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Personal finance and planning

This page is meant to discuss the personal finance and planning involved for freelance artists. If you need a reminder (or a first time introduction) on how money works, consider brushing up on the fundamentals with these e-learning videos developed by the Chang School at Ryerson University and the Financial Consumer Agency of Canada. They will help boost your financial acumen on topics such as budgeting, credit, debt, saving and investing, financial planning, and protecting yourself from fraud. You will find more resources created specifically for artists and/or creative freelancers at the bottom of this page.

Variable Income

Many artists have a variable income. Having a variable income means you do not make your living by having a consistent regular paycheque. If you are an artist working on a project-by-project basis, with contracts of varying amounts, and your income is dependent on the timelines of your multiple projects, then you live with a variable income. A variable income can be challenging because most of anyone’s major living expenses are set amounts due at regular intervals. This means it requires more work and planning for you to manage your income against your living expenses. The good news is you can use your producing skills to manage your variable income.

Tracking your Time

It is integral that you keep track of the hours you work on each project, even when you are producing for yourself. It's worthwhile to take a step back at the end of, say, producing a show, and add up the hours you spent on it - that can help you plan your time more effectively in the future. It's also important to track your hours on a project when you are invoicing someone for your time.
A few easy ways to do this are:

  • Creating events/blocks of time in iCal so you can block out the time ahead of time.
  • Creating a spreadsheet that you fill in every time you work on a project.
  • Use a time tracking app like Toggl (which is highly recommended by Generator staff).
  • Prioritize your projects. Ask yourself: What project carries the most weight? Which one is paying you the most? What grant has the most pay off if it's done well?

Calculating Your Monthly Budget

Just like you would build a budget for your show, you can make a budget for your life. If your life was a show, how much does it cost to run it every month?

Set Expenses (Monthly)

Determine your monthly set expenses. These are any recurring bills you have to pay every month - rent, internet, phone, car payments, transit pass, gym memberships, netflix subscriptions, bank fees, loan/debt payments, etc.

Fluctuating Expenses (Monthly)

Estimate your monthly variable expenses. These are amounts that might change from month to month - groceries, gas, clothing, coffees, meals out, entertainment, and so on. Set them at round numbers you think reflect your habits.

Personal Expenses (Annual)

These are expenses that don’t come up every month, but are significant enough that you know you can expect to be spending this money every year. You can look to the year ahead and know approximately how much you will spend on certain areas of your life:

  • travel (personal trips and vacations)
  • charitable donations
  • medical and dental
  • birthday gifts, special occasions
  • insurance

Business Expenses (Annual)

Whether you are a registered business or not, as an artist producer you have business expenses. It is important to keep track of these expenses for tax time but it is also important, wherever possible, to plan for these expenses before they come up. You know every year you have to spend money on certain things in order to do what you do:

  • union dues, membership fees
  • travel
  • workshops, training
  • headshots, website costs, agent retainer
  • supplies (plays, books, materials)

Work it out

Here is a basic formula to determine your total monthly costs:

(Set Monthly Expenses + Fluctuating Monthly Expenses)
+ (Personal + Business Annual Expenses)
/ 12 months =
The cost to run your life each month


Once you know this monthly expenses number, you have a better idea of how much money you need each month to live.

To figure out roughly how much you make monthly you can look at your previous year's income tax return, or use a formula like this:

(Add up all the contracts you had last year/or the year ahead)
/ 12 months =
Your average monthly income


Think of this as your monthly revenues.

Managing your Variable Income Budget

Hopefully, your monthly expenses and your monthly revenues balance.

If your "monthly expenses" seems astronomical (or just unrealistic) compared to your "monthly revenues", you may need to find ways to lower some costs OR increase your earnings. The goal is not to run a deficit, you need to have at least this total monthly expenses amount available in cash each month.

Feast or Famine

When you make a variable income, you may find one month your actual monthly revenues is only enough to cover 50% of your monthly expenses while the next month your monthly revenue is double your monthly expenses. Some months I feast and some months I famine. What do I do?

A strategy to avoid the Feast or Famine problem is to start working with a buffer for yourself.

If your combined income one month is more than your monthly expenses, you can start putting your surplus towards the next month(s) to build your buffer. Having a surplus one month doesn't mean you can spend more money that month. Stick to your budget. As you accumulate surplus from previous months, you will start to create your buffer so you’re not living paycheque to paycheque.

In an ideal world, you want to get to the point where you start each month with at least your total month’s budget amount already available in cash. This way, if you have a month or two where you are making less than your monthly budget you are covered.

With a variable income, you are bound to have some months with surplus and some months with deficit. The strategy is to plan for these instances to balance each other out. Your buffer is not the same as your savings. Your savings should be money directed somewhere else that you don't touch. Your buffer is actively in flux month to month working for you.

The more buffer you accumulate in terms of months' surplus (one month's surplus, two month's surplus, etc) means the more flexibility you have - to accept a smaller contract, to take that 2-week training program, to schedule time off to write, or to take that (planned) vacation.

Freelance Budget Template

This is a budget planning tool that Kristina Lemieux created for Generator's Arm Yourself With Capitalism's Tools Workshop at Progress. Download it directly to your computer by clicking the link below:
Freelance Budget Template

Some other great apps/tools for tracking your budget include:


If you need more robust accounting software:
QuickBooks
Kashoo

Knowing when to say No

Sometimes it can be hard to tell when to say no to a project. In addition to using the budget planning tool above to see whether the fee covers your expenses, here are a few other resources that can help:

  • Freelancers often assume financial risks without the benefits of being a traditional employee. The Urban Worker Project has created a Wage Calculator which coverts your full-time, annual salary as an employee into an estimated freelance hourly rate. It also will factor in invisible expenses like office space, time off, and benefits.
  • Jessica Hische created an invaluable Client Email Helper that generates email responses to help you say “no” to free and low-budget work and to help ask for more favorable contract terms before the start of a project.


More Personal Finance Resources

There are many resources available for Personal Finances & Planning, but it is worthwhile to look at resources created specifically for artists and/or creative freelancers. There are many specific financial questions and answers that are specific to us.

Artbooks - A highly recommended tax filing service based in Toronto dedicated to working with artists with over 20 years experience.

Toggl is a time-tracking app which is highly recommended by Generator staff - you can track multiple jobs and view your hours my different time periods. It even creates reports!

HoursTracker - Do you work one or more part-time jobs with fluctuating hours and differing incomes? This mobile app will track hours, pay periods and expected income for up to 4 jobs.

Smart Money - Financial management strategies & services for creative professionals.

First Nations Financial Fitness is committed to sharing knowledge, materials, and training to help improve financial literacy for Indigenous children, youth, adults, families and elders in British Columbia. Their online resource bank is useful for Indigenous folks all over Canada.

Rags to Reasonable - A great blog and website written by an opera singer who is also a financial planner! Includes lots of free worksheets, tools, reviews, and other resources. He also provides financial coaching for artists.

Good Investing provides 1-on-1 coaching to support DIY investors. They charge an hourly rate on a sliding scale based on how much money you're investing, and provide a 15% discount for people who work or volunteer for a non-profit or social enterprise.

GYST (Get Your Sh*t Together) has a bunch of downloadable forms, checklists, and worksheets to get you organized on topics from Goals & Life Planning to Funding & Finance. They also have an extensive list of contract templates, primarly for visual artists.

Want more? Watch our Youtube Playlist "Personal Finances, Artist Life"