One main reason why creatives fail at becoming professionals – making a full-time living from their work – is because they are not financially literate.
Financial literacy can be summed up like this:
- know how much money you need, how much money you make, and how much money you spend.
- understand how to make more or spend less and when to make those decisions
- create a business that supports your work that generates the results you want for your lifestyle
Over the next month I’ll write a short, “atomic” essay every day on a different topic. Read each one and by the end of the month your financial literacy will be much improved.
How much money your creative business needs is a simple equation:
How much money do you need to support your lifestyle? That includes all of your personal bills, savings, spending, etc.
How much money did you spend from your personal bank account the last three months? Divide that number by three and that’s how much you spend.
Now double that number.
That’s how much your business needs to make each month to afford taxes, operating expenses, paying yourself, and to have a little profit for growth.