The essentials of handling your finances as a graduate, junior or freelance creative

Within the creative industry, the financial side of things is honestly quite boring and dry. It’s also not something that many creatives are prepared for – budgeting and thinking numerically are totally different skills to learn and education hardly sets you up for them.

As a result, when I graduated I made so many mistakes. I agreed to doing jobs for little or no money, because I thought it was offering a good experience (it wasn’t), I thought it was fine not to budget and hope it works out (it didn’t), and I had an absolute sweatfest of a panic when it came to doing my taxes for the first time.

In a nutshell, if you work in the creative industry – and particularly if you’re freelance – no one is going to tell you how to look after your money and this, in my stupid naivety, came as a bit of a shock. Even though it’s been a little while since I graduated, I still struggle to look after my money and so turned to creatives I admire, our own HR manager and the savviest of money experts to answer every question I could think of when it comes to looking after your finances.

Below is a long list of answers to questions such as how to know how much to charge for work, what actually goes in an invoice, how to save money, what you should be saving for, what to do if you don’t get paid, and a whole lot more.

How to save

I’ve never organised my finances before – how do I start doing this?

Spreadsheets! Sorry to begin so boringly, but if you start your working life with a detailed spreadsheet of your finances, this is going to help you with numerous money-related decisions down the line.

Adam Ellison – the founder of The Monday Morning Club, a social enterprise which teaches self-employment skills to people seeking jobs following redundancy – suggests setting up your books on a cash basis. This is the most straightforward way of bookkeeping, only documenting money once you’ve received it.

To do this, set up a simple spreadsheet with each month. One tab should feature your outgoings and expenses and another for your income. “Get into the habit of filling it in at the end of every month,” Adam says, “Then it’s easier to remember things, and it doesn’t get out of control.”

Is there an easier way to save money in my daily life, though?

Of course, but it will require you being stern with yourself. The creative industry is an amazing sector to work in, but there are a lot of trends people pick up that will influence financial habits.

“If you want your art to be different from everyone else’s, don’t just copy their financial behaviour when you graduate,” advises Katie Menzies, one half of illustration and animation duo Cabeza Patata. “It’s easy to fall into this trap in your first job, but you can live without expensive lattes and taking a Tupperware into work can be cool too (plus nice and eco-friendly!).”

Also, as Rosie Wadey of photography agency East co suggests, “make use of new banking technology to help you budget. There are so many ways to keep track of your outgoings – using a top-up card like Monzo or Revolut for everyday expenses will help you to visualise where your money is going and where you could make changes.” Rosie also suggests taking a look at the messenger app Clio, to “give you some eye-opening statistics on your spending!”

Don’t forget, though, sometimes the old ways are just the best: set up a direct debit to your account and funnel as much money as you can into it.

What am I saving money for though? I’ve only just graduated!

No creative can exist without their tools – particularly if you’re freelance. While you may have all the possible equipment you’d need now, it’s always best to burrow away some funds in case the worst happens.

Hollie Fernando, a photographer who dropped out of university and has been a freelance photographer ever since, actually recommends investing in the best possible equipment at first, “as the quality of your work will just be undeniably better”, she says. “You’ll end up getting higher-paid jobs due to your output looking more professional and can make your money back on this investment.” But, if this equipment fails on you, try to make sure to “put away £15, £20, £50, anything you can whenever you get paid into a separate account and try not to touch it until an emergency – it will save your arse when your camera suddenly breaks on you.”

Also, thinking big here, but you’re saving for your future! Putting away a little money every so often can actually make a pipe dream come true, as it did for Cabeza Patata: “Be organised with your money and think of the long-term goal: with the little everyday money we were saving at the beginning of our careers, Abel and I put away monthly amounts that ended up allowing us time for the personal work which built our studio.”

Taxes

Do I need to save money for my taxes?

This depends if you’re freelance or on a full-time contract. If you’re full time, your employers will pay your taxes because it is taken off your payment every month and will be displayed in your payslip. If you’re freelance, however, you’ll have to do your taxes yourself.

I’m freelance, so how much do I need to save to pay tax?

