“When rich people get together, they talk about art. When artists get together, they talk about money.”

Oscar Wilde

Creative people are notoriously bad money managers. Notorious, because we always hear about the author with the million dollar selling book who ends up broke a few years down the line. People who win the million dollar lottery usually go through the whole wad within 3-5 years, too. Are artists really any worse at managing money than anyone else?

I don’t think so.

Money management is a set of skills, and contract negotiation is another set of skills. Being an artist or writer means spending years developing the craft that gets you the sales that make you the money. You probably didn’t get 5 years of schooling in economics, or 6 years of graduate law school to go along with your painting classes.

And few commercial artists ever get a big break. The last time I looked, the average freelance commercial artist (according to the Graphic Artist’s Guild) made less than $15,000 per annum. And that’s with no benefits. So, out of your $15,000 per year, you have to pay for your business expenses, as well as your health insurance, your legal fees, and your disability insurance, leaving you with just a few thousand bucks annually to live on.

I haven’t seen a year with income that low in quite some time, but even when a mainstream cartoonist makes $50,000 per year or more, he still has to pay all of his own expenses, as well as finance his own retirement plan. So, on $50,000 per year (which seems like good income) a cartoonist can expect to have about $25,000 per year left over to live on, before taxes. This is not exactly high on the hog.

Here’s a common example of how creative people can be wrong-headed about money management:

The cool part of being a creator is you get to deduct comic books and art supplies as business expenses. That sounds great, doesn’t it?

The uncool part is that if you go overboard spending on all the neat things you get to buy and deduct from your taxes, you may not have enough money left over to pay everything you really ought to be paying.

I’ve had several acquaintances who made this mistake year after year and wondered why they were always broke.

As professional artists and writers, they loved the fact that the stuff they loved to buy was also tax deductible: computer gadgets, magazines, cool movies. What a break! They could easily blow $1,000 a month or more buying stuff. And it was OK to buy the stuff because it was business related and therefore, deductible.

If I spend $1,000 on computer equipment, I am going to save roughly $300 in taxes on the equipment. Wow! What a deal!

But the fact is, I still spent $700 on stuff. Is that $700 really going to enhance my ability to work? Increase my ability to make more income? Make my life better in any meaningful way?

If Albert (not real name) could claim it was business related and deductible, he’d buy it. He had every gadget known to mankind. He subscribed to expensive industry magazines, bought collectibles that piled up in his garage, and took trips across the country to carry on conversations that could easily have been conducted over the phone.

But that was OK! It’s all deductible!

He could justify having bought the stuff because it “saved him money on his taxes”, but what kind of money are you really saving when you are paying interest on debt to own the stuff? Do the math! $3,000 credit card bill, 18% interest (national average), minimum payment per month, and it will take you 33 years to pay it off and you will have paid $6,500 for it. Yowsa. In the years I’d known Albert, I never knew him NOT to be carrying consumer debt. The average American pays over $1,000 per year in interest payments and fees. Albert was not the average American, so you can vastly increase that amount for Albert.

Albert’s not special. I know dozens of motivated self-publishers who drop big bucks on attending conventions with no hope of getting a positive financial return. “It’s all investment! It’s deductible!”

Year after year those deductible convention expenses don’t bring in any positive cash flow. If they paid for their table, they had a great show! And yet, there never seems to be any long-term consideration to what dropping that wad of dough into creative investments which bring in a negative return is going to do to them when they are 50. Much less what it’s going to do to them next year.

Creators behave this way – not because they are flaky artists and writers – but because a LOT of people behave this way. Artists are self employed and therefore responsible for all the disciplines of running a business. Most businesses fail.

So do most artists, and often for the same reasons.

Being a professional creator means exercising a lot of self discipline. There’s no accounting department managing your IRA. There’s no one handling your KEOGH plan, or running a group health insurance scheme. There is no disability plan, or unemployment insurance. You are on your own. And the responsibility for prioritizing your expenditures rests entirely on your own shoulders. You cannot count on anyone to do any of it for you.

When I was first starting out, I made some of the same mistakes as Albert, but my consumerism ended in my self publishing days and learned what money management really meant. Never have the words “operating capital” made so much sense.

The only money you should be spending on your business is money that enhances your ability to run your business. That’s why you get tax deductions for it: to encourage you to reinvest so as to enhance your business.

More importantly, learning about money, learning how money works, learning about running a business is essential to your art.

No, really.

Without money, you have no resources to make more art. You have to go out and get a day job, and then you can enjoy working at Walmart instead of drawing your comics, or writing that book, or painting that painting.

Many creators are embarrassed to discuss money, or to even learn how to use it.

Some claim that the time they spend learning about running a business takes time away from making art.

But we all have time to do other things: watch TV, go to a concert, spend time with friends. Sometimes we even frame these things as important imput for our creative work: entertaining ourselves or taking a break from the studio helps to fuel our creative engines.

Reframe learning about business and money as an essential investment in your creative future. The time you spend learning to understand that contract, run your business, or about good investment practices can buy you years of creative life. The better you are at maximizing the value of the money you earn on your creative work, the more time that creative work will buy you to create more work.

If you take care of your work, your work will take care of you. Show your work the same business level respect you demand from other clients.

You are your primary client. Treat yourself that way.