I’ll be honest with you – I took it pretty easy this summer. (Other than producing the July 30 Day Challenge! 🙂 ) I was away in Canada for part of it and other periods I took time for some good old R&R enjoying the fantastic summer weather in England this year. It was glorious. It was also necessary to recharge my batteries.
While my batteries were boosted, my bank balance was drained. Now Autumn has come and it’s time to step it up a gear and start earning some money again.
It’s easy (and tempting) to launch myself into a myriad of ways to try and reel in the dough…. but I know better.
When you’re feeling a bit stretched financially, is making MORE money the answer?
Let’s preface this argument by assuming that you are a creative person and you make time to be creative a priority in your life.
Here’s 3 reasons why I don’t think earning MORE money is (necessarily) the answer for creative people.
1. The more you earn, the more you spend
We’re funny creatures. When we’re stretched financially we tend to be pretty cautious with how we spend – we have to be. But as soon as you start earning more money you get freer with your spending.
After a long day at work, it’s easy to feel that we ‘deserve’ something – whether it’s a beer, a meal out or a new pair of shoes. When we know we’ve got work lined up for the next few weeks, it’s easy to spend now, knowing you’ll pay it off with a future cheque.
Before you know it you’re back on the financial hamster wheel and getting nowhere.
If you increase your earning by 100 pounds/week, but increase your spending by 100 pounds (or more)/week – then you aren’t any further ahead financially and you have given up a whack of your precious time.
The only way you are truly going to ‘get ahead’ is if you keep your spending reigned in when your income increases. This is hard for most people to do.
2. Earning more money takes precious time & energy
There are different ways to earn more money. You can:
a) work more hours at your current rate
b) increase your rates (though you may have to work harder to justify them)
c) release capital from something you currently have by selling it
d) create a product to sell
Let’s look at each of these.
a) you can work more hours – but this is just going to tire you out. It’s not likely to give you any time to create or be an artist and you may very well spend more money since you’re tired and looking for convenience (convenience often costs us more).
b) you can increase your rates allowing you to work the same number of hours but earn more for them. In theory this is a really good option (and you should definitely consider raising your rates), BUT you may have to work harder to justify the higher rate and you will likely have to do MORE marketing and selling to get people to buy at the higher rates. Again this may not create any more space for you to be an artist if you are spending more time marketing or are exhausted from working flat out all day.
c) you might decide to sell some things you’ve got to release the money. A clear out can be a really good thing – but how much time/energy is it going to take? Is faffing around on Ebay to sell a $3 CD really worth your time if it takes you an hour to photograph it, create a page, monitor it, respond to enquiries, pack it and go to the post office to mail it? Have you really gained anything? Are you any further ahead? It depends on the value of the item and how long it takes to sell it, but be clear the time invested will be sufficiently rewarded.
d) you might create a new product to sell. Creating products to sell is a great long term strategy for a creative person BUT it takes a lot of time to write a book/record a CD/create a lithograph series etc. On top of that, it takes a lot of time to market and sell your product. You are likely looking at a big investment of time without any guarantee of financial return.
3. Earning more money means higher taxes and often greater expenses
Even in the basic (UK) tax bracket (20%), to take home £1 you need to earn £1.20. If you earn more money and it pushes you up to a higher tax bracket(40%) then you need to earn £1.40 to take home £1.
If you are on the threshold between 20% tax and 40% tax (above £32K), unless your income goes up significantly past the new tax threshold, then you were better off before!
Additional income seldom earns itself and it often comes with greater expenses. Greater travel costs, increased marketing costs, greater networking costs, increased labour costs (if you need to hire someone to help you manage some or all of your work), increased supplies required. Often you have to spend money to make money. Be clear you are going to be further ahead before you seek more work.
It’s not all bleak!
The intention here is not to frustrate you. There is an answer to this situation.
ANSWER: Learn to manage the money you already have better.
Learning to spend less money will make you freer and give you more space to be creative, rather than focussing on earning more money.
If you have to earn £1.20 to take home £1, then the inverse is true. If you can save £1 you have actually saved the equivalent of £1.20 (or more). That’s a 20% return on your investment.
This is a huge return!
Have you looked at how much interest your bank is paying you? Unless you’re really shrewd it’s probably under 1%. So a 20% return on your investment is amazing.
When your Grandmother said “a penny saved is a penny earned” she was almost right – a penny saved is 1.2 pennies earned.
But I’m already living on next to nothing!
I hear you, creative people are usually pretty good at living on very little – but it’s worth taking a look every six months at your spending and see if there are further savings that can be made. Our spending can easily creep up in various places and a good hard look at your current finances (before you even contemplate trying to earn more) is time well invested.
Do I ever get to earn more money?
Yes. Once you’ve learned to manage the current money you have.
Learn to plug the holes in your finances NOW so when you DO start earning more money it doesn’t pour out the bottom. An investment in your business to earn more money needs to be on a firm financial foundation so that you can reap all the rewards of your efforts.
Plug the holes first. Then look to fill the bucket.
That’s going to be our approach here as we dig deep into money. Look at what you spend, make some adjustments, get clear on where every hard earned penny is going. Then look to increase your income when it isn’t going to just trickle away.
Get Clear on Where you Spend
Homework: this is such a boring exercise and yet so bloody informative! For one month write down everything you spend money on. Every coffee, every bus ride, every beer, every penny in rent. Write it all down. Until you know where every penny is going, you can’t have a clear idea of your financial patterns. I bet just about everyone can find 10% of their spending to cut. Bingo! You’ve just got a 10% raise without having to work any harder or longer.
Imagine what a difference having 10% more income each month would give you?
Toshl.com – There are loads of spending trackers for your phone or online. Few are as fun as Toshl. If you hate the idea of tracking your money (and most creative people do) Toshl has great graphics of monsters, fun little pop up reminders like
Aloha, Steven! You seem to spend most on Sunday, be a bit alert about spending then.
You can download a version for every kind of smart phone (Android, iPhone etc) and there is a good web app – and it synchs between the two of them. It also has a security feature so you can set a lock on the phone so it requires a passcode to access (so if you lose your phone someone doesn’t also have access to your financials).
There are limitations to the free version – for example you can only enter one income per month. This doesn’t really work for freelancers who often have income coming in several times per month, so I don’t recommend it as a way to track your income. BUT as a basic expenses tracker it works really well and you can set up different tabs and categories for your spending.
You might love it so much that you decide to upgrade to the paid version at $19.99 per year (with 20% off if you promote them on Twitter and Facebook). At the moment I’m using the free version but might upgrade…
Paper – for those that prefer pen & paper, I’ve created a paper tracker. Slip it into your pocket or your bag and keep track of every expense for a month. To download the tracker click on this link
It will take you to a separate page where you can download the PDF file. Save it and print as many copies as you need!
Please use the comments below to tell me if you’ve ever tracked your spending and what did you learn?