Unless you fake your death, live off-grid and become self-sustainable, money is, for better or worse, a daily reality of modern society. Even if you don’t want it to influence your life, it is a factor that needs to be taken into account. There are a few basics you need to understand and work with, like how much money is needed to support your lifestyle. For many financial matters, it’s also possible (and sometimes advisable) to hire an expert. Your creativity will definitely come in handy when it comes to finding new avenues of making money.

Money illustration

In an interview with the magazine Intersection, actor Giovanni Ribisi tells the story of his wake-up call regarding money. He has been an actor since he was a child, so there had always been someone to look at his contracts, invest his money, and do his financial homework. However, a turning point came when Giovanni was working on the set of Gone In 60 Seconds, in which he needed to learn to strip and rebuild a car. It was then that he realised he’d been driving cars for a long time without knowing even the basics about how they worked. The same went for most of his financial dealings. He had no idea how much money he made, how much he needed and where it went. He decided to take control of his finances by learning about the moving parts, understanding the consequences of his decisions, and then choosing for himself what was best.

Likewise, to have control over your own financial life, you need to know the basics. That doesn’t mean necessarily that you have to manage your financial life yourself, but you do need to know enough to make the right decisions. That means being able to understand the moving parts that influence the outcome, or being able to ask questions until you do understand enough. So, for example, if you’re talking with a financial advisor for your business or when buying a house, don’t let yourself be intimidated or embarrassed if she starts speaking in a language you don’t understand—ask to clarify. Understand enough about how the car runs so you can still be in control. If you find yourself in a complex situation with money being spent and allocated in a way you don’t understand, or any other deal that feels even remotely shady, stop and bring in an expert who is motivated to be on your side, who can explain things and advocate for your priorities.

Money shouldn’t rule your life.
You should rule your money.

«In this world nothing can be said to be certain, except death and taxes.»
—Benjamin Franklin

There is much more you can learn about how to do your bookkeeping, but the question is if it’s worth learning everything yourself. Many will tell you that a good accountant pays for herself, because there are many ins and outs you have to know when filing your taxes, and checking the right boxes will save you money. You can take a course and spend hours learning it yourself, or you can pay someone else to be the expert for you. When starting out you will probably pay your accountant a few hundred euros a year. It might feel like a lot, but if you count on this annual expense and make sure to put money aside, it will save you a lot of hours and headache. But here’s a crash course in the basics:

Taxes are inevitable, so the best way to handle your income tax is to figure out what bracket of income tax you’re in, and then, each time a payment comes in, set that percentage aside in a separate account. A good guideline is to save 1/3 of your income for taxes. This way, you’ll have the amount due ready to pay, with as few unpleasant surprises as possible. If you have a more complicated situation, hire an accountant to help. Also learn the difference between VAT and income tax; as a small business owner or freelancer you will have to deal with both.

Invoices and receipts
Keep all your invoices and receipts. It’s legally required to keep them (for at least five years in the Netherlands). There are apps available to help with your administration, including archival for receipts and writing and sending your invoices, that can save you many precious hours.

To know how much money you need to make to support your lifestyle, you need to know how much your lifestyle costs.

It comes down to this: You go broke when you spend more money than you have. The key to not going broke is to earn more money than you spend. It’s one of those seemingly obvious ideas, that’s nevertheless hard to put into practice. Laid out here is a simple exercise we will help you get a grip on the amount of money you need to make to support your lifestyle.

Over the course of a month, keep track of all the money you spend (if you pay for everything by card this is a pretty straightforward exercise) on essentials, like food, insurance, rent, gas / electricity, and transportation. Now, take the total of your essential expenses and add 20% as a buffer. This will give you a very rough estimate of how much money you need to make every month to avoid going broke. Be sure to factor in your income tax.

