Having
a financial plan is an important part of any acting career.
Having the right plan in place will help you make sound financial
decisions to get you the lean times and give you hope financially-
while not going broke or getting in debt. At The Savvy Actor
we don't believe in the starving artist mentality. We believe
that you can have your art and set your standard of living high.
There is a system we use to achieve our financial goals and
it starts by paying ourselves first.
Before
you pay yourself first, you need to figure out your monthly
expenses. What do you pay for rent, utilities, groceries, entertainment,
transportation, laundry, pet food etc. Figure out what you need
to live on without all the extras like Starbucks Latte's, dinners
out, drinks with friends, new clothes, etc. How much money do
you need to make ends meet a month? Then divide that by 4 (weeks
in a typical month). This is what you need to put aside each
week to cover your necessities.
Budgeting
is essential in order to achieve your financial goals and pay
for your classes, pictures, seminars, coachings and everything
else the professional actor needs. In his book, SECRETS
OF THE MILLIONAIRE MIND, T. Harv Eker talks about
taking the emotion out of money. In order to do this, he suggested
creating six separate jars or bank accounts (this is what we
recommend and personally use). For each jar/account you attach
a percentage of your weekly income. The percentage can be adjusted
as needed-- you need to cover your bills. You'll see an example
below. This is the breakdown I use following T. Harv Ekers idea.
Now to explain each
account….
Financial
Freedom
Account (FFA) - 10%
The financial freedom account is the account we pay first. It
is our savings account for retirement and something we will
continue to grow by letting compound interest work its magic.
It is the money that goes towards mutual funds, stocks, bonds
and the various other investments that exist.
Necessities
Account - 50%
This is the account from which my daily and necessities come
from. It includes Rent, utilities, cell phone, groceries, etc.
The percentage used on this account will need to fulfill your
monthly expenses. It receives the largest percentage of your
income.
Education
Account - 15%
The education account is actually my acting account. This is
for anything that informs your life …ie acting classes,
cooking classes, language classes, school, etc. This is my second
biggest percentage, because taking classes and voice lessons
are important to me.
Play
Account - 10%
This equals the amount that you pay yourself in the financial
freedom account. It is the money that we will use to buy a round
of drinks for everyone, or that new iPod. The thing I love about
this account is that it MUST BE SPENT each month.
Long Term Savings for Spending (LTSS) - 10%
This is the Money you'll use to save for the trip to Europe,
an engagement ring, a house, a car, etc. You'd think that a
house is an investment that would come out of your financial
freedom account….actually it's a liability and you wouldn't
want to use your retirement savings for the down payment. That's
why you would pay for it with your Long Term Savings Account.
Within the Long Term Savings account you can breakdown the percentage
of your contribution to cover several different Big Ticket savings
projects.
Give Account - 5%
This account is there because you need to give in order to get.
It's karma in a way. Tithing is our way of giving back and being
thankful. Its giving twenty dollars to United Way, or the politician
or church of your choice or $100 to a friend for their 1 man
show. At 5% you can donate to your favorite cause and not feel
guilty about giving money away….because you budgeted for
it.