In the UK, it is standard to save at least 20 per cent of your earnings to pay your taxes. However, if you earn more than £50,000 per annum you’ll need more. Adam recommends checking this however as “each year, the personal allowance (the amount you can earn without paying tax) changes, as do the income tax bands so check Gov.uk. You may not need to pay any in the first year but it’s best to save some money just in case.”

Can I use expenses on my tax return?

Gov.uk also clearly explains what you can expense. Make sure to check this as it could bring down your tax bill. Examples of what you can expense can include your internet bill and travel costs. “They use categories, which would be worth using on your own accounts,” points out Adam. “It’s also worth noting that with anything you use for your personal life and business, for example, your phone, you can’t expense the whole thing, just the percentage you use for work.”

Do I tell the government I need to pay tax or will they tell me?

You need to tell them you’re self-employed and register for self-assessment (AKA, I will fill out my tax form rather than my company). Adam suggests making sure you register for self-assessment ASAP as it takes “ten days to receive your username and password, and you need these to file a tax return, so if you leave it until the deadline it will be too late,” he says.

The main thing to remember with your tax return is to be honest and tell them everything about your financial situation. “Make sure you tell them all about your income, including any part-time or full-time jobs you have. I’ve made that mistake once and had to pay a painful fine.”

Also, in our experience, HMRC in the UK is actually very helpful when it comes to paying your taxes. As long as you’re actively trying to pay your taxes, its employees are very helpful over the phone with any advice you may need.

How much to charge

How do I work out how much I can charge for freelance work?

Because of your spreadsheet! Begin another spreadsheet by being honest and working out how much money you will need to run your business or just generally live. “Make a spreadsheet listing how much, roughly, you spend on rent, bills, food, socialising, holidays, Christmas presents etc. and on your business, rent, bills, lunch etc. If you work from home, a percentage of your rent and bills should be a business outgoing,” says Adam. From there, “calculate a monthly estimate for how much you spend, multiply it by 12, and you know the minimum amount of money you need to make in a year.”

Following this, you will need to work out how many days you can realistically work. “Take 365 days and minus weekends, bank holidays, potential sick days and time for holidays,” Adam points out. “Divide your estimated annual outgoing by the number of days, and you have a bare minimum day rate.” If you’re freelance, “really, you should charge at least double that as you’ll need to cover off quiet patches.”

After this base rate is worked out then consider your experience, industry standard rates, who the client is, who you are up against. “It’s a bit of a dark art,” admits Adam, “and a bit of trial and error. But at least you know your minimum.”

Negotiating a price

What the studio has suggested is too low, can I negotiate?

Sadly, this is a question all creative graduates are going to be faced with and it’s always dependent on your feeling towards the opportunity. However, if (hopefully because you’ve made the spreadsheet above) you know this opportunity is not financially viable you can absolutely negotiate and “weigh up the financial vs creative risks,” as Rosie Wadey of photography agency East co suggests. This will allow you to assess what work could develop from this opportunity in future, and help you decide if it’s worth doing in the first place.

Looking back on her career so far, director Roxy Rezvany admits that making this decision is something she wishes she understood properly when graduating. “If there was one piece of advice I wish I’d been given sooner when it came to managing my income, it would be don’t undersell yourself,” she tells us. “Too often we’re made to feel that asking for more will lose us jobs or will mean we’re never able to work with certain employers. Even when we ask for rates that aren’t even what we think we deserve, but are just what we need to cover rent, we are told the money isn’t there.”

But how do I actually go about negotiating?

Roxy rightfully points out that “if you’re ever stuck on what you should be asking for, talk to friends, colleagues or feel free to message people you haven’t met but have taken on similar jobs or worked for the same employer and ask for their advice.” This should allow you to come to an amount that is right for you and hopefully the client.

But when it comes to actually making the call or writing a carefully worded email, be confident. “I’ve learned that most employers who don’t want to pay you properly will not be worth working for,” points out Roxy. “I’ve also learned that if you stick to your guns, and someone really does want your work, they find the money.” Although this may lead to you missing a few opportunities, “it’s a great and necessary practice for your career longevity, and means the times you are agreeing to cut your rate, it’s only on projects you really care about and find fulfilling.”

