Developing Your Money Smarts as an Artist

by | Dec 13, 2021 | Uncategorized

Developing money smarts as an artist begins with accurate thinking. And let me say, at the outset, that accurate thinking usually challenges convention.

To practice accurate thinking in this area, you can’t let the allure of big promises, get rich quick schemes, and surface level information (that’s been designed to entice and tap into your desire for easy money), get the best of you.

Accurate financial thinking takes work, because we tend to have a lot of emotions tied to matters concerning money. Don’t let anyone tell you otherwise. They will never be as interested as you are in your own financial well-being, except to extract from your wallet every penny they possibly can.

How do I Practice Accurate Thinking in Financial Matters?

Here’s a great place to start to do some looking for yourself:

There are countless content pieces and ads out there talking about how someone earned $4,000 per month from music, how so-and-so got $5,000 from a single Medium article, how what’s-her-face earns $10,000 per month from Amazon FBA…

Look, there are many upsides to all this content. Typically, there is something you can learn from it, and it can even build your faith in the idea that it’s possible to achieve success on your own terms (which it is).

There is a dark side to it though. Most of these income claims are unverifiable. It’s easy to falsify payment dashboard slides. Plus, these content pieces tend to focus more on selling you a home study program to duplicate these results versus showing you the how, which was the original promise.

It’s one of the reasons I find most webinars disappointing. I can appreciate that there is going to be a pitch at the end. But I would love for there to be more meat on the bones, real training that’s going to make a difference for me, before I commit my time or money to a big purchase.

Questions to Help Guide Your Thinking

So, where can we begin in the critical thinking process?

I’ve prepared a battery of questions one should ask when evaluating financial opportunities:

How much money did they spend to get to that revenue figure?

Typically, there are costs to earning an income – promotion, advertising, outreach, and something green entrepreneurs often completely overlook – their own time!

You can’t say the cost of creating something was $500, and because you sold it for $700, you made a $200 profit. If your time is worth $100 per hour, and you put five hours into the project, your true cost was $1,000, and you lost $300. Not even universities will teach you this.

How much of their own time are they putting into earning it?

See previous point. Your time is worth something. Showing a profit is sexy, but if you’re not accounting for your own time, you’re cooking the books. Stop focusing on how others perceive your P&L statement, and instead focus on making a profit. That’s the only thing that’s going to move the needle in your career or business.

Showing a profit is sexy, but if you’re not accounting for your own time, you’re cooking the books. Click To Tweet

Remember this simple formula:

Revenue – Expenses = Profit

How much money are they saving?

A six-, seven-, or even eight-figure income starts to lose its appeal when you realize the person creating it isn’t paying themselves first let alone saving a dime of their earnings.

And this is not uncommon in business, so I’m not making light of that.

But accurate thinking is realizing that someone earning $3,000 per month could be saving more than someone earning $8,000 per month simply because they’ve developed the discipline to do it.

More income does not equal more money saved.

How much money are they investing?

Are they setting aside any money after the fact?

And I’m not necessarily talking about mutual funds, stocks and bonds, things that banks generally call “good investments,” but people regularly lose money on (again, accurate thinking goes against the grain).

I’m asking whether the people earning these astronomical figures are setting aside anything for their emergency, entertainment, aggressive growth, and retirement fund. And just as critically, are they able to reinvest anything into growing their business?

If the answer is “no,” it might be a bad deal.

How much money are they reinvesting into their business / putting better structures in place?

My mentors in network marketing called spending your profits “killing your seed money,” especially when you’re in the early stages of growing your business.

Now, this isn’t to say you shouldn’t pay yourself. But recognize that you can reinvest a portion of your earnings into continually growing your career or business. That is, in essence, the magic of an offer that converts and amplifying it with advertising.

If you’re evaluating any kind of financial opportunity, you should look at whether there’s anything left over after expenses to keep up with demand and growth. If not, at some point, the model will prove hard to sustain.

Can they earn the same amount monthly or annually without burning themselves out?

I would venture to guess that most sharp people could find a way of cobbling together a six-figure income, especially in today’s creator economy.

The question is, can you do it without keeping an unsustainable schedule, completely burning yourself out in the process?

How good is the opportunity if it requires you to work at a breakneck pace for the foreseeable future?

My business coach, James Schramko, works about 20 hours per week to sustain an eight-figure business. That sounds like a great opportunity to me.

An opportunity that requires me to pull 60-hour+ weeks every single week? Not as attractive, especially if I’m not working at something I enjoy.

Look, simple math doesn’t apply to building assets, but you’ve got to ask yourself whether what’s being presented can ultimately be considered an asset (a source of income with ongoing, increasing returns).

Is their revenue recurring or do they start from scratch every month and work their ass off to earn the same amount?

Although they may be hard to find, the best opportunities are those that allow you to start each month with something rather than nothing.

The best opportunities are those that allow you to start each month with something rather than nothing. Click To Tweet

This could mean having clients on retainer, taking advantage of affiliate opportunities where you earn on other people’s commissions, investing your money into vehicles that steadily grow each month, or otherwise.

This is the essence of future planning, and if you’re not doing that, you’re not setting yourself up for long-term success.

Final Thoughts

At the end of the day, you’re going to make your own decisions concerning your financial matters, and I can’t tell you what to do.

But it can’t hurt to add the above questions and mental framework to your toolkit in evaluating opportunity.

Again, no one is going to be as invested in your financial future as you are, and that means you’ve got to learn to take care of No. 1.

Quick reminder – you can now pre-order the Kindle edition of The Music Entrepreneur Code – 2022 Edition (just in time for the holidays). Don’t get left behind – be the first to get my latest work into your hands!