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Short Cuts

Day jobs: Linz Hamilton (Vodun) – musician and electrician

As part of a new series looking at day jobs for creatives, we speak to the NZ guitarist about the merits of his side-career as a contract electrician

It can be really difficult to make a living from creative work alone. As I discussed previously with DJ/new music guru Shell Zenner, sometimes the only course is to work a day job and try to build things to a point where you can go full-time.

It is a balancing act, but done well, this approach can result in you doing more than one job you enjoy, while also easing some of the financial pressure and helping you gain some complementary skills.

Linz Hamilton (pictured top of the page, left) grew up in New Zealand and came to the UK to make his way in music. On arriving, one of the first shows he caught featured the band Vodun – a voodoo rock trio that meld big, Sabbath-y metal riffs with the powerful soul-style vocals of singer Chantal Brown (ex-Invasion, Chrome Hoof and Do Me Bad Things). As fate would have it, just few years later, he wound-up joining the group.

“It really works with the lifestyle of touring. If you’ve got a break, you can go and do a three month contract”

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When he’s not occupying his role as a neon voodoo spirit, though, Linz covers his bills by working as a contract electrician. It’s a line he got into due to the foresight of his school career’s office.

“A friend of mine went to the career’s department and said, ‘I want to be a musician and play in bands’,” explains Linz. “They said to him, ‘Go and do electronics, because at least then if your gear breaks, you’ll be able to fix it.’ He went on to be a painter and I took his advice and trained to be an electrician!”

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Trading up

Perhaps my views are outdated, but I can’t imagine a UK equivalent being so practically-minded. Either way, it appears to have been good advice.

“It’s been really handy for me to have a trade,” says Linz. “It’s meant that I could go, ‘OK, I’m going to uproot from New Zealand, get a job, be educated, do contracting.’ It really works with the lifestyle of touring. If you’ve got a break, you can go and do a three month contract, or jump on a site for a week or so.”

Music is one of the riskier career paths and Linz says the idea of finding a complementary day job had long factored in his thinking.

“I was endorsed by my neighbour in NZ who used to make handmade guitars for me and he said, ‘Never forget that you will need a job.’ It’s not the 70s anymore where the big labels will fund you the whole way. You’ve got to love it and want to love it and you’ll have to pay your way a little bit.”

Fanning the flames

As predicted by the Linz’s school career’s advisor, the career choice has had other benefits for his music, too. Not just in understanding signal path and tone.

“It really paid off at a show in Madrid,” adds Linz. “I had to stop and resolve an electrical fire so the support band could finish their set and we could play ours!”

“It’s not the 70s… You’ve got to love it and want to love it and you’ll have to pay your way a little bit”

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The other benefit of becoming an electrician is that a lot of the training can be done via a paid apprenticeship position. However, if wires aren’t your thing, Linz has one other suggestion…

“As a little side note,” adds Linz. “Chan [vocals] would also recommend cheffing/kitchen work, as she has been working for a charity Made Up Kitchen over the lockdown/pandemic, cooking donated food into a different daily menu for those in need over this crisis. She is really enjoying the ability to still be creative and giving back to the community.”

For Linz’s part though, he says he’d happily recommend electrician work for touring musicians and he’s glad he took the tip given to his friend. As Linz jokes: “It has been the best advice I never got!”

If you want more information on apprenticeships, check out the City & Guilds website. To keep up-to-date with all things Vodun

Linz Hamilton (pictured left) works a day job as an electrician when not touring
Vodun (Linz Hamilton pictured left)

Short Cuts is Creative Money’s series of quick tips, tricks and thoughts about saving or making money in the creative industries.

How can we help you?

What issues are you facing? What questions do you have about managing your money in the creative industries? What would be most helpful to you?

We don’t have all the answers, but maybe we can find someone that does.

