If you want to develop a career in the arts, you should consider not only the pay of your next gig but also the type of long-term financial foundation you are laying for yourself and your future.  Developing financial literacy is crucial for artists, as it can help you set goals, establish healthy financial habits, invest in your future, and protect your interests. By building your knowledge from the ground up, you can gain a solid understanding of how to manage your finances effectively.

How can you improve your financial literacy, and prepare yourself for the ups and downs of the gig economy and make the most out of periods of high demand?

This includes learning how to manage your income, save for emergencies, and invest in your future, so that you can weather any potential periods of famine and thrive during the feasts.

We've got you covered on this last week of Financial Literacy Month!

Select Your Sources of Revenue

As an artist, there are many ways to boost your earnings using your unique skills and talents. You can choose the revenue streams that match your interests and abilities, and set goals to pursue the ones that you find most enticing. Whether it's selling your art online, offering classes, performing live, or creating merchandise, there are many opportunities to turn your passion into profit.

Some income streams include:

1. Performing live at concerts, festivals, or even in your own home.

2. Sharing your expertise through teaching or master classes, either in a private studio or at an institution.

3. Creating music compositions or arrangements for others to use and enjoy.

4. Selling your own unique merchandise, such as clothing or art prints.

5. Becoming a brand ambassador and partnering with companies that align with your values and interests.

No matter which income stream you choose, there are many opportunities to turn your creativity into a sustainable source of income!

Know Your Numbers and Set Clear Financial Goals

Setting career goals is important, but it's just as crucial to develop a financial strategy that aligns with your aspirations. For instance, if you have a goal to start performing on stage, you'll need to plan for how to fund those performances as part of your long-term strategy.

By combining your career goals with a solid financial plan, you can set yourself up for success and make sure that you're able to achieve your dreams without facing unnecessary financial hurdles. Once you have identified and selected your sources of revenue, examine your existing circumstances and set realistic financial goals in response. This will drive your budget, savings plan, retirement strategy, and every other financial decision you make.

You should make goals based on where you are now, not where you expect to be in the future. After all, when your cash flow grows, you can modify your strategy.

Make a Personal Budget

A budget is an essential part of any financial plan, especially for artists such as actors, musicians, painters, singers, and authors, whose income can vary greatly or even stop altogether at times. By creating a budget, you can keep track of your expenses and income, and make sure that you're able to manage your finances effectively, even during times of uncertainty.

Creating and sticking to a budget can be a powerful tool for managing your finances and reducing financial stress. Here are some steps to help you get started:

1. Start by making a list of your essential expenses, such as rent, utilities, and expected monthly spending on things like gas and groceries.

2. Estimate when and how much of your irregular income you will receive.

3. After you've paid for your necessary expenses, set aside money for debt repayment, savings, emergency funds, and taxes.

4. Allow yourself a reasonable amount of "fun money," but remember to adjust it each month based on your income.

5. Cancel any memberships or services you don't use to save money.

Your budget should change as your income changes. As you review your budget each month or quarter, aim to save as much as possible and build up your emergency fund.

Prepare for Both the Anticipated and Unanticipated

Aging is an inevitable part of life and can bring with it a decline in both physical and mental abilities. Additionally, unforeseeable events such as illnesses, accidents, and pandemics can disrupt even the most well-laid plans, as we have seen with the Covid-19 pandemic which left many artists without a source of income. It's important to prepare for these situations by building an emergency fund, obtaining insurance, and seeking financial advice to ensure that you're able to weather any storm that comes your way.

The presence of financial cushions lessens the impact of these events. It is a primary reason why most financial health guidelines encourage saving for at least six months of your living expenses.

Having a financial cushion will also help you to categorise your earnings either as a "must spend," "good to have," and "untouchable." This will help you make purchases wisely.

Invest! Invest! Invest!

Investments are easy to overlook when an artist's career is in full swing.

Long-term investing should be part of your financial strategy since it can provide you with comfort, keep you financially stable, maintain your standard of life, and help you make better professional decisions.

There are a lot of ways to start saving and investing early in your career,  however much or little you are making.

Purchase the Most Appropriate Insurance

As a performing artist, your physical strength, health, and ability to work are essential to your career. Any injury or illness could put your profession at risk. That's why having insurance is crucial as it provides you and your loved ones with a safety net in case of unexpected events. Investing in insurance can help protect your income and secure your financial future.

While artist-specific insurance plans may not always be available in your area, it's worth exploring whether any insurers offer coverage tailored to the needs of performing artists. These plans are designed specifically for people working in the arts and may offer unique benefits that other insurance plans do not. Be sure to inquire about any insurance coverage that may be available exclusively to performers in your field to ensure that you're getting the best protection possible.

In addition to coverage to protect your source of income, it's important to consider insurance to protect your personal life. This might range from health and auto insurance to life insurance to electronic equipment insurance. By investing in the right insurance policies, you can safeguard your personal assets and protect yourself and your loved ones from unexpected financial burdens.

While obtaining several coverages may appear costly, comparing insurance quotes will assist you in locating the cheapest pricing.

Do Not Put Off Learning About Finances Until a Catastrophe Occurs

Many artists avoid dealing with money until it becomes an emergency.

Emergencies can happen at any time, whether it's a minor issue like a car breakdown or a major one like a medical expense. Ignoring your finances will only lead to stress and worry.

Although it may not be glamorous, keeping track of your receipts, earnings, and expenses, and setting retirement plans are essential to your long-term success. By being proactive and taking care of your financial health, you can enjoy greater peace of mind and be better prepared to handle any unexpected situations that arise.

It is important to conduct monthly financial assessments and not delay evaluating your situation until it is too late. By doing so, you can make necessary adjustments and prevent financial emergencies.

What's the Bottom Line?

Many artists often worry about their finances. When is the next payment expected?

Artists who are aware about their needs, expenses, budget, and costs are more likely to succeed professionally.

Financial literacy is crucial for financial success because it enables you to make decisions based on what is essential to you, rather than just out of necessity.