As a creator, managing your finances can feel overwhelming. You’re juggling creative projects, building your brand, and trying to keep track of income streams. But avoiding common financial pitfalls can make all the difference in your journey to success. In this post, we’ll explore financial tips for creators to help you sidestep these mistakes and take control of your money.
1. Mixing Personal and Business Finances
One of the most common mistakes creators make is combining personal and business finances. It may seem convenient at first, but it can lead to confusion, inaccurate tax filings, and difficulty tracking profitability.
How to Avoid It:
- Open a dedicated bank account for your creative business. I personally use Novo.co, which I highly recommend for US business owners.
- Use accounting software or tools like Google Sheets to track income and expenses.
- Clearly separate business expenses from personal ones to simplify tax preparation.
If you’re just getting started, a simple bookkeeping spreadsheet can be a game-changer. It’s an easy, affordable way to organize your finances and gain clarity on your income and expenses. I even offer a simple bookkeeping template that’s perfect for creators looking to establish better financial habits.
2. Failing to Plan for Taxes
Taxes can catch creators off guard, especially if you’re not used to paying quarterly estimated taxes or tracking deductible expenses.
How to Avoid It:
- Set aside a percentage of your income (20-30%) for taxes in a separate account. I set aside 30% to be extra sure I save enough money.
- Learn about tax deductions relevant to creators, such as home office expenses, equipment, and software.
- Work with a tax professional to ensure you’re compliant and maximizing deductions.
Check out a list of common tax deductions here.
3. Not Budgeting for Irregular Income
As a creator, your income might fluctuate from month to month. Without a budget, it’s easy to overspend during high-income months and struggle during leaner times.
How to Avoid It:
- Create a budget that accounts for your essential expenses and savings goals.
- Use high-earning months to build an emergency fund.
- Try tools like a monthly budget template to manage irregular income.
4. Ignoring Retirement and Long-Term Savings
Creators often prioritize short-term goals, like upgrading equipment or launching a new project, and neglect long-term savings. This is even more challenging for creators who are just starting out and may feel they don’t have enough income to think about saving.
How to Avoid It:
- Start small: Open a retirement account, such as an IRA, and contribute what you can, even if it’s just a small amount each month.
- Look for low-cost or free resources to learn about savings and investments.
- Automate your savings to ensure consistent contributions, no matter how small.
- Reach out to a financial advisor for beginner-friendly advice tailored to your situation.
5. Underestimating the Value of Professional Help
Managing your finances entirely on your own can lead to missed opportunities for growth or costly mistakes, especially for those just starting out who may not have the budget to hire professionals.
How to Avoid It:
- Start by using affordable tools, like a simple bookkeeping spreadsheet, to organize your finances. You can try the one I offer here.
- Seek free or low-cost advice from online communities or workshops designed for new creators.
- As your income grows, consider gradually outsourcing tasks to a bookkeeper or accountant to ensure compliance and free up your time.
- Invest in beginner-friendly resources, such as online courses or templates, to build your financial knowledge over time.
Avoiding these financial mistakes can set you on the path to sustainable success as a creator. By implementing these financial tips for creators, you’ll gain clarity and confidence in managing your money. Remember, a strong financial foundation allows you to focus on what you do best: creating.