For Katie of Cabeza Patata, Roxy’s words couldn’t be truer. In her eyes, negotiating a fee is always worth doing because, “if you take the step of working as a freelance creative, remember that just because you’re doing some ‘fun’ work doesn’t mean that it’s not work, and clients need to realise this too,” she says. “Companies make a profit from our images and should pay accordingly. Always negotiate budget – in most cases, the worst outcome is just the client telling you the original figure they had in mind. We have very rarely lost clients doing this, and, if they do disappear, it’s probably because they weren’t very interested in the first place.”

I think I can afford to take on this opportunity despite the money, should I still not do it though?

There are two things to consider here. Firstly, working for a very small amount is essentially doing a favour, but to the client, you’re always going to be doing work. Adam Ellison suggests that if “you can’t negotiate a higher rate and you understand (eg. you’re helping out a friend in a similar position), it sounds counterintuitive, but you may want to consider doing it for free. As soon as you’re being paid, you’ll have a client, and they will act like one even if the pay is low. You can instead turn this job into more of a collaboration, which will give you more flexibility with the deadline and the brief. But if you don’t agree, or you’re not in a financially secure position, be brave enough to turn it down, your skills are valuable and you might be better off working on a personal project.”

Another consideration is your fellow creatives! If you accept a job at a low rate just because you can, that influences industry standard. As Roxy pinpoints, negotiating is yet again important because by achieving the most reasonable rate “also helps maintain a healthy industry standard regarding the rate of pay for everyone.”

A project is taking longer than we envisaged or has changed drastically. The agreed payment doesn’t reflect this – what do I do?

If you’re working in-house at a company, any extended periods of your contract should be added to your freelance agreement and signed again. However, if you’re a freelancer working on a specific piece and you’re doing more work than was initially asked of you (other than reasonable revisions) it should be agreed to be changed with a price. For example: say you’re an illustrator and you’ve been commissioned to draw a face portrait for a profile piece. You can ask the company for a higher amount if they extend the commission to include a full body drawing, but probably not if they give feedback on the style or colour choice you have used.

If you can’t work out whether you should be asking for more money, Adam suggests asking yourself “Why does it need more time? Is it because you misjudged how long it would take? If so, you might have to take it on the chin and learn for next time.” But, if it’s the fault of the client: “Be upfront, clear and professional and specify what’s new, how long it will take and what it’ll cost. They will try to negotiate but so can you.”

If you’re agreeing to a one-off piece, it is also a good idea to agree on a price with a number of revisions confirmed within that too. That way, everything is on the table from the beginning of the working relationship.

Contracts

I’ve decided to be freelance so I never have to sign a contract, right?

Wrong. Although you will not sign the same contract as if you were joining a company full time, as a freelancer – particularly if you’ll be working in-house at a company for a period of time – you will need to sign a freelance agreement.

A freelance agreement (sometimes known as a supply agreement) is a contract between you and the company stating the length of time you’re working for and the rate you will be paid. It is your employee’s responsibility to supply one and, if it hasn’t, do not be afraid to ask.

It is your right as a freelancer to have an agreement with a company who has promised to pay you. And, a freelance agreement is your proof if they do not. Make sure that you have your own copy, signed by the employee and yourself.

The studio is asking me to sign an NDA, what does this mean?

NDA stands for “Non-Disclosure Agreement” and is a legally binding document which will ask you to keep a project and its contents confidential for a certain amount of time. In normal terms, it basically means you’re disclosing that you will not share sensitive information about a project (ie. we are commissioning so and so for this brief that isn’t released for another six months) while, and sometimes after, you’re working there.

Within the creative industry, signing an NDA is commonplace, particularly for freelancers. You should always be prepared to sign an NDA and most employers won’t allow you to start the project or leave the company until you do so. Even in full-time work, it is common to be asked to sign an NDA as it may not just relate to projects, but have clauses around working for competitors in future.

Although you are likely to sign a number of NDAs throughout your creative career, always ensure to read the contents. It’s important you understand what you’re signing and ask more questions if you don’t. Usually, the most important thing to note will be the date at which you can start speaking about the project, or negotiating whether you can show that work in your portfolio in future. Never underestimate how far telling one friend down the pub can travel either.

Invoicing

Can I ask for a deposit payment on a freelance job?