Send your questions and suggestions to creativemoneycontact@gmail.com.
We want to hear from you.
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Guides

The best budgeting apps for UK creative workers

Untangle your personal finances with our guide to the best budgeting apps for UK creative-types

Working in the creative industries has its ups and downs – and not least when it comes to our cashflow. This can make it really hard to budget effectively. The best budgeting apps make this process much less painful, taking full advantage of the ‘open banking’ revolution to quickly and clearly calculate our cashflow and spending. What’s more, most of them are free, too

Often in creative careers our finances will vary greatly from month-to-month. One month you can be sat at home wondering where the next gig will come from, the next you could be earning and paying a second rent in a new city.

The budgeting process usually relies on predictability – and that is something that is in short supply in our field

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This makes budgeting exceptionally difficult for creative workers. It’s a process that normally relies on predictability – and that is in short supply in our industries.


Does your work situation make it difficult to save money? Check out our guide:How to start saving (when you don’t think you can)


Budgeting apps can be particularly useful to creative workers because the data will usually be much more up-to-date and easier to interpret. This is helpful when your income and expenses somewhat wildly fluctuate!

A good budgeting app can

  • Make it easy to track and sort your income and spending into categories
  • Give you a clear picture (via fancy graphs and charts) of your income, spending and cashflow
  • Help you compare the above across the months/years
  • Allow you to set budgets for defined projects/categories
  • Keep you up-to-date on how much you have left
  • Help you to identify potential savings on your bills
  • Help you to save or invest by siphoning off cash on a daily basis (for instance, by rounding up transactions)
  • ‘Gameify’ the process of money management

Most do this by connecting to your bank (with your explicit permission) and regularly importing your transactions for analysis. Some have the power to make transfers between accounts, but most just look at the data.

If this sounds a little suspect, rest assured that all of those featured on the best budgeting apps list are regulated by the Financial Conduct Authority, which is there to ensure they behave themselves. Do not use any service which is not FCA registered.

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Things to consider when picking budgeting apps…

What do you need?

Each of these apps has different strengths and weaknesses. Some are great at budgeting, some can help you save more, others have better spending analysis or clearer interfaces.

I have my preference (below) but you might need to try a few. Ultimately, the ‘best budgeting app’ is the one you will actually use consistently. Just keeping half-an-eye on these things will help you to improve your finances (lowering expenses, increasing savings), so know thyself! Which one will most encourage you to keep track?

Cost

Most of the apps below are free, but some have a small subscription fee or premium tier that gives you more options.

How many accounts and types of accounts do you want to manage?

Do you want a budgeting app that’s a one-stop shop to plan and keep track of your assets (including pensions and the value of your home)? Or simply an app that makes it easy to monitor a basic set of current and savings accounts?

How will you use the app?

It’s good to consider how you will use a budgeting app as part of a wider system.

You might be keen to set goals and boost your savings or pension. Or you might want to use the app to easily calculate your monthly income, spending and savings and track those total figures in a separate spreadsheet.

Alternatively, you may want separate apps for work expenses and personal finances (perhaps you have an accountancy platform with whizzy apps for your work stuff and just want something simple for personal finances).

Most give you various export options for data so you have even greater flexibility if you require it.

1. MoneyHub

Best UK budgeting apps for UK users: MoneyHub

Best for making a complex picture clear

This is Creative Money’s preferred choice of budgeting app. It helps you to keep track of income, expenses and savings (like Money Dashboard et al), but you also can pull in an impressive range of investment accounts, pensions and even home equity.

For
  • Makes a complex web of account types easy to understand
  • Easy transaction tagging process (compared to other apps)
  • Great as a simple way to keep track of net worth
  • Spending and income analysis tools are really clear
  • Big range of accounts supported (including Vanguard)
Against
  • Some users say it’s not so hot on the predictive/forecasting side
  • Has a sideline in trying to direct you to financial advisors, too (but doesn’t rub it in your face)
  • It also comes with a small monthly fee of £1.49

2. Money Dashboard

Best budgeting apps for UK users: Money Dashboard

Best for those who want an established name

Probably the biggest name among UK budgeting apps. It set the template in many ways: you connect your accounts, tag your transactions and it will start to automatically group them into categories for tracking/comparing month to month.

