Personal Finance for Artists & Freelancers

Lesson 18 of 30

How Much Should You Charge?

 

Personal Finance for Artists & Freelancers

Lesson 18 of 30

How Much Should You Charge?

 

Lesson Info

How Much Should You Charge?

How much did you charge? This is a really powerful kind of hoping to end it, but I figure since the question segue weighed so what did we talk about yesterday? Your fixed expenses were three thousand your weekly cash spending is fourteen hundred dollars, so that was maybe four hundred dollars a week or for fifty a week or three fifty a week. You want to save two fifty a month for a rainy day because you're not saving enough for your rainy day. You want to save to spend another two hundred because you want to go on vacation or you want a new coats or you want a car in two years and you need to save a thousand dollars a month for retirement. So today to really pay yourself, you need about six thousand dollars a month after taxes, which means before taxes twenty five percent and again, this is probably a higher number, so then what's assume the numbers a little bit more. You need to earn seventy eight hundred dollars a month or nearly one hundred thousand dollars a year, so you need to ea...

rn one hundred thousand a year toe live this way so you as an artist or freelancer, what projects do you need to get? What jobs do you need to get what you need to charge to earn one hundred thousand dollars a year because earning one hundred thousand a year let's you say for retirement lets you say for the rainy day let's you say for a vacation lets you live, you're fixed expenses and have extra money for dinners and things like that. So how do you earn that money again? That's the seven are next door nobody loved be earning that no or maybe we are if you are wonderful maybe you're not earning that don't get stressed about that just right away say ok, this is the number I need to learn I have done this exercise with my clients over and over and over they get there do they get to the hundred thousand thirty fifty not the next year but they move up it's a number to strive towards and that's what I want you to feel is that how can I strive that way so I don't put this up right away I put this up you know towards like the middle toe end because if I did this right away nobody would chat rooms would be crickets radio silent nobody would sign because we went through these numbers and hopefully you got comfortable with these numbers what am I fixed expenses what is my weekly number? What am I doing to pay myself? I'm saving a lot towards retirement so maybe I just under assumed the taxes so again, I need to win one hundred thousand a year to really take care of myself. I could probably get by with sixty and not take care of myself and feel like it's a little bit tight, but if I really want to take care of myself and what how did I come up with one hundred? You know, that was the excuse me, the thousand dollars a month that because if I want to live on seventy five thousand a year that's taken care of myself like I'm not talking about millions of dollars, I'm not talking about earning a million dollars, I'm not talking about living on a million dollars, I'm talking about really taking care of ourselves in retirement, it's a sobering thought, absolutely, but you can do it. I wouldn't put it up here, I wouldn't be standing up here if I didn't think you could do it, and I say this because I've worked with so many people who have done it and maybe it's going from five hundred to six, fifty two, seven, fifty, you're going from zero to two hundred and then running this exercise again and that's really the point that I want you to walk away with, do it now, but they do it every year, it definitely takes the stress away. Because the numbers change, you change, you know, and think about even like the information that you digested yesterday, now you're probably sitting with that, you're being like, okay, I can do that or I can't or I really have to make some changes in my life, but you've already digested that, okay? I've gotta work on a budget I've got to do with my credit. Hopefully you've already digested some of the retirement plans we've gone over, and now you're thinking, ok, I really have to focus on my say things I've got to figure out how to run one hundred thousand a year. Let me rethink how to charge differently let me think about a different industry, let me think about, you know, and by the way, a hundred thousand year, maybe you're a married couple doing that so that's only fifty each or maybe it's thinking about I need to value myself in my work and get paid that way, and I worked with a lot of artists and freelancers that make a hundred thousand a year absolutely so it's a lot of money, but it's also not a lot of money. So something to think about if you can't see the thousand, if you really feel comfortable where you're at, you don't have enough saved you don't have time on your side retire later I mean, I put these numbers together, assuming that when you're sixty five shops closed, go live in wherever don't work don't do anything feet up on the couch. Realistically, that's not the lifestyle most of us are living. Most of us are continuing to work. Both my parents are in their sixties and seventies and they're working. They're working full time, part time, partially, they have two partial, they love it when it keeps the brain going. What? What do you have to say about business owners? I don't know if this relates to a lot of artistic businesses, but what if you're building a business to sell it? Um how how do you plan for things like that? It's a great question because I've dealt with a lot of people have tried to sell their business. I would first of all say that a personal goal that you should have, especially if you're a business owner and you're hoping sort of that cash cow or that big exit is if you have a mortgage, make sure you're paying off your mortgage by the time that happens, because that's a big thing, you don't want to sell the business that you were getting a lot of cash flow from the office and still have a mortgage payment. So maybe you move and you sell or you really say you know what I've got ten fifteen years to pay off my mortgage so that either means I have a lot less income that I need and it's also a big debt that I've gotten rid of number one number two I think of that something you're thinking about and I'm working with a couple that's trying to sell their business and I think it's something you need to start earlier than you think so it don't necessarily wait because your business might not be worth the sale that you think it is or you might be selling it to somebody internally that you really have to start grooming and having them paid off over five ten years again this is just the conservative person and me so I've seen some great exits and maybe if you were like a big product or if you but it might be something that you have to just do a little bit more work around because especially if you're counting on that in retirement okay so raise your rates if there's