As a creative, finances can feel unpredictable at times. Sometimes it’s feast or famine; that’s why it is so important to manage your finances as a creative entrepreneur to make sure you’re not struggling when work is slim or splurging too much when you sign a new client. But don’t worry, you don’t have to give up things you love. Being intentional with what you spend your money on, saving when you can, and investing in yourself and your future is the way to go. Here are some tips to help you manage your finances as a creative while still enjoying your life in the process.
1. Be Strategic in How You Spend Money
Paying for meal subscriptions, laundry services, hiring out administrative tasks, or bringing someone in to clean the baseboards, are activities that are investments in your productivity. Outsourcing tasks can allow you the time and freedom to create space to do the work that will generate income while simultaneously filling your cup.
Time is your most valuable resource as a creative entrepreneur. Instead of spending hours on tasks that drain your energy, invest in services that free up your schedule so you can focus on your work. Meal kit subscriptions, laundry services, or hiring a virtual assistant might seem like indulgences, but they’re investments in your productivity. By outsourcing tasks that aren’t directly tied to your creative projects, you’re creating space for the work that generates income and feeds your passion.
2. Take advantage of Credit Card Rewards
Consider using a credit card that offers generous rewards to pay business expenses. Choose expenses though that will offer a return on your investment. These are usually purchases you can write off during tax season. Use a credit card to cover subscriptions, memberships, advertising, supplies and equipment, and courses related to your business. Then use the accumulated rewards to either invest back into your business or pay off some of the credit card balance. Credit cards can be tricky, and getting into debt is easy if you don’t pay off your balance in full each month, so proceed with caution here.
3. Build an Emergency Fund
As a creative, income is inconsistent so having some funds to fall back on is important. An emergency fund can help you during those times when business slows down. Work toward having three to six months of living expenses set aside so that you can weather those storms if they come. Consider setting up a high-yield savings account and transferring money to it regularly to build your emergency fund. This will give you some peace of mind if money gets tight.
4. Invest in Yourself and Your Business
One of the most important things you can do for your mental health and your business is to regularly invest in yourself. Never stop learning, no matter what you do. Investing in your education or putting money towards professional development will not only help you now but in the future. Just be sure the investment aligns with your future goals otherwise you’ll be spending money unnecessarily. Investing in yourself can help you increase your income and it can also bring you new opportunities.
5. Separate Business and Personal Finances
Working with a tax professional is always advised when talking about money earned from a business or side hustle. Depending on your circumstances, it may benefit you to separate your personal and business finances. Your tax professional or accountant may advise you to open a dedicated business bank account where you’ll track expenses, income, and taxes. This can make tax time that much easier, plus it’s a good way to help gauge how much you’re making in your business.
6. Pay Attention to Taxes from The Start
Speaking of taxes, be sure to consider that whatever money you make, you’ll be taxed on. So if you earn $500 for a project, that may seem exciting in the moment, but when you break it down after taxes, that’s about $350.
Keep this in mind when setting your rates and when depositing money into your business bank account. It may be a good idea to set aside 25-30% of what you earn for taxes. Again, your tax professional or accountant can help you navigate this confusing road. An accountant can also help you figure out how to keep more of your money and ensure you’re taking advantage of all possible deductions.
7. Always Diversify Your Income
Multiple income streams are important, no matter who you are. But, when you’re a creative entrepreneur, it’s crucial to have money coming in from a variety of sources. Ask anyone who relies on income from their TikTok account right now. The impending potential ban has creators scrambling to figure out additional forms of income and new platforms to post to.
Relying on a single source of income is not only risky, but it’s not the smartest move for a creative. Diversify your income by freelancing, offering courses, selling digital products, working a gig like Instacart, Door Dash, or Uber Eats, or selling on Poshmark or Mercari.
8. Gratitude To Manage Your Finances as a Creative
Remember that if you are to manage your finances as a creative entrepreneur, it’s not just about the numbers. Mindset has so much to do with success. Practicing gratitude for what you have currently, how far you’ve come, and how your life has changed for the better can help you avoid falling into the trap of comparison. You don’t have to be perfect on your journey toward financial freedom, you should just be grateful and mindful of the path bringing you closer to the life you want.
It is going to take time, effort, and energy to manage your finances as a creative, but it is completely worth it. Your finances should work for you, so take control, be intentional, and watch as your business thrives.
