Money Matters: Financial Tips for Creators
In this essay, we wanted to tackle a topic that has probably been sitting in your to-do list for the longest time. It's important, but not really urgent. So it's just sitting there, a silent victim of your inaction. Yep, you guessed it. Finances. Now, before you go ahead and close this tab (or keep it open for the next few months!) give us 4 minutes to explain why you should care.
The world’s most successful creators run their businesses like sophisticated media enterprises. From the outside, they may seem like well-oiled machines with an army of accountants, legal advisors, and taxation experts. But the reality is: they've just adopted the right financial habits and systems today that have set them up for financial success in the future.
The point is: it's easy, and everyone can do it. So today, we want to outline three tips that will help you up your financial game instantly!
Disclaimer: Stir does not provide tax, legal or accounting advice. This essay has been written for informational purposes only, and is not intended to provide tax, legal, or accounting advice. Please consult a professional tax, legal and accounting advisor before engaging in any transaction.
Separate your business from your personal finances
This is crucial. Having a distinct presence as a business will help you with financial discipline. It helps you save on taxes since you can deduct professional expenses: this includes purchases like cameras, lights, and other production equipment; and payments made to independent contractors like editors, thumbnail designers, etc. who help you with your content.
Flying out to see a client? Paying for lunch with your manager? Expense it all my friend. Not to mention the hours you’ll save while doing your taxes because your finances will be so much more organized at the end of the year.
Your business would typically be a sole proprietorship or an LLC to begin with. Speak to a professional to figure out what’s the best legal structure for your income level. You can get set up as an LLC for as little as $300.
Separate your income from your time
Let's be honest. Being a creator is financially precarious. Advertising revenue and brand deals are highly inconsistent and unpredictable. Online fandom and cultural relevance is fragile. You don’t want your financial well-being to be tied to virality, or churning out increasing amounts of content for a perpetually displeased algorithm. For your financial security and frankly, your sanity, it's really important to have stable and recurring sources of revenue that work while you sleep. This is why we see most successful creators selling physical products, offering courses,publishing eBooks and so on.
Double down on these revenue streams today and reap the financial rewards for years to come.
Save Money and Don’t Underestimate the Power of Compounding.
This one is so cliché. Yet so rarely followed. Morgan Housel said “Building wealth has little to do with your income or investment returns, and a lot to do with your savings rate.” The people who live well below their means and invest their savings into assets that compound over time slowly amass enviable fortunes over the years. This sounds incredibly boring—because our human brains aren’t meant to process the power of compounding. Think about Warren Buffett, who is regarded as one of the best investors of all time: Did you know $81.5 billion of Warren Buffett’s $84.5 net worth was made after his 65th birthday?
If you start saving $200 a month and invest it in an S&P 500 index fund, in 20 years, you’ll have roughly ~$150,000. In 30 years, you’ll have $437,000. And in 40 years, you’ll have amassed a whopping $1.2 million.
Don’t underestimate the power of compounding.
Final Thoughts
Hope you enjoyed this mini-essay! The idea over the next few weeks is to get a few experts to weigh in on financial best practices for creators. We plan to take sleep-inducing topics like investing, taxation, and business structuring and make them fun, informative, and most importantly: actionable.
Until next time,
Team Stir