For
  • Money Dashboard has won multiple awards
  • You can also set multiple budgets (telling it which categories to track) and add recurring bills etc. to predict cashflow
  • Was the first UK app to really crack the blend of an intuitive interface and mainstream connectivity
  • New features are rolling out all the time and a ‘predicted balance after bills’ feature is useful for those with a regular income
Against
  • The recent redesign, Money Dashboard Neon, has not gone down well with everyone
  • Some say it’s a little glitchy and lacks some of the utility of the classic version

3. Emma

Best budgeting apps for UK users: Emma

Best for finding those sneaky fees and expenses

The makers of Emma describe their app as ‘a financial advocate’. Their USP is that it analyses your transactions and tries to find ways to keep you in good shape, financially.

For
  • Keeps track of the sneaky stuff you often don’t notice
  • Seeks out subscriptions you don’t need
  • Uses notifications to help you avoid overdraft
  • Compatible with cryptocurrencies [this is NOT an endorsement of crypto – but that’s another post]
  • Clear interface.
Against
  • Can’t split transactions across categories on the free version
  • Some people don’t get on with the interface’s super-bold colour scheme
  • Pro plan is quite expensive (min. £4.90/month).

4. Yolt

Best budgeting apps for UK users: Yolt

Best for keeping it simple

Yolt likes to keep it simple. It offers you a place to connect and view multiple accounts and doesn’t get hung up on fancy tech to make predictions or do things for you.

For
  • Easy to use, with intuitive auto-categorisation
  • Simple to set and review budgets
  • Stealth mode allows you to show off app without personal info
  • Payday tracker
  • Free for life with no premium mode
Against
  • Pay tracker only works for monthly/four-weekly
  • Not as clever or customisable as rival apps
  • Unlike the others here, there are no options for savings goals/projects
An artist AND an app-user
Photo by bruce mars on Unsplash

How did we pick?

Through a blend of personal usage/testing, user reviews and considering research conducted by other independent platforms. Creative Money is 100% independent and has no affiliation, commercial or otherwise, with any of the brands mentioned above.


Creative Money Guides are ‘How-to’s and explainers relating to specific aspects of money management for those working in the creative industries.

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How can we help you?

What issues are you facing? What questions do you have about managing your money in the creative industries? What would be most helpful to you?

We don’t have all the answers, but maybe we can find someone that does.

Send your questions and suggestions to creativemoneycontact@gmail.com.
We want to hear from you.

Categories
How I Make It Work

How I Make It Work: Shell Zenner – DJ/presenter

Manchester’s mainstay DJ and new music obsessive Shell Zenner on how she makes, saves and tracks money from a diverse range of music gigs

Shell Zenner somehow blends together a career involving multiple radio shows, club nights, DJing and a huge variety of other activities, all of which revolve around an almost surreal level of dedication to new talent.

Having gone full-time in music a year or so back, she is in some ways the consummate modern media worker, pulling together a variety of incomes and a strong sense of her personal brand to sustain herself in the music and broadcast industries.

Unsurprisingly, keeping on top of her various work and projects requires a remarkable level of personal and financial organisation, so we couldn’t think of many people better placed to discuss the challenges, tips and tricks of money in the music and broadcast industries. Fortunately, Shell was generous enough to share her insights…

How would you describe your current role, given the many different strands to your work?

“I would describe myself as a ‘radio-presenter-producer-curator-music-journalist – that does digital’. Does that make sense!?”

Er, yes… How many different sources of income do you have?

“Well, I don’t do any free work unless it’s for charity, so everything else I do is paid. There are a couple of things which will pay me PAYE [Pay As You Earn – i.e. taxed at source], which is BBC work, whether freelance or staff, so I work a day and a half a week for the BBC. I do two days for my XS show, which is freelance, and my Amazing Radio show is freelance, then I do various other little projects…

“The more skills you’ve got, the stronger a position you’re going to be in”

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“So things like DJing, which is obviously not happening at the moment, but I normally co-curate nights with [Manchester venue] Band On The Wall, I do lecturing, I do hosting, I’ll get paid for filmed interviews for brands, build playlists, write articles, host online gigs – and I also do voice-overs. And I’ve forgotten about artist development! I’ve been doing quite a lot of that over the last 12 months, which has been really great, being able to mentor new artists. I’ve also done things like assessing funding applications for PRS and Help Musicians. All of that ‘top-up’ work [outside of radio], is all freelance.”