no other incentive than charging twenty percent more twenty five percent mauritz today artwork say that was a thousand yesterday today it's fifteen hundred and really you are where you are today and you can only move forward I mean there's a lot of like oh if only I so you are where you are today could only move forward so your homework over the break gather your numbers together they're easy numbers, it's your age what you want to live on, it's, how much you've saved and how much you are saving on a monthly basis run those different scenarios and as we saw here put the ira savings into your budget any questions? Well, I'm sebi sebi g you're just you're if you have investments that are now considerable, how do you take into account using that money for retirement? Because obviously when you use it, it depletes the investment. So is this some way to calculate absolutely that's a great question so what I would suggest here I mean, there there's the very simple strategies like, how long will my money last so like, you know, if you have a million dollars, I'm assuming they've got considerable, they will just use that number's an example. So how old are you? You know, if you're fifty years old, if you're living on one hundred thousand a year, you can just take one hundred divided by a million and when is your money going to run out? So maybe you cannot take a hundred thousand dollars a year out of it so that's just the simple example or on the flip side, if you're seventy years old and you need one hundred thousand a year, have fun with it so, you know, you might want to think again looking at actually you know what? I really go through the ages. I kind of dole I don't want the money to run out before age ninety I can't say this is that I'm an expert, but what I've seen in terms of life span is that people usually either live into their eighties or nineties or the kind of guy much earlier from, like cancer or something terrible like that very few people sort of, like, die in their seventies again, this is just an actuarial number, so you have to assume that if you're going to live long, you're going to live to your eighties and nineties. So you want your money to last that you have to really think about how much do I need again? That's? Why I kept talking about that yesterday, really? Knowing that magic number is what is your monthly night? What do I need annually or monthly toe live on? So if I need fifty thousand a year, one hundred thousand a year and I am using these numbers for the person with considerable assets and if I've got that, let me divide that out, does that mean that my money is gonna last time made seventy, seventy five, eighty, eighty? A j d I'd say you know what? You've got to start living on less and taking that money out we'll talk about investments tomorrow because there are and by the way and all these calculators fidelity has it I know for a fact cnn money has a great calculator how long will my money last so they could put that and they can assume a certain performance number which I would assume five percent six percent if they get older a smaller number, whereas if there they have more time I might assume seven percent a percent it's a tricky thing when I speak from personal experience if you, uh working in more than one country to try and work out where you will do you know it's such a such a difficult thing to work out where you'll do your retirement plan? I think other people that advise on that do you even go to work out if you're working in several different countries and you're not quite sure where you're gonna end up he's totally one of retirement plan somewhere and my father created and I mean that that's a tough question I don't know who you go to I mean, I actually work with, um a lot of employees who for the u n and I mean, they talk about a different so I worked with two swiss I work with an indian woman um and so one of them has worked the swiss woman worked in switzerland for a long time she worked in africa she's a translator and then she now works in new york so one of the things that we did when we were working together is we were actually looking at the pensions that she would get from the country she'd worked in actually of the few clients that worked for a lot of ngos in washington that had worked all over the kind of all over the world excuse me so one of the things that we did is we said, well, you know, you would get seven hundred a month from this pension five hundred a month from this ngo and so if you tell him using use an example a few potentially would get a pension monthly pension so it's like the social security from australia so if you were to rick you know you haven't worked there in a few years so what would you get as today on a monthly number so that's like the social security from australia so probably, you know, it's probably pretty good I guess I shouldn't say that, but maybe it's three thousand a month for thousand a month and if you need seven thousand a month so you've got to find that extra three thousand from income and so you probably do have to say for that if you're going to retire here you know it's not easy answer no, no no it's just I think it's a lot of lot of creatives are in that position and I mean I mean, I think a lot of them also possibly look at what they can save and if you can't, I have enough to live here I mean that maybe some people moved to leave india yeah, no, actually I'll yeah, I've worked with a few clients who've moved to costa rica that's right like a big haven to move too because the cost of living is so much less thirty thousand you can definitely live there and if that's all you've saved, you can have a great life there. I actually have a wonderful couple who are ministers and they go live in mexico three, four months a year and they live in a community there and they're retired ministers they had like full time jobs here in the u s and so now they work in mexico a few months a year and they do their ministry thie organised the community hires them, we just you know, I think talking about getting creative, you got your creative everywhere. Elisa berman design wants to know if age fifty and don't have retirement ira but have some money in stocks should I move that money too ira or is there another option that might be I would say, well, the thing is, if she moves that into an ira she's probably going to have to. I don't know if she can transfer it just into an ira, she might have to sell the stock and then buy it back again and ira. So the question is, what would her capital gains be like? When did she buy the stocks? If she pays a lot of taxes, if she were to sell the stock and a lot of taxes, it might not pay for her to do that. So I would want to know what the capital gains are potentially on it. And if they're really high, I would say not to. But even though she's, full fiu it's definitely suggest you're starting to open an ira absolutely right on maybe of the ira, the stock excusing his pain dividends, which is like an interest rate. She could take that cash from the stock and put that into an ira.

