretend everything is fine. We ignore it all, and hope all issues will just dissolve. This is not a good strategy! The healthiest way to practice financial planning for creatives, is to have a date with your money EACH WEEK. Open your bank account, how much is in it? What’s gone in and out? Are there any outstanding bills to pay? Are there invoices to chase up?
Money saving tip: do you have any money leaks? Money leaks are something we all have: subscriptions and memberships we have forgotten about, automatic payments no longer needed, bills that can be reduced, etc. It’s a great way to save extra money each month, and put this away in your savings. If you didn’t already notice it going out before, you won’t miss it going into a savings jar either!
A healthy business means healthy finances
If you do all of the above, you have made a great start at financial planning for creatives, and you stand a good chance of actually reaching your goals. Of course, this also requires a healthy business in the first place. If you need help and accountability getting your creative business up to speed or scaling up to a higher income, I am here.
I work with creative entrepreneurs like coaches, illustrators, entertainers, photographers, publishers and many others, and help them build a solid and sustainable creative business. I know this is 100% possible for all of you, with the right planning, clarity, consistency and support.
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