5 ways to save money
Do you have a savings account? Well, that's a good start. But there are other ways you should consider saving to set yourself up for long-term financial stability.
Business manager Belva Anakwenze works with creators all the time and has 5 ways you should consider putting money aside for various financial needs.
This video is intended as knowledge-sharing, not tax, financial, or legal advice. Always consult with tax/financial/legal professionals to determine what's best for your business.
Belva Anakwenze:
As a creator, you're constantly tracking views, shares, likes, clicks, but just as important is to track your savings, something that is sometimes overshadowed by those sexier metrics like views and engagement. Especially for creatives, income can be unpredictable, sporadic, and hard to track. One of the most important ways to protect you and your business in this world of feast or famine is to make a roadmap for savings.
Roadmap? I know this sounds boring and possibly daunting, but we all learned the importance of having cash reserves in 2020. I'm here to give you some tips on building that savings roadmap in a way that'll work for you.
I'm Belva Anakwenze and I work with creators just like you every day, helping them with financial and business decisions like how and where to save money. And remember y'all, this video is for informational purposes only. Everyone's financial situation is different. Consult with legal and financial professionals to make sure you've got the full picture for your particular scenario.
A good rule of thumb is to start saving about 15 to 30% of your income. Remember, this is only a baseline. Your target percentage will depend on your lifestyle, your age, family dynamics, tax bracket, and more. Now, what do you do with the money that's being saved?
Coming up with a savings roadmap may seem scary, but start small and work your way up. Try starting with just one of these savings buckets and expand from there as you feel more and more comfortable.
There are five buckets of savings. First and foremost, your emergency savings. With the uncertainties of life, everyone should have at least three to six months of living expenses saved. For creators whose sole income comes from creative ventures, you should aim to have about six to nine months of reserve. I recommend keeping these savings in liquid assets, so something like a high-yield savings account. You don't necessarily want this money invested. If the market drops and you need your cash, you could find you actually have less money available than you originally saved due to negative yields in the market.
Next up, your retirement fund. Start saving for your retirement today. If you are a creator who still has a nine-to-five job, you should be maximizing your employer's benefits, especially if they offer a 401k. In addition, you can contribute up to $6,000 per year into an IRA. The most important part is to start today. Put in the most you can. And remember, this money is not yours, at least not until you're 65. Forget about the funds and do not touch them until it is time to retire.
Here's something you can get creative with, make sinking funds. These help you save for specific big purchases or big plans. Set aside money monthly to save for that vacation or a new car. You can also use this type of savings plan for some of your adulting needs like a major repair for your car, new camera equipment, or whatever makes the most sense for you. This money is separate from your retirement or your emergency fund and can be used for your big goals.
If you're looking to make a purchase with this bucket of money in the near future, you may wanna play it safe. Keep the money more liquid like in a high-yield savings account or a money market account. On the flip side, if you've got five to 10 years or even longer before your purchase, you might consider a longer-term certificate of deposit. You could also take a little risk for possible higher rewards by investing in the stock market.
Next, your tax savings. Now I know this may not be fun, but if you are a creator, you are more than likely not having taxes withheld on that gig income. You should be setting aside funds to pay possible tax liabilities on those creative endeavors. For more information on how to calculate a fair amount to set aside for your taxes, check out our tax tips video on the link below.
Finally, my favorite, your general savings. Put this money to work for you. Use this money to help you make more money. This is one of the key ways to wealth. There are tons of savings and investment vehicles to make that happen with varying levels of risk and growth opportunities.
For some of you, coming up with a savings roadmap may seem scary, but start small and work your way up. Try starting with just one of these savings buckets and expand from there as you feel more and more comfortable and make sure you ask a financial advisor to fine-tune your financial roadmap to meet your specific needs. How are you saving and what for? Tell me in the comments below. Make sure you like this video and subscribe to this channel for more helpful financial tips and tricks. Until next time, go be creative with your business.