Saving regularly pays off in the long run. However, some typical advice for growing savings, such as cutting back on non-essential items, doesn’t exactly work for you because most of the art supplies are considered as non-essential. So how do we look at savings from a creative point of view?
What are savings in general
Savings is basically stashing money until you need it. It is considered that it is better to save money rather than borrowing because it is safer (you’re not risking not paying anything off) and cheaper (you’re not paying interest, rather interest is being paid to you).
You should always have an ’emergency fund’, which is an amount of money equivalent of 3 months of your expenditures, meaning you can survive for at least three months is you lose your regular income.
Other than that, saving for anything you dream of is only going to work if you’ll be saving regularly because you’ll be earning interest on your interest as your savings will grow.
The most popular savings account in UK is Cash ISA because it is tax free on the first £20k every year, and that you can take out money pretty much instantly. But you can only open one ISA per year.
And be aware that interest rates (AER) can change from year to year. The provider (who you’re opening saving account with) should be very transparent about it, so don’t be shy to ask.
Strategy no.1 ‘Saving Goals’
So, if you’re like me who is struggling to really sort out their spending into what is what because life seems too hard that way, then you can try committing yourself to a saving goal.
For example, my saving goal at the moment is to save £10 per week. It doesn’t seem a lot, but I get the consistency I need in order to be regularly saving money without much pressure. After couple of months it will seem like I saved a lot.
If you’re saving for an emergency fund:
- Work out how much you’re spending per month (estimate it as accurate as you can, but don’t worry if it’s not like that every month)
- Multiply that number by 3
- Divide the result by however many months you want to spend saving for emergency fund
- There is your saving goal per each consecutive month starting from today!
For this I also recommend to print out, or even better create yourself, a saving tracker that will easily keep you on the track.
Strategy no.2 ‘Percentages’
Now, if setting up a goal isn’t really for you, I suggest that you divide your monthly income (even if it is small) into three fractions: reoccurring spending (food, subscriptions, education, bills), additional spending (art supplies, gallery and museum visits, nights out), and savings.
For example, Lewis Weil (2018) wrote in his blog how he divides his income into 50/30/20 ratio – 50% reoccurring spending, 30% additional (discretionary) spending, and 20% savings. He also mentions that savings should always come after you pay for your monthly obligations.
So, if you’re implementing this strategy, you should also learn how to budget.
Strategy no.3 ‘That Day Of The Month’
Yay, it’s payday!
A much more relaxed and passive way of regularly saving money is to set up a standing order on your bank account to transfer a certain amount of money to your savings account on a particular day every month. This day should not be the very first day of the month because savings always comes after spending.
So, first find out when you pay all your bills and subscriptions, and then choose a date after all of those. In a sense, you’re setting up another ‘obligation’ to ‘pay’ for, but instead it is just saved for you for later automatically. Not only you will be consistent with your savings (as long as you can cover all the costs with your income), but also it will give you the clarity of what you’re paying for and when.
When setting up a savings account, a provider will usually ask what amount and when you want to save money. In the past, I made a mistake which was that I let my provider to choose the date for me. So, I would recommend that you tell them when you want your money to leave your main account, instead of them just picking a date in the end of each month.
Strategy no. 4 ‘Saving Creatively’
Of course, the best way to save money consistently, that will inspire you for years to come, will be to combine all or some of the previous strategies into one.
For example, you might have a goal to save £100, so you decide that you’ll save 20% of your monthly income every month on a certain day. You might not set up a standard order because your pay-day money differs from month to month, or because you don’t have a set payday each month.
Another example – you might save a couple of pounds every time you sell a piece of artwork or when you get money for your commission. That amount of money will be a percentage that you decided before, say 15%.
Another example – after a couple of months of steadily growing your earnings, you realise that you can comfortably afford to save a certain amount every month. So you set up a standing order which will bring you one step closer to your saving goal, which you decided earlier and worked out the required savings for each month.
Thank you for reading this post, I’ll be back to you with more money wisdom’s for artists in a week!
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