Welcome to Day 3 of Creator Money Week: Set Your Budget. Yesterday, we laid out your financial goals and you identified why you wanted to reach those goals. Today, we’re laying out your budget as a content creator and influencer. If you’re just joining us for the first time, the purpose behind Creator Money Week is to set up creators to be paid.
Budgeting is a life skill and will help you understand how much money is coming in and how much money is coming out (being spent). Plus, creating a budget helps you feel more in control and helps you see opportunities to help you achieve your financial goals.
When you create a budget as a creator, you start to take your finances and your business more seriously, and you set yourself up to be paid.
Step 1: How much money are you bringing in?
The first step in creating your budget as a content creator is to track your revenue. If you make money from brand partnerships, affiliate links (linking your outfits or home items with Shop Style or Shop LTK), coaching or courses, I encourage you to track the money you bring in on a monthly, quarterly, or annual basis.
Step 2: How much money are you spending for content creation, your side-hustle, creative passions, etc.?
The second step in creating your budget as an influencer is to layout your expenses. You have fixed expenses (regular monthly bills or payments) like:
- Your annual subscription to Adobe Photoshop or Lightroom
- Your annual website hosting site payment
- Your rent or mortgage for your home
You also have variable expenses:
- Buying a new laptop to replace your 4-year-old laptop
- Buying props for seasonal photo shoots
- Your gas to fill up your car on a weekly basis
- Travel costs – weekend content trips, hotels, food, etc.
My tip is to look at your monthly expenses and taking an average of your monthly spend. If you find that you’re spending an average of $400 paying for photographers, then you know you need to be covering that each month. Understanding how much you’re spending on average each month allows you to see if there are any opportunities to save money. For example, you might find that you’re spending $100 a month to style photo shoots. One way you could bring down the cost is splitting the cost of props with a content creator friend.
Step 3: How much net profit are you bringing in?
Revenue minus expenses = net profit. Net profit is what you’ve earned after you take out expenses.
While setting revenue goals is great, you should be equally aware of your net profits as a creator. Looking at your expenses and your net profit as an influencer or creator will help you determine whether or not you’re on track to hit your financial goals.
Step 4: Set aside 30-40% in taxes (& consult with a tax professional or CPA)
Before you spend or reinvest back into your business, don’t forget to factor in taxes into your budget. Different states have different state taxes. I highly recommend you consult with a tax professional or CPA for in depth tax questions. However, through my research, I’ve learned you should be putting aside 30-40% to cover your federal and state taxes.
One tip I learned early on is to create a separate business bank account to set funds aside for taxes. If you set up automatic monthly or quarterly transfers into this account, you won’t be blindsided when you file your taxes quarterly or annually.
Here are a few other resources to check out for small business and taxes:
IRS: Business Taxes
FreshBooks: How much do small businesses pay in taxes?
The Balance: How to Budget for Taxes as a Freelancer?
Step 5: Evaluate how much you need to set aside for health care, savings, and other financial goals
As you become more comfortable laying out your budget, you can start to incorporate other financial necessities or goals into it.
For example, if you’re currently balancing your side-hustle with your full-time job, you might not need to budget out $200-$500+ (varies by person’s need, individual vs. family size, etc.) for health insurance since your employer provides health insurance. But if you are a full-time content creator/freelancer, you must budget out the few hundred dollars per month to buy and maintain health insurance coverage.
You might have heard the 50/30/20 rule – where 50% if your income goes to your necessities (groceries, housing, insurance, childcare, etc.), 30% for wants (gym membership, getting your hair done, entertainment, etc.), and 20% for savings and paying down debt. But it’s important that you do the work to understand where your financial health and well-being is at and where you should be prioritizing certain areas in your life.
Once you’ve laid out your budget, you can evaluate your spending habits and determine whether you need to make any adjustments or not. For example, you might find you’re bringing in revenue, but after taking expenses out of it, you might discover you aren’t keeping those net profits.
I’d encourage you to lay out your budget as a creator every year, revisiting it on an annual or monthly basis, and sticking to it.
Thank you for participating in Day 1, Day 2, and Day 3 of Creator Money Week: Set Your Budget. Tomorrow, we’ll be discussing exploring revenue streams as a creator.
Day 1 Creator Money Week: Your Relationship with Money | Content Creatives Podcast Episode 110
Day 2 Creator Money Week: Your Financial Goals
Thank you for reading!