Looking for funding? Check out our guide: UK arts funding and development opportunities


There are so many poor unpaid ‘opportunities’ in the creative industries. How did you go about finding such a variety of paid work?

“I find it mostly comes to me now. I think that’s about networking and about being a sure thing and also having a big palette of skills. So, if someone wants a voice over, I can copy-write, I can voice it, I can edit it. It’s having a home studio and the equipment you need, it’s having contacts at facilities and a rapport with people.

“[In terms of networking], it’s just about talking to people because you’d be surprised – that conversation might not lead to something right now, but it could in six months time. If a project comes up, they may think of you. It’s also about wanting to keep learning new skills and pushing your knowledge because technology is changing all the time. Now I’m able to video edit and film myself and things like that make a big difference. Again, the more skills you’ve got, the stronger a position you’re going to be in.”

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Do you think we have an issue with financial literacy in the creative world?

“Yeah, you’re absolutely right. I do a bit of lecturing and often wind up talking about how I budget or how I organise myself and I think it is illuminating for people. [It’s surprising], even freelancers at the BBC, where they get tax deducted at source, don’t know how to handle freelance earnings and DJ money and stuff like that. And people don’t know how much to charge for stuff, so it’s about having the balls to stand up and say how much you need to be paid. I’ve had to point out to people like, ‘That’s going to be paying me below minimum wage, once I take the tax money off.’ Once they think about it, they will up the money then, but you have to have the strength of character to do that as well, because there’s a risk you could lose the work.”

Shell Zenner discusses managing money in the music and broadcast industry
A major issue for many in the creative industries is the ups and downs of cash flow. How do you deal with that situation?

“There’s a couple of things that I think are really important. One is always having some savings. I grew up in another industry [engineering], and I never really wanted to depend on anyone else, so I always made sure I had a bit of money to cover one or two months, should anything go wrong. I worked this career up over 10 years – I didn’t take the plunge to go fully radio/music until last year. I’ve always been quite risk-averse but that has stood me in good stead because I built it up over such a long time and wore so many hats.

“The other thing is that I’ve been really clear about keeping spreadsheets for earnings, expenses and mileage and understanding what you can and can’t claim as a business expense. I got myself an accountant and you think, ‘Oh I don’t want to pay that kind of money’, but an accountant is a tax deductible expense and they don’t always cost the earth. Having someone there that you can run stuff by gives me the sense of security that I’ve done everything correctly and am not going to find myself in trouble and needing to pay a big sum of money down the line.”


Struggling with your cash flow as a freelancer? Take a look at our guide: ‘How to manage your money on a variable income’


How do you handle things like invoicing and tax savings?

“Every freelance earning you make, regardless of whether it’s paid in cash, you still have to invoice, so it’s having systems in place for invoicing and saving invoices. Then, for me, it’s making sure that whenever you get a payment you are – right at source, as soon as it comes in – taking 30% off for tax and national insurance and putting it in a separate savings account. I have two linked [savings] accounts at this point, one for the last financial year and one for the current one. I got my tax return back today and it says I’m getting a rebate! So not only do I not need to pay it, I get a rebate. Now I’ve got some extra money and I can think, ‘What can I invest that in?’ Or give myself more of a buffer.

“You hear people say, ‘Right, I need to go and sell my car so I can pay my tax bill.’ That’s insane!”

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“I’m not the messiah of tax but I’ve seen friends fall foul of that who have worked in the creative industries, so I think it’s worth being super organised and giving yourself that buffer. If I have that money there, I also know that if something goes drastically wrong then I have that flexibility. You don’t want to be living hand-to-mouth if you lose one of your roles. Some people rely on one particular organisation for a lot of their work, that’s pretty normal for most people, but then if you do lose your role you’re in quite a catastrophic situation.”

Do you use any fancy financial software to help you keep track?

