Americans for the Arts

Content presented by the Institute of Financial Wellness for the Arts (IFWA).

As arts professionals, we value the importance of exploration, play, and experimentation—these are vital to the creative process. At the same time, as professionals, we also know that the key to success for any creative venture depends on taking action—and that requires discipline and a plan.

Not unsurprisingly, a large number of artists and arts professionals tend to be more impulsive and less strategic when it comes to managing their finances. Some of this is a long-standing cultural misconception—believing (incorrectly) that artistic endeavors ought to be unencumbered by financial realities—and some of this is circumstantial: a lack of access to educational resources or sound financial advice.

Whatever the case may be, as you wind down 2019 and start thinking about your goals moving into next year, now is a good time to step back and re-evaluate: Are you taking care of your financial well-being? Do you have a plan for the future?

The truth is, creativity and prosperity are strongly correlated. Financial freedom enables creative freedom. Money allows us to pursue ideas and projects that may require an upfront investment, or that don’t immediately translate into a paycheck. It allows us to dream big and, when opportunity comes knocking, open the door without hesitation. And just like eating a balanced diet, exercising, and getting enough sleep, “healthy” financial habits are fundamental to achieving and sustaining career success.

At The Institute of Financial Wellness for the Arts, we’ve spent a lot of time understanding the unique financial challenges and constraints that arts professionals face. Here are some of the strategies and tips our financial coaches come back to time and time again.

Get honest about your beliefs around money.

What are your emotions around money? Do you have anxiety, fear, anger, happiness, worry, gratitude, arrogance, hope, shame, serenity, guilt, or love? Take a moment to really assess this and where these emotions stem from (most likely from early family experiences), because they are intimately linked to your behaviors around money. As one leading theater manager told us recently, “The conditioning in the arts is that we’re all supposed to broke.” It’s something we hear a lot. How about aiming for beliefs focused on abundance versus scarcity? For example, “Money is an important tool to make the world a better place,” or “I deserve a healthy financial life and will achieve it,” and “I will achieve long-term financial success so I can take care of myself and others.” These types of beliefs are guaranteed to drive better behaviors.

Know what you need.

Understanding your true baseline budget—exactly what it costs you to live each month—is a critical first step. Precision is important: make sure you include all your fixed expenses like a mortgage, rent, food, utilities, car payments, etc., but also account for variable costs, things that aren’t necessities. Having a thorough understanding of your actual budget gives you the ability to make smart choices, so you know your income can cover your lifestyle and provide additional cash flow to save and create a plan for your financial future.

Think offensively and defensively.

A financial plan, like much else we do in life, requires balance. On the one hand, we want to be prepared for unexpected events that might disrupt our income (i.e. defensive strategy). Hence, we always advise people to have at least three to six months of living expenses saved up and readily available. Depending on our circumstances, we may also want to consider things like disability insurance or life insurance.

While we’re protecting our assets and income, we simultaneously need to focus on building and creating wealth (i.e. offensive strategy). Diversification is key. A trusted advisor will make sure your investments are diversified, mitigate risk, and are well balanced, depending on your goals. This would include equities (stocks in which you participate in the ownership of a company), bonds (fixed income from loaning different entities money and earning interest), as well as alternative investments. (Financial planning should be a little boring—we’re not looking for the “hot stock.”) Everybody has a different situation that requires a unique approach; a good financial coach is a trusted resource to get it done correctly.

Don’t wait.

When it comes to a successful retirement, starting early is still very much the key (the power of compound interest over time is truly compelling), but if you haven’t started early, there’s no need to be discouraged. There is only one bad time to start saving money: later.

The crucial lesson is not letting avoidance and procrastination hamper you further.

Executing a successful financial plan is not a mystery—it is a process. It requires working with the right person, taking time, mapping things out, and sticking to it. Be careful of anyone trying to rush this or telling you what you need before going through this process. Chances are they have an agenda that may not be in your best interest.

For more information on mapping out a financial future, and to learn more about the IFWA’s core programs, visit our One-On-One Financial Coaching and Financial Wellness in the Workplace pages on the IFWA website.