Suppose you need 1250 euros a month minimum to support the essentials of your lifestyle. Adding a buffer of 20% to this would give you 1500 euros. If you’ve got an income tax rate of let’s say 25%, that means you need an income of 2000 euros per month to give you some stability.

Working by the hour
If you work by the hour, you can make an easy calculation of what your minimum hourly rate should be to earn this minimum income. Give yourself a buffer of 40% when it comes to time, because you’ll need time for administration, sales and marketing, writing proposals, and other non-billable chores.
So, let’s say you can reasonably expect 24 billable hours a week. That means, to make ends meet, you need to set your minimum wage at 21 euros per hour. That is, 2000 euros / (24 hours X 4 weeks in a month) = 21,00 euro.

Working by gigs or sales
If you play gigs or sell works, make a plausible estimate of the number of gigs/works you can sell each month. For example, suppose you can play 4 gigs a month as a solo artist, this means you need to get 400 – 500 euros per gig.

Keep in mind, these calculations don’t give you any weeks off for holidays or illness. To give yourself time off, or a wider buffer for other activities or expenses (like a house or a kid), you’ll want to increase how much you earn per hour/gig.

“Cash rules everything around me, C.R.E.A.M. Get the money, dollar dollar bill, y’all”
—Wu-Tang Clan

Money is an imaginary concept – it doesn’t really have any value, except we all agree that it does, so it works as a tool of exchange. The basic idea is: you have something that somebody else wants, she gives you money for it. There are variations, however. You can rent things, for example. You can barter, or work for ‘exposure’ or a ‘favour’. Payment isn’t just one thing.

Pay what you want

One way of pricing your products and services is ‘pay what you want’, which lets your customer set the price. Most people are afraid that if they don’t set the price themselves, they’ll be underpaid, but artists who sell their merchandise after shows often make more money this way.
The amount that people pay is often directly related to their admiration for you as an artist, rather than the work’s economic value.

Rent out
Instead of selling someone your work, you could also rent it. Or, another option is rent-to-own, whereby if they’ve rented it long enough, they’ve essentially bought it.

Scarcity adds to the value of work, so use it to your advantage. Sign and edition your work, or release special editions. In one famous example, the Wu-Tang Clan released an album of which there was only one copy, ‘The Wu – Once Upon A Time In Shaolin’, which sold for $2 million.

Circumvent overhead
Look for opportunities where you can cut out the middleman. Platforms and agents often take a hefty cut – see what you can do to reduce, if not eliminate, the overhead fees and reach your audience directly.

Work for free
If you would like to work for a certain client or would like to see your work in a certain museum or on a specific stage, why not give them a free sample? Think of it as an investment in a longer-term relationship. Offer a client a free month of work as an opportunity to prove yourself, donate a work to the museum, or give a free concert on the street outside the venue you want to play.

One way that you can ensure demand for your project is crowdfunding. This will let you pre-sell your products before you pay to produce them, so you already have a good idea what your return on investment will be. There are a lot of online crowdfunding platforms (for example, Indiegogo and Kickstarter) that make this as painless as possible, but you could also try to find investors yourself.

A sponsor pays you in exchange for promoting their product or cause. This usually involves a mention of their brand name along with your publications, but you’ll want to make sure the terms of their sponsorship are clear to you. Some newer formats involve more of a collaborative effort.

A grant is basically sponsorship by the government or an organisation that wants to support you or your project. Some grants are no-strings-attached, but others have conditions. Be sure you understand what your obligations are.

No concessions
There is also the option of self-financing, which is to say you work a day job to pay for your creative work and are therefore able to keep your art and income separate. This gives you the freedom to make what you want without making concessions to a client or customer, but obviously you need another source of income, which will absorb some of your time.

“Sponsors? Sure, why not!? But only if they don’t have requirements on how my work should look. If I have to tattoo a Sony logo on my ass, then maybe not. You have to constantly make moral judgments.”
Jonas Liveröd
Artist working with Sculpture, Drawing and Installation, Sweden