“There are people that track things in more modern ways, but a spreadsheet is fine for me, so I keep an eye on my income, my receipts, my mileage and just have it all listed in one document. If you can do that and update it week-by-week, it just makes your life so much easier. Then when you get to the end of the financial year, you can just have a quick check-through and send it to the accountant for the final number crunching. The amount of people you see who are at the end of December and January, trying to do their tax returns and panicking… I’ve seen that a lot. That thing like, ‘Right, I need to go and sell my car so I can pay my tax bill.’ I’m just like, ‘What!? That’s insane!’”

Shell Zenner discusses managing money in the music and broadcast industry
What are the financial issues or mistakes you think people should be wary of as they try to keep their head above water in the broadcast or music industry?

“I think if you are in a situation where you are pitching for something and you’ll need to hire a lot of equipment or pay out for locations then you’ll need to be really watertight on your contract. If you lose the job and you’re having to pay, then having policies in place for that kind of stuff is really important. Insurance, too. For instance, I have public liability insurance and I try to cover myself to make sure if I say anything on air [that could lead to a lawsuit]. You just have to protect yourself really well and prepare for every eventuality. I’ve done a lot on this, my career before this was engineering so I was into health and safety, risk assessments and stuff like that!

“The worst thing you can do, business-wise, is promise things and then not deliver”

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“It’s also about always having a contingency [plan] so that should anything go wrong, you’re not out of pocket, because ultimately you need to be making profit. Even if it’s just a small profit. You may be gaining from a project in a different way, whether it’s experiences or contacts, so you may be willing to do something at a stripped-back rate to gain that network and that experience, but it’s still important to make sure you’re not going to end up out of pocket.”

Is there anything about money in the creative industries that you would like to change for the better?

“I would definitely like the BBC to change their freelance policy. I was angry about this before, but the lockdown situation has really brought to light the major issues with it, which is that if you work as a freelancer at the BBC, you get taxed at source and that means you can’t claim the mileage or any of the expenses [nor do you have the perks of full-time staff]. So should you need to travel two hours to get to a job, you can’t claim that mileage, you can’t claim any equipment you might need to do that job.


In need of financial support amid the Covid-19 pandemic? We’ve rounded-up some options here: Coronavirus support: resources for the creative industries


“[The BBC have stepped-up to offer furlough payments for freelancers now] but there were people who lost all their work because the BBC has changed schedules etc., which is fine, but if you go to HMRC and over 50% of your earnings are PAYE, then you are not eligible to claim on the Self-Employment Income Support Scheme. So that’s meant there were a lot of freelancers who couldn’t be furloughed because they weren’t technically ’employed’ by a company, they couldn’t claim for the self-employment benefit and all they had left is Universal Credit, which is very little. If you are paid as a freelance, you shouldn’t be taxed at source, you should be figuring out your tax through a tax return and you should be able to claim your expenses. I question why freelancing at the BBC has to be taxed at source, it just doesn’t seem consistent to me.”

And it’s not just BBC freelancers, it’s those setup as Ltd companies, new starters and other PAYE freelancers. Millions of people…

“I’ve been trying to support [the #ExcludedUK campaign] on Twitter and stuff. These people have really fallen through the cracks and it’s just pretty insane really. It just blows my mind.”

What would you say to someone trying to figure out how to sustain themselves within the industry?

“Maybe just that it’s good to give yourself a financial buffer. It means you don’t have to flog yourself just to survive at times. The problem is in the creative industries is that self care is something that’s often overlooked. You feel like you need to be ‘on it’ 24/7 and sometimes, for whatever reason – you’re not very well, or you’ve got family issues – giving yourself a little bit of a buffer can enable you to take some time out and give yourself a breather. You can push yourself too far with the pressure of it, so having some savings there really helps.

“Also, it’s about not over-stretching yourself with work and trying to be realistic with what you can accommodate and do. The worst thing you can do, business-wise, is promise things and then not deliver.”

