So there’s an article flowing around the inter webs that’s made some waves in the personal finance community:
Now I imagine that for some of you just reading this title sent a wave of justification through your soul. And that, even though you’ll probably agree that it’s an exercise in click bait extremism, some of you might be on board with its general premise.
“Why should I ‘waste’ my 20s saving and scrimping? I should be living life to the fullest.”
I’ll admit that in amongst its “learn to treat yo’ self” insanity, the piece makes a few actual points, like… how spending money on networking and investing in yourself can pay off fully in the long run. That’s a huge truth for entrepreneurial types (like artists).
But like many one-size-fits-all statements it probably fails to address your reality, beautiful snowflake that you are. However, it brings up a super basic question that I think tons of variable income artists struggle with whenever a big cheque comes in:
Should I be saving or spending?
When is the time to be tucking money away, and when is the time to be investing in yourself: pouring money into your craft in the hopes of a career?
Well, the answer to that question is going to be incredibly personal. But there is something big to consider, something that makes the rules way different for artists than for most people… and it all comes down to:
The Lifecycle of an Artist
I think it’s fair to say that artists are pretty much like butterflies. In fact it’s so obvious a comparison that I don’t feel like I need to justify or explain that metaphor at all.
Artists = butterflies
So to understand the financial lifecycle of an artist why not start with an old standard…
*In this metaphor we’re traveling from artistic potential … through the career… right into financial independence (which allows us, as artists, to stretch our wings and fly… never having to worry about money again.)*
Little Egg (of potential)
We all start our artistic journey as a little egg, a nugget of untapped potential. Like anything at this stage, our needs are basic… but specific.
The most important thing? Get the right kind of training and mentorship to help us grow.
Does it cost of a lot? It doesn’t have to… it will vary depending on what kind art we want to do. But I think in the earliest stages of our artistic life cycle, there’s no need to spend huge amounts. We’re just learning… so there’s no need to do everything right now. We need a very focused amount of resources spent on the essentials.
SAVE OR SPEND:
A little bit of spending, and as much saving as possible
Non butterfly version: The little egg stage is when you’re focused on making your ‘product’. There’s no point in spending a ton of time and money marketing something that just isn’t ready, so keep your costs down, spend money on the few things you need (teachers, lessons, coaching), and work to save (and limit debt) as much as you can.
We grow up so fast. Before you know it we artists have sprouted dozens of legs and are crawling around, eating everything in sight.
In this stage, the basic training is set and it’s time to test that knowledge out in the real world. We need to be fed: by exposure to other artists, other ways of learning, and as much on the job practise as possible.
This is when the resources have to start flowing. Your business (caterpillar) is growing, and it’s pretty much insatiable.
Non butterfly version: This is the hardest stage for a business, and some people are trapped in it for years. You have a product to sell (even though it might need some work still), but now you have to get someone to buy it. No matter what kind of business you’re in, this stage costs a ton of money (basically all the money that you can throw at it).
This is the stage at which a business becomes a big risk. There’s no guarantee you’ll ever become a ‘huge caterpillar’, but it costs a lot to even have a chance at it.
Yes you have to spend, but for those of us who don’t have limitless resources we have to spend smarter. Try making a BUSINESS PLAN ( I promise that it’s artist friendly), and make sure that every dollar you spend is having a maximum effect.
It’s all paid off. You’re a massive artistic caterpillar, working all over the place. All those resources that you plugged in have worked wonders… yay you!!
Even though you’re a huge caterpillar and you still need to be feeding a ton, you’re no longer the insatiable machine that you were when you were tiny. You have a pretty good idea of how much of your resources it takes to keep expanding, and because you’re so huge you’ve got some to spare.
This is the stage where things start to tip from ‘lots of input’ mode to ‘starting to save for the future’.
SAVE OR SPEND:
Spend what you have to, and save the rest.
Non butterfly version: You’ve established a place in the market. That doesn’t mean that it doesn’t cost time and money to stay there, but the same insatiable rush of money that you needed when you were trying to carve out a piece of the world isn’t required anymore. At this stage you might have a good idea of how much money you need to spend to keep your business growing, and the rest you can start putting away into assets (like stocks, savings, or houses).