Yes, but only really on projects which will take a few weeks or months. Deposit payments are becoming increasingly common and if it will make you comfortable, or put you in a more comfortable position financially, you might as well ask.

Adam Ellison always asks for a percentage of a longer-term job to be paid in advance. Following his career as a freelance illustrator and contracting digital designer, Adam advises to “break down the job into stages and explain these to the client in writing, then ask for the first stage to be paid in full before the job begins.”

As Adam points out, this shows your commitment to the client as well as making them “take it seriously, and work with you when you need something from them.” Following this, because of the plans you’ve laid out with the client, you can ask for each stage to be paid on completion. “It gives each stage a clear sign-off and means less risk for you, as only one stage’s worth of money could be lost.”

When do I submit my invoice?

There is no blanket rule for all companies as to when you should submit your invoice and when you will be paid. As a general rule, it would be normal to submit your invoice when you have come to the end of your working period. However, always remember that is your responsibility to submit an invoice and don’t expect your client to remind you.

However, in your freelance agreement, a payment term will be stated (ie. you will be paid within 30 days) and that is when the company is promising to pay you from when the invoice is submitted.

What should my invoice actually include?

If this is the first time you’re invoicing it is very important to know what to actually include on an invoice – mostly so you get paid on time. An invoice in all cases should include your name, contact details (mobile number, email and address), account details, the amount you should be paid and the invoice number.

In terms of account details, if you’re in the UK, this is your account number and sort code – the same details you supply to a friend if they owe you some cash. If you’re within Europe you will need an IBAN (International Bank Account Number) and a BIC or Swift Code, dependent on what your particular bank calls it. If you’re international you will need all of the above but also your bank’s address.

What is an invoice number? Do I have one? Do I need one?

An invoice number is a unique system code that you will apply to your own invoices. It can numerical, letters or a mix of both, but we’d recommend keeping it simple. And yes, you definitely do need one, it is the law that you number your invoices.

It will also make the HR manager or accounts person’s life a lot easier as its a reference for them making the payment. That way, if a company mistakenly has not paid you, you’re able to go back and say you haven’t paid me for this specific invoice. This is also very helpful if you’ve supplied multiple invoices at the same amount to one company but they have missed one. That way they can differentiate between invoices and rectify the mistake quickly.

Does it matter what my invoice looks like?

Nah! Not at all. For the accounts or HR manager they literally just care that it has all the information on it so they can pay you. There are several templates available to work from and just also make sure it is saved as the correct file for the accounts system. Universally accepted files are Microsoft Word, Excel and PDF.

I’ve submitted my invoice but I haven’t been paid – what do I do?

Speaking to our own HR manager Sandip Gill about this, she suggests first taking a look back at the freelance agreement. This will state the employer’s payment terms and it may have been longer than you expected – again another reason to read this properly at the very beginning.

If the payment term has been exceeded, get together your invoice, the freelance agreement you and the employer signed and email your point of contact. This could be the project manager or art director who contacted you in the first place, who should then point you in the direction of the accounts person, “or, if you know who the accounts person is already, get in touch with them – every time.”

Then, if it turns out the company isn’t willing to pay you and has been dishonest, the best course of action is to look to Citizen Advice Bureau as it is expensive to hire a lawyer etc. Remember not to accept it though and chase, it is against the law that they haven’t paid you.

Further Reading

The Scottish Artist Union

The Scottish Artists Union is a trade union, affiliated to the STUC. It is the representative voice of over 1300 visual artists, applied artists and makers living and working in Scotland. You can join as a member of the union for helpful consultations but also check out its suggested rates for artists here. Be sure to check out its events too!

Gov.uk

If you’re based in the United Kingdom, Gov.uk has everything you need to know about handling your taxes.

Citizen Advice Bureau

If you need to face a problem within your finances, for instance not being paid, helpful advice can be found via the Citizen Advice Bureau.

Monday Morning Club

If you’ve taken note of Adam Ellison’s helpful advice in this article, be sure to check out his social enterprise, the Monday Morning Club.

If you’re after more advice and insight into creative work and careers, check out Lecture In Progress, It’s Nice That’s sister company. Standard membership is free and includes exclusive offers and promotions.