The summary:

  1. Spread your risk. Zenner worked a day job for nearly a decade before taking the plunge full-time in music. She also now has a huge variety of income strands.
  2. You need savings. Make the effort to syphon off tax money as soon as it lands in your account and build a savings buffer to get you through tougher times.
  3. Network – and deliver! We don’t mean lunch at The Ivy. Just talk to people. You never know what might happen down the line. And, crucially, make sure you follow through on any promises you make.
  4. Keep building your skillset. Zenner has consciously expanded her skillset to include writing, recording, editing and video, alongside promoting and industry knowledge. All of these can provide a source of income.

How I Make It Work is a series of interviews with a variety of creative professionals, where we discuss personal experiences and lessons learned about money in the creative industries.

How can we help you?

What issues are you facing? What questions do you have about managing your money in the creative industries? What would be most helpful to you?

We don’t have all the answers, but maybe we can find someone that does.

Send your questions and suggestions to creativemoneycontact@gmail.com.
We want to hear from you.
Categories
Guides

How to manage your money on a variable income

Are you self-employed, freelance, or a contractor with a variable income? Here’s how to cope with the financial peaks and troughs

Nearly half of creative workers (47%) are freelance or self-employed (source: ONS, 2017). Chief among those are writers, producers, artists and directors – it’s a large and significant part of almost all creative industries. One of the key challenges for this group is managing money on an irregular or variable income. So what can we do to smooth-out the financial ups and downs that we will inevitably face in a given year?

The key is learning to syphon-off your income in normal and higher-earning months into a ‘top-up fund’, so you can top things up from your savings when needed.

This would be easy if humans were calm, logical creatures, but we’re not – so we need a way to tell whether or not we should save or withdraw (and by how much) in a given month.

Turning a problem into a question

If we put a little effort in upfront, we can save ourselves from guesswork down the line.

In order to do this, we’re going to answer these five questions…

  1. How much do I earn?
  2. How much do I spend?
  3. How much am I normally left with?
  4. How can I create a more consistent income?
  5. How much do I need?

Why? Well, if you know how much you earn and how much you spend in a given month, you can figure out what you are left with. This is your personal cash flow.

All businesses ultimately survive or perish based on their cash flow (overall, is there more money flowing in than flowing out?) and it’s the same in your personal finances.

Once you have a predicted cash flow figure for the month, you know whether you will likely need to pay in or out from your savings (your ‘top-up fund’) for that period. This will help smooth-out that variable income over the longer term.

Answering the final question (‘How much do I need?’), gives you the comfort of knowing the minimum amount you’ll need to live on in a given month. The bigger the gap you can create between your income and this essential spending, the more you can potentially save into your top-up fund – and the bigger cushion you’ll have to smooth-out the financial ups and downs.

This is quite a lot of information to pull together initially, so I’ve put together a spreadsheet to help you keep track and – if it all goes to plan – to do some of the calculations for you.

Free spreadsheet!

The sheet is designed to be used to log your answers to some of these questions and calculate your cash flow for a typical month.

You can then stop there, or you can use it to keep track over the longer term. Keep it up-to-date and the sheet will help you figure out how to spread your variable income more evenly throughout the year. We do this using a ‘top-up fund’.

You can download the sheet above and there are links and tips (in bold, with the lightbulb icon) throughout this piece to help you understand where to enter the relevant information.

Even with the whizzy spreadsheet above, this stuff can take time, so don’t stress if you find you have to do it in instalments. The clarity is worth the effort.

1. How much do I earn?

First, let’s figure out what you have coming in normally.

If you have any salaried work (or state benefit) that pays a regular, fixed amount, use your bank statements or pay cheque to find out your monthly income.

Make a note, or add this into the top ‘Salary income’ box for your ‘Typical Month’ on the supplied spreadsheet.

But I’m freelance and my income is a nightmare…

It’s a bit messy, but finding a past average is probably the simplest and most helpful place to start. We’re looking to smooth-out future dips and bumps in income, so a figure that represents the middle of your ‘normal’ range is useful here.

Ideally, you want to represent a long period with the average – a year or more – but you can hone this and update down-the-line. Right now, settle for making a start.

So… add up your income for your chosen period and divide the figure by the amount of months it covers.