Cocoon (of savings)
This is when saving get serious. There comes a time in every caterpillar’s life when you stop eating, and start concentrating 100% on becoming a financial butterfly.
Remember, a financial butterfly isn’t tied down to anything, it has enough resources stocked away to live in complete independence (no worries about money).
So how do you get there?
When you reach a certain point in your career, where the money is good and you don’t have to put nearly as big a percentage of your income back into the business… you save like crazy.
I’m talking SAVE with a capital S.
If you really want to be a financial butterfly, when the money gets good, the good get saving.
SAVE OR SPEND:
SAVE SAVE SAVE
Non butterfly version: You’re at your peak. The money is rolling in, and it feels great. It may seem like the time to finally treat yourself to all the things that you deserve… but if you want to actually retire, or at least get to a place where you’re financially stable heading into the latter part of your life.. You have to save your butt off.
This is the stage at which you might be able to afford to save half of the income that’s coming in (ya.. that’s right, I said half). Of course that really depends on a ton of things, as in what obligations you might have in your life. But no matter what, it’s a great time to start thinking more about saving than spending.
It’s hard to become a financial butterfly. Especially as an artist.
But as a big dreamer, I can say that it’s usually better to set the bar high… the worst thing that can happen is that you’re in way better shape later in life than you thought. I don’t believe you’re going to regret having a bit of extra money stocked away… but go ahead and prove me wrong :-).
The thing is, if you do it this way, you can end up in your butterfly years as a spender… because all the saving is already done.
SAVE OR SPEND:
Non butterfly version: This is that thing that they call findependence (financial independence). The hope is that you’ve put away enough during your prime earning years to be able to have the freedom to do whatever you want. Doesn’t sound too bad does it…?
From oversimplifying to conventional hypothesis #bigwords
Now, I fully admit that this is an immense oversimplification, but it all leads to a greater point.
In the more conventional world, there’s something called The Life Cycle Hypothesis. It talks about the different priorities through your life: early years to 35 – build assets, 35 to 55 – increase savings, 55 to retirement – lots of saving.
What it fails to capture (other than its complete lack of butterfly/caterpillar metaphor) is one of the unique factors of artist life.
Depending on your art form… your career could be peaking at 30.
The cycle that I just described isn’t set at a certain age range, like the Life Cycle Hypothesis might suggest.
A dancer may be in ‘huge caterpillar’ mode in their 20s, certain kinds of opera singers may not be there until 50. It’s essential that you take a look at your niche and have some kind of understanding of at what point you’ll have the potential to pull in the most amount of money.
If you follow the standard Life Cycle Hypothesis model, you can find yourself waiting until your 50s to get really serious about saving… and miss your biggest earning years.
Living in the moment vs the 20/20 of hindsight.
It’s easy to look back and see when your ‘huge caterpillar’/‘cocoon’ years were. It’s harder to know in the moment. If you’re lucky enough to make money doing this… it can be easy to get wrapped up in the idea that it will never stop.
But it will.
The earning potential of many artists is limited to a certain time frame (especially performing artists). It’s up to you to know your business, and know how you fit into it.
In some cases, if you don’t have savings in your 20s… you’re already too late.
Whether you should be saving or spending is going to depend on a whole lot of things… most of which I can’t possibly guess at. But one thing that I always keep in the back of my mind and that I recommend you do too, is where I am in the artist life cycle…
It gives me a bit of hope that a weirdo financial caterpillar like me, might one day spread my wings and fly.
Want to start getting control of your money? How can I help?
Financial Planner/Opera Singer
Money never came naturally to me. In fact… I was a bit of a disaster. I remember (very clearly) what it feels like to be ‘financially out of control’.
And honestly, I still get stressed about money… that doesn’t stop… the difference is that now I have the tools to deal with that stress.
And those tools are what’s made it possible for me to build a life full of the things I want: art, creativity, travel, family and more.