Class Description

Surviving and thriving as a freelancer or working artist requires strong financial management skills, but getting there can seem stressful and overwhelming. Join financial expert and Fordham University MBA holder Galia Gichon for an introduction to a painless, seven-step plan for taking control of your personal finances.

In this course, you’ll set financial goals, create a budget that works for you, and establish the habits that lead to financial health. You’ll learn how to make financial planning less time-consuming by spending 30 minutes a week directly focused on your budget, spending, savings, and investments. You’ll also learn how to create immediate growth in your savings and investment accounts. Galia will also share key techniques for taking the stress and uncertainty out of planning for retirement.

By the end of this course, you’ll be able to confidently and successfully manage your personal finances, and have more time (and money!) to do the work you love.

Reviews

Kieu Truong
 

I love how approachable and welcoming and easy to understand this course has make financial terms and situation sounds. I love Galia and she makes I really feel calm and comfortable learning from her. Great!

Danielle Allen
 

This class was an eye-opener for me. I love the way Galia makes you feel comfortable thinking about as well as talking about your financial picture. I also appreciated her many examples and actionable steps for planning.

Shannon Borg
 

Galia is AWESOME! I love how down-to-earth she is (hence the name of her business!). I learned so much, and am going into a new year with a totally different outlook on my money. Now I have a plan, goals and much less anxiety about the whole process! Thank you, Galia!