Total income for period ÷ Number of months in period = Average monthly income

For instance, if you earned £12,000 in freelance income over 12 months, your average would be £1,000 a month.

Some ideas about where to find this information:
  • Banking apps (you may be able to just filter income only transactions)
  • Your income statement (where you track invoices etc.)
  • Your tax returns (dig out that Self Assessment login)
  • Ask your accountant

If you’re setup as a company, make sure you factor in your dividend income for the year here, too.

Once you’ve found it, make a note.

You can drop your average freelance income figure in the ‘Freelance income’ box of your ‘Typical Month’ on the spreadsheet. This will then be added to any salaried income or benefits you specified, in order to tell you your average total income.

Then take a break…

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2. How much do I spend?

Now let’s figure out your spending for a typical month.

Sit down with your banking app or statements and go through your spending for the last month (or one you feel is truly representative of your typical expenses – if in doubt, be pessimistic).

Split the month’s spending into categories of fixed and variable expenses.

Fixed expenses

Your fixed expenses will be recurring bills and spending (e.g. rent or mortgage, insurance, gas/electric and other direct debits), which do not usually vary month-to-month.

You can enter your fixed expenses on the sheet, under – you guessed it – the ‘Fixed Expenses’ heading. Add the corresponding figures in the ‘Typical Month’ column.

Variable expenses

Variable expenses are things that may might vary month-to-month, for instance: travel costs, food shopping, eating out, or gifts and entertainment.

It’s a good idea to make groups under your variable expenses to reflect your spending priorities and help you to see where your money is going. There are some examples on the sheet above already. Keep it simple, though – no more than 10 groups.

If you just can’t face doing all of this immediately, settle for totting up any expenses not covered in your fixed category and lump them all in one ‘other expenses’ group.

(This sort of thing makes accountants reach for the smelling salts, but you can always come back and split this out out at a later date.)

Make a note of the totals.

You can enter your groups on the first column of the sheet under the ‘Variable Expenses’ heading and add the corresponding figures in the ‘Typical Month’ column.

Can I make a robot do this for me?

Yes! Or at least, sort of… There are several apps out there that will help to automate the process of grouping expenses. Some of the fancier bank apps do this and there’s also the likes of MoneyHub and Money Dashboard, which allow you to connect and monitor multiple accounts/banks.

You can set your own groups or categories for expenses, but you will have to check-in and tag/correct your transactions. However, it does ‘gameify’ it somewhat, so if you’re a phone addict, it could work for you.

Adding it up

Now add the total of your fixed expenses and variable expenses together. Hello, monthly spending!

Fixed monthly expenses + Variable monthly expenses = Monthly spending

Again, on the spreadsheet, it will do this for you and give you a figure for total expenses, as well as factoring in any savings you specify.

That’s the hardest bit done. Congratulations! Again, this is a good point to take a break.

3. How much am I normally left with (i.e. what’s my typical cash flow)?

If you’ve been using the sheet, just scroll down and look at the ‘cash flow for the month’ total to see what’s left in a typical month.

If you don’t want to use the sheet, you’re simply doing the following calculation for your example month:

Total income for month – total spending for month = cash flow for month

What does this mean?

If you have a positive number, this is an amount you can save to supplement leaner months, using a ‘top-up fund’.

Bear in mind, too, that this ‘Typical Month’ cash flow figure might look small, but you are using an averaged income at this point, so even a small surplus is a good thing. It suggests an overall trend of more cash flowing in than flowing out.

If you get a negative number at this point, it means that on average you are likely spending more than you earn (a negative cash flow), or are on course to do so in the near future.

Don’t panic – this is good information to have, but you will need to cut expenses or raise your income to sustain yourself over the longer term. Figuring out your essential expenses (Q5. ‘How much do I need?’) will help here.

4. How can I create a more consistent income?

The answer is to create your own overdraft, using a ‘top-up fund’.

As soon as you are earning more than you spend, set-up an easy-access savings account to set this remaining cash aside. This is your ‘top-up fund’. So how do we do use it?

