Where is the hole in your wallet?

This week, I’m encouraging you to cozy up to your finances–to know where your money is coming from and to know where it’s going.

When you’re building a business (and, let’s face it, that’s what you’re doing when you’re trying to make a living with your art), you need capital. You need it for your art supplies, your promotions, but also to make sure you can pay rent, eat, and save for retirement.

In today’s Art Marketing Action newsletter, I ask you to patch the hole in your wallet. Where are you leaking money when you could be saving? I mention what David Bach calls The Latté Factor® in books such as Smart Women Finish Rich*. The philosophy behind it and some tools to help you with yours can be found on David Bach’s Web site. Check out his Latté Factor® Challenge Worksheet at the bottom of the page. Are you up to tracking where every penny is going?

Where is the hole in your wallet?

*Other books by David Bach: Smart Couples Finish Rich and The Automatic Millionaire. While you’re on his Web site, take a look at the free worksheets he provides to help you organize your finances. (I believe you have to register to download them, but it’s worth it.)

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11 comments to Where is the hole in your wallet?

  • Timely advice. I fixed some of my hole when I cut up my unnecessary credit cards and started living out of my actual bank account. So few people do this. And even the credit cards themselves are a drain – several years ago I added up my interest for a year and was shocked, it was about a month’s income. So I was throwing that month away essentially! And since you mention pensions too, I hope you don’t mind me pimping some free artist pension seminars over here in the UK – the main message is that as creators who intend to keep working into retirement that means our pension savings are investment in our business! UK folk can find info here: http://www.pensionsforartists.org.uk/ I’m off to look at David’s book now!

  • I’m so glad to see you bring up money – the ultimate taboo subject! lately, I’ve been thinking about how we throw money at our interests rather than time and attention. For instance, I’ve been taking art classes and I am completely seduced by the aisles of promise that the art supplies stores offer me. Pens! Pencils! Pads of paper! I’ve tried to rein it in this time, and am aware that often we’ll try to buy our passions rather than do the real work involved.

  • The Pareto principle (ie the 80/20 rule) is really helpful in evaluating ones finances (and time management and pretty much everything). The hole in the wallet is the 80% of money spent on things that provide only 20% of value in ones life. I try to concentrate on spending only the 20% that results in 80% of the value in my life. I’ve been told before this means I’m cheap. I think it means I’m financially responsible. Plus I really dislike coffee. To identify which 20% is the most valuable requires tracking expenses and income and how they relate. I created a budget for my art business this year and it’s made a huge difference in identifying where my money should be spent. http://en.wikipedia.org/wiki/Pareto_principle

  • Tina: I have no rules against pimping on this blog. Thanks for the resource! Cynthia: Very little more seductive than art supplies. Except maybe office supplies. Can I ever have enough pens? But you are one of my financial role models. You inspired this message. Lisa: You, too, are a role model. No one can create spreadsheets and goals like you can. But glad to know you’re doing it for the financial side as well. And I have never thought about applying 80/20 rule to this. It makes perfect sense. Thanks!

  • In my life there is a much simpler rule: 1. before I open the wallet I ask myself do I really need this? 2. if yes – do I really need it now? Only if the answer is yes in both cases the wallet will be opened. It needs a bit of an excercise but it works!

  • I have been on the edge financially for so long that I think I automatically question myself about buying something. And here in lovely Point Reyes, a latte and a croissant is not $5, but more like $7. Yikes! I went and looked at David Bach’s site–I question his chart on how much money one can save by not having a latte every day. He figures it with 10% interest–and where, I might ask, does one get 10% interest? I use credit cards all the time. It’s more convenient, and I have a written statement to go by for my taxes. But I either pay them off every month, or if I know I’m in a tight bind and I have a big expense coming up that I won’t be able to pay off right away (like several art fair fees) then I get a new credit card with a no interest offer and put those charges on that one. I have done this for several years–it gives me more time to pay off a large fee without interest. But you have to keep on top of how long your offer lasts & when you need to pay everything off. And I only use them for things like show fees, which I have to do for my business. Christine http://passionforpainting.blogspot.com

  • I thought that same thing about that 10% rate on David’s site. Although you can earn 10% or more on some investments (think stock market), I’ve found that only financial advisers I don’t trust use such a high rate of return when doing forecasting for the future.

  • Lisa-I looked up the Wikipedia entry for the Pareto Principle–being math challenged, much of it made no sense to me–but I found this very interesting…”An ‘inverted’ application of the Pareto principle is the so-called ‘long tail’ focus in internet marketing. Rather than focusing on the high-popularity keywords for which there is a great deal of competition, some marketers have concentrated on the much larger number of obscure phrases that each get a few searches per month. Creating web pages that are search-engine-optimized for these is a less challenging task than for the small number of popular and highly competitive key phrases”. Thanks for the link! Christine http://passionforpainting.blogspot.com

  • Yes to what Christine said – when I took SEO lessons I was taught just that, don’t go for the popular words but focus more on your specialties and narrow down your words. Fewer but more effective keywords to get the right viewers to your site, quality not quantity. A latte is at least $5 over here. But the worksheets didn’t do much for me since I don’t spend any money on that sort of thing! Haha! I even balk at large cash payments because there’s not much I can do with cash, sad but true. However, I do have a weakness for eggnog lattes so will budget in a few for December. As for shopping, I walk around the whole shop holding something before buying. That’s usually enough time for the initial enthusiasm to wear off as you as yourself that ‘do I need it’ question.

  • Christine and Lisa: I believe the 10% came from Bach’s belief in investing in the stock market and mutual funds–and he’s using that number based on the stock market’s performance over the past decade or so. (Careful: I know just enough about this to be very dangerous.) But I went back and checked (briefly) this chapter in his book and that seems to be where it came from.

  • 1)drink tea instead of coffee (nobody steeps better than homemade)2)colour your own hair (buy professional quality tube colour, add activator in bowl, paint on with brush save $100.00 a month)3)cut your own hair(buy pro quality scissors, cut ends only, save $50.00)4)buy designer clothing on ebay at a fraction of the price(get a seamstress measuring tape first)…5)paint on thicker canvases that don’t require framing (save $500.00 a year)6)buy favorite art supplies cheaper buy searching pricepoint online (save another $500.00 yearly)…6) paint with a knife instead of brushes7)buy whitestrips from drugstore instead whitening at dentist8)wear good running shoes year round for daily casual wear9)paint outside instead of renting a studio10)learn & chat for free on the ArtBizBlog 11)instead of going out to movies, rent them from your tv set (save $25 each time on sundries)…hope this gives others some ideas…would be curious to hear other specific tips…lol Sari