Every artist should follow these six financial practices by GadCapital
Making those initial few sales is one of the most exciting aspects of starting an art business. Those few lines of revenue are proof that you’re on the correct course and an indication of what’s to come. Whether you’re doing art as a full-time job, a side hustle, or just for enjoyment, you’ll have to deal with money at some point. As a result, it’s critical to understand where your money comes from and where it goes.
Financial planning may not be your favorite subject, but it is critical to the success of your art career. Fortunately, establishing clear financial standards in your art business is not as difficult as you would imagine. Here are six practical ideas for getting your finances financially secure and freeing your art practice.
Make a list of the most critical questions to ask yourself, and have clear answers.
Before you decide to pursue a career as a self-employed artist, you must first determine whether you can afford to do so. Being a full-time artist is a challenging path, and it becomes even more difficult if you lack financial security.
How can you be confident that pursuing your passion of becoming a full-time artist is financially feasible? What’s the simplest solution? You’ll never know unless you try, so start selling your work while you still have a source of money. Begin right now. Please don’t put it off till you’ve formally launched your company.
Before relying on it for your income, learn to price your job and the available demand on other markets. When your art is your sole source of income, you’ll be glad you have this expertise and business experience.
Stick to the 50/30/20 budget. However, keep in mind that your income will change.
GAD Capital suggests, to be financially free, you don’t have to be affluent. You may create a budget that permits you to have freedom in your practice, business, and life, even if your income is modest. Make a list of all your current ongoing expenses to begin. Make a list of your recurring expenses, such as rent, groceries, phone bills, gym memberships, etc. Then, make a plan for how you’ll spend and save your money.
For your needs, wants, and savings, financial advisers advocate a 50/30/20 split. This means that half of your income is allocated to housing, food, power, phone bills, auto payments, debts, and health insurance. Thirty percent goes to “wants”—things like dining out, concerts, entertainment, and shopping that aren’t critical for your survival or business but make life more interesting and enjoyable—and twenty percent goes to savings or loans.
Artists, on the other hand, are a little different. Because you don’t get paid regularly, you might have to increase your budget one month to cover the 50% of your needs-based component.
You might not make anything the following month. An artist’s hardest part is being able to look at the year as a whole so that you don’t spend all your money in one month.
If you know from previous experience that the winter vacation months are the best for you and the spring is normally quiet, make sure you save a more significant percentage of your income during those months to use those cash for extras during the off-months.
What if your current needs consume more than half of your after-tax income?
That’s fine; many artists experience this when they first start out, and these figures can fluctuate month to month. You may have to adapt your desires and learn new ways to save for a while.
It doesn’t have to mean giving up all of your favorite pastimes, but it could mean eating out less and coming up with new ways to save money.
Bartering your services and time are excellent non-traditional strategies for artists to save money. Carpooling or trading weekly childcare services with a neighbor is a terrific way to save daycare and transportation money. You can also barter your artistic skills with other artists in exchange for professional services such as headshots, marketing materials, and booth displays.
As an artist, you possess a wide range of abilities beneficial to a wide range of individuals.
Bartering is a beneficial type of currency that aids in community development—trust in the community, ask for help, and assist others when you can.
Knowing where your money comes from and goes is the key to financial freedom.
To begin, separate your art company from your funds. It’s just easier to have a separate company account. It’s much easier to understand where your money is going and obtain a quick summary of your company. Plus, you won’t waste time going through line by line to extract all of your line items during tax time or whenever you need to see how much money your company makes.
A few different tools might assist artists in keeping track of their expenses and revenue.
Quickbooks provides a self-employment component that assists artists with small businesses in keeping track of their profits and losses.
Artwork Archive also has an income tool that allows artists to keep track of sales, workshop fees, and any other revenue and expenses related to their art company. You can quickly learn how your art business is doing, generate invoices, and keep track of your finances. Understanding how your money flows in and out makes running an art business more manageable and less stressful.
So, how do you get started tracking your sales? In your art inventory system, in a nutshell.
The core of a thriving art business has an art inventory system that helps you keep track of your artworks, sales, and finances.
After you’ve set up your inventory system, you’ll be able to see exactly how much money you’ve made and how much money you’ve spent over time. With this information, you can forecast your income for the following months, look into cutting expenses, evaluate what type of work is selling well and perform more of it, and develop new strategies to supplement your revenue.
If you have a system in place, you can put everything out in front of you and make informed judgments regarding your creative career.
It’s simple to record your artwork, invoice your customers, and keep track of your sales over time when you use an art inventory system like Artwork Archive.
With savings goals, make short- and long-term plans.
Saving money in the abstract for the sake of saving is ineffective. Saving money with a clear purpose in mind is effective. Goals motivate us to save in unique ways, making us *want* to put money aside for that goal. You’ll also think twice about squandering it on unnecessary items.
Setting these goals will make it easier to save for things like a new studio, kiln, major equipment, a costly show, or even a vacation. But what about those out-of-sight, out-of-mind long-term financial goals? When you don’t have enough money to get by today, it can be challenging to think of putting money down for savings or retirement. Small amounts of money saved regularly, on the other hand, can have a significant impact over time. Even tiny sums of money, such as ten or twenty dollars, build up and grow over time.
One of the most effective methods to get there is to pay off your debts first as part of your savings plan. Because artists have some of the highest student debt levels in the country, it may seem daunting to pay off, and you may choose to ignore it. However, since it’s unlikely to go away very soon, it’s preferable to pay it off now before the interest accrues.
Act as if you’re the CEO of your company (because you are)
When you started an art business, you became the head of your own small business.
As a result, you must now begin to act like one. This entails understanding your art practice’s financial situation, setting strategic financial goals for your art career, and making business decisions based on the data.
It also entails sticking to your guns regarding pricing and having a sound pricing strategy. Examine your pricing strategy by factoring in costs such as materials, transportation, and, most importantly, your time when deciding on a price so that you may earn from each art sale.
Using a consistent pricing formula will help you avoid the panicked “I don’t know what to charge!” stage and avoid discounting yourself while speaking with a potential customer.
You may be able to attract sales from a larger spectrum of art clients if you provide several price ranges.
You’ll need to keep track of your art sales as the boss. It will help to know how much money is coming in and when. A program like Artwork Archive can help you track which pieces have sold and how much, giving you a benchmark to compare against. Keep in mind that your goal is to get out of doing your labor. Because you will never be able to afford more if you continue to do work that you can “afford.”
Please don’t put off learning about money until it’s too late.
Dealing with funds isn’t a concern for many artists until it becomes an emergency. It could be a minor issue, such as your car breaking down, or a more serious problem, such as not having enough money to pay your taxes, medical expenses, or retire. Ignoring your funds in any case will add to your stress.
It’s not glamorous, but keeping track of your receipts, recording your income and expenses, and planning retirement is crucial to your long-term success. As an independent artist with a small business, your long-term plan needs to start your retirement fund when you are able.
Check your accounts daily, and don’t wait until April to discover where your company stands.
This will help you make adjustments as needed and prevent emergencies.
Money is a major source of anxiety for artists. When will the next payment be received?
And there’s the matter of having more of it. However, the artists most likely to make a career out of their art are aware of their needs, costs, budget, and expenses. Having financial success only means you will be able to make choices based on your passions and not out of necessity.