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A jargon free guide to tracking and tracing your finances as a creative. It's not often a pairing that is talked about much...but it should be! Let's see why.
Creatives and finances. It’s often not a pair you see or hear mentioned in the same category. You may be more focused on expressing your artistic vision than on finances, which is totally fair! However, getting a handle on those finances can also allow you to concentrate more on your creative vision in the long run.
So, let’s get cracking!
- Create a budget
It seems funny to say right, for any business owner to have a budget, right? Well, you might have one, but is it nice ,clear and concise? A budget that you can easily follow your income and expenses and allocate your resources effectively is key for a creative business, as is making sure you’re allocating your expenses into the right categories (Xero makes this easy to do!). This way, you’ll know exactly what you’re spending and when so you can keep things in check.
- Keep track of your income, always!
As a creative professional, you may have several income sources, like royalties, commissions, and grants. Making sure you keep track of all these income streams should be one of the higher priorities for you. This means you can set aside that cashola you need to dish to the ATO when they come knocking every quarter.
- Save for emergencies
Having an emergency fund is crucial for all professionals, including creatives! Emergencies can happen at any time (think a dental one, ugh the worst!) and having a little financial cushion can help you weather those little storms that come up. Especially if you can’t work for a week or two. Aim to save around three months’ worth of expenses in a separate savings account so you don’t have to worry!
- Pricing
Ooo the big one this one. Setting your prices can be challenging, but it’s important to price your work in a way that reflects its value and covers your expenses at the same time. Don’t undervalue your work...but also keep an eye on what the market for it is doing and what it might be able to bear at that point. To help with this, consider speaking with your accountant who can give you a bird’s eye view of your current situation. They may be able to be a soundboard if you’re looking to increase or decrease your pricing to find the perfect fit.
- Understand your taxes
The word tax can make people uncomfortable sometimes. However, if you understand what you need to plan for, it’s really not a scary word at all! You’ll know what you need to do when it comes to filing with the tax office, but if you’re just starting out and don’t, MAKE SURE YOU ASK! This will help you understand what to save money for when it comes to BAS (business activity statement) and year end income tax time.
- Check in
Block out some time each month to review how you're tracking. It is important to check in on the budget to see if your actual expenses are following what you thought you would spend. Doing this will allow you to make better informed business decisions.
So, there we go. A short sharp summary around finances and numbers in the creative industry. It may seem challenging having to juggle all your income streams, expenses, and tax savings, but it’s essential for building a sustainable business for the future. Getting a good grip on these above will allow you to take control of your finances and know your situation inside and out, allowing you to build a super awesome successful career, and we love that!
If you’re a creative who’s keen to get a handle on their finances, well, you’re halfway there and you’ve landed in the right spot! All you need to do is reach out and we can help you crush it when it comes to your budget.
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