One method is to simply use your average income (as logged under your ‘Typical Month’) as a guide, as follows:

Earn more than your average income?

Pay the difference into the top-up fund.

Earn less than your average income?

Withdraw the difference from your top-up fund.

Of course expenses vary as much as income and most of us will need to keep a closer eye on things.

If you want to keep a better track on your finances and expenses, update the sheet monthly with your income and predicted spending and it will tell you whether to save or withdraw the ‘cash flow for the month’ figure.

* Updating requires much less effort than finding the initial figures, particularly if you set up your expense groups using an app – you’ve done the hard work already.

My mind won’t let me do this. It needs shiny things.

I hear you. Some things that might help you:

  • Make the ‘top-up fund’ deposit/withdrawal early – as soon as you can once payments have cleared.
  • Keep your ‘top-up fund’ with a different bank. You still want easy access, but for some reason the mental difference of having to login to a different platform can make you less inclined to dip-in to those savings.
  • Use separate accounts for bills (fixed expenses) and variable spending. Direct your earnings to a bills account and then transfer a regular amount (your variable expense total) over to your spending account and spend according to your priorities that month, knowing your bills are covered. Once you run out of cash in your spending account, that’s your lot for the month.
  • Don’t think of your ‘top-up fund’ as spare money. It is essentially your future income. ‘Borrowing’ too much from it now is like a salaried worker asking for an advance.

5. How much do I need?

Need to create a bigger gap between your earnings and spending? First, find out your essential expenses…

Look over your spreadsheet/notes/crumpled napkin with your expense totals and consider which items could be cancelled or easily and quickly reduced, if necessary.

For instance, rent is still considered compulsory by most landlords, but you may be able to avoid the posh shops for a bit and spend less on food.

If you’re using the spreadsheet, simply duplicate your ‘Typical Month’ column expenses to the ‘Essential Expenses’ column and remove/reduce, accordingly.

Add it all up. Now you know your essential spending – the bare minimum amount you could exist on from either your income, or savings.

Are you asking me to remove all joy from my life?

No, but this figure is really useful to bear in mind for a number of reasons, for instance…

  • If you’re making an effort to boost your ‘top-up fund’ or other savings (because income – essential expenses = your maximum current saving rate).
  • If you want a minimum earnings goal, particularly if you are risk averse and keen to always avoid spending more than you earn (creating negative cash flow) within a month.
  • If you’re assessing whether or not you can afford to pass on that boring work you’ve been offered, or start that new thing.

Found it hard to save in the past, or looking for a way to get started? Check out our tips on How to start saving (when you don’t think you can)


I’m doing it! It’s worked! What next?

Keeping one eye on your cash flow is key to avoiding nasty surprises. If you keep the sheet up-to-date, it can help you do this.

It has columns for ‘Year Total’ and ‘Year Average’, too, which can be really helpful in showing whether your overall cash flow is positive or negative for the year, as well as your average income etc. The year average can then me imported to the next year to form the basis of your ‘typical month’ column and the cycle starts over.

As you get more confident, it’s a good idea to start to increase your top-up fund savings (by cutting costs, or boosting income) until you have at least a month’s ‘salary’ on-hand.

A final note…

This approach should be regarded as a useful rule-of-thumb. It is a collection of various techniques that have worked for me, but it is not 100% foolproof.

For instance, it initially relies on your past income and predicted spending trends prevailing to keep your top-up fund savings balanced, which (particularly in the current climate) will not always prove to be the case.

In addition, the more dramatically your income fluctuates (say, you have three or four ‘big’ paydays, which sustain you through the year), the more you will need to set aside before you start using this technique regularly. In this case, build the ‘top-up fund’ as much as you can for time being and implement the system following your next big payday.

Nonetheless, the above represents my best effort to date. As we gather more ideas and resources on Creative Money, I will endeavour to update this guide and the spreadsheet.

Ultimately, the minimum you’ll get out of it is a better knowledge of your earnings, spending and the importance of cash flow, all of which can be really useful. Give it a go and let me know how you get on!

Photo by Fabian Blank on Unsplash

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