Quick. What is the sum of 2+1? Nice. How about 37-18? Better late than never. Let’s try 435 x 9. Oh, never mind.
If you’re like me and most other artists I know, your eyes glaze over and your brain toggles off as soon as numbers show up.
Artistic gifts are a handy excuse for poor math skills.
For instance, when I was accepted to a performing arts high school there was no outcry when it was decided I would forego math and science for dance and singing. It was collectively accepted that I would have no need for math or science in my chosen field.
And sure, that side of my brain is rarely called on during an audition or a session. But what about this crazy thing called life? Contributing to your retirement? Squirreling away a savings? Balancing your checkbook? Figuring out a tip? They all involve numbers! And then there’s the business side of our business. Contracts. Commissions. Estimated taxes?! Maybe you should sit down.
Creative types are renowned for living on a prayer and that position is justified. Just ask Jon Bon Jovi. But chances are there will be a day when you face your future and it scares the crap out of you because you are not prepared. Even if Social Security is still around when it’s your time to collect, chances are it won’t cover your living and medical costs. Be afraid. Be very afraid. Be so afraid that you take these 5 Financial First Steps for Freelancers:
Set up an automatic transfer. You probably have a checking account already. You probably have a savings account already. Now ask the two to work together by setting up a monthly automatic transfer from checking to savings. Even if you can only afford to transfer a small amount. Start there. Starting is the key.
Find an actor’s taxes accountant. Most non-union gigs will pay you a gross sum and it’s your responsibility to pay taxes on these monies. To avoid a penalty you must pay estimated taxes quarterly. An accountant who specializes in actor’s taxes can help you estimate your payments. They can also help you identify deductions you may be missing, making their value well worth the cost.
Set up an IRA. Even if you can’t contribute the full yearly maximum allowed of $5,500*, setting up a retirement fund will still empower you. It will educate you on what you’ll need for the future and make you aware of your spending. A traditional IRA is also tax advantageous. *$6,500 if you’re 50+
Find affordable health insurance. I know, easier said than done. Right now health insurance is in flux while the Affordable Care Act gets ironed out. In the meantime, those most affected by pricey premiums, costly co-pays and a skimpy selection are often freelancers like us. However, you may qualify for financial assistance so it’s worth visiting your state’s ACA marketplace. Open enrollment begins Nov 1st and runs through January.
If you are a union actor, you’ve probably heard that SAG-AFTRA will be merging their health plans by January 2017. Now all your income combined will count toward the healthcare minimums. (As of this writing, $17,000 for basic or $33,000 for the good stuff.)
If you have yet to join the union and don’t qualify for financial assistance under the ACA, you may consider working the minimum hours needed to qualify for employer healthcare at a corporate coffee shop or hotel. Day jobs can be a bummer but one that offers benefits is affirming.
Set up a separate business account. This will help organize your taxes and legitimize your business. There is usually a fee involved so best to consider this step when your creative career begins to become a profitable profession.
It should be noted that I am in no way an economic scholar just because I scored an 86 on my math app last night but I have walked down procrastination alley. I get that it’s easy to blow this stuff off because it’s boring and confusing and expensive but with each financial first step you take you’ll gain confidence which will ease anxiety which will give you fewer reasons to procrastinate and suddenly you’ll find yourself figuring out other contractual, percentage-y, numerical life survival stuff because you know you can.
You got this.