Budgeting basics for creators

By Francesca Margherita

Photo by Jeremy Cohen, featuring Atish

Arm yourself with these simple but powerful finance tips to help you grow your business.

Budgeting might not be the most exciting part of your work as a creator, but it’s one of those things your future self will thank you for. A thoughtful budget that’s tailored to your specific goals and creative priorities can help you weather the ups and downs of cash flow, achieve financial independence, grow your business, and make the most of your work.

So let’s get started:

Budgeting 101

At its core, a budget is basically a look at your net income (that’s your total income minus your expenses) that leads to some guardrails and goals around how you spend, earn, and allocate your money.

And the great thing is that you don’t need a heap of accounting know-how to make a solid and functional budget that works for you. To get started, all it really takes is a simple spreadsheet (like the one we’ve made for you here), a look at your financials and goals, and a little elbow grease.

Pro tip: If you use digital financial tools that help you organize the numbers or organize expenses, they can be really helpful too.

Preparing to make a budget

Try looking back at the last year of your business’s income from all sources and expenses to get the most complete picture and make the most accurate budget. If your creative business is new or things have changed a lot in the past year, use your best estimates and projections (Googling average costs or industry standards, or asking other creators, will be helpful) and update with real data as it comes in.

And as you kick off, keep in mind that going into your budget-making process with some goals can help you make thoughtful and effective decisions. Maybe you just want more financial clarity or direction. But maybe you want to grow your team, see higher profit margins, invest in new materials, or rethink your pricing strategy, and you want to carve a clear, data-informed path to achieve those things. Jotting down what you’re working toward can help guide your decisions later and keep you focused.

Step 1: Tally up your income

Whip out that fresh spreadsheet and make a list of all the money that comes into your business each month. Don’t have that information yet? Use conservative but reasonable estimates — or, if you’re feeling ambitious, a conservative average and full version of your estimates. It’s better to wind up with some extra cash in your pocket than to come up short.

Your goal is to account for everything in a way that makes sense for you, minimizes room for error, and will give you good data later. For example, try giving each of your major revenue streams its own line. You might list sources like Patreon, YouTube, TikTok, Substack, your online store, and so on as their own lines, but you might treat “friends-and-family sales” or “craft fairs” as buckets rather than listing out, say, “sale to Hugo,” “sale to Maia,” “sale to Issa,” and so on.

As you gather up these income streams, be sure to include both predictable revenue (like subscriptions), regular but less predictable earnings (like royalties or your cut of the door at shows), and one-off bumps you might see now and then.

"Your goal is to account for everything in a way that makes sense for you, minimizes room for error, and will give you good data later."

Step 2: Calculate and categorize what goes out.

Next up, look at what you’re spending money on. List all the expenses you incur running your creative business. Just like with your income streams, if you don’t yet have a lot of data, do your best to create solid estimates and projections. But in contrast to those income stream projections, it can be helpful to put your expense estimates on the high side of what you realistically expect to spend. Again, better to have a pleasant surprise than an empty wallet.

If you have Expensify or similar software that you use to track and categorize your business expenses, put it to work and grab those relevant numbers. If you don’t currently use a tool, pull up the expenses from wherever you’ve got them and break things out into clear streams, like art supplies, labor, or software. Label your fixed, variable, and one-off expenses so you can indicate how predictable each expense is and start to identify what you may or may not be able to tweak. (The spreadsheet we shared earlier has a dropdown field for this.)

Need a little intel on what qualifies as a fixed, variable, or one-off expense? We’ve got you covered:

  • Fixed expenses stay the same month over month, with minimal variation. Examples include subscription fees, insurance, rent for your studio space, etc.
  • Variable expenses include things you regularly spend money on but that aren’t totally static. Examples include material costs, shipping fees, utilities, or hourly paychecks for employees.
  • One-off expenses only come up now and then or are one and done.

Step 3: Calculate your net income

Remember, this is the total of all your income minus all your expenses. Tally it up for each month as well as for the year so you can see any peaks and valleys while getting a sense of the big picture.

Step 4: Survey the land (and do some landscaping)

All right, we’re really getting somewhere. You know what you’ve got coming in (or what you expect to come in), what’s going out, and how much you should have left over. Now what?

Making a budget means making some smart and strategic choices about spending your money. Think back to those goals you set earlier. Does it look like you’ll be coming up short? Are your goals bigger than your cash flow allows?

This is the perfect moment to make changes to make your ambitions possible, and to potentially increase your profit margins. See if there are any expenses you want to change or get rid of, like a software subscription you no longer need or a costly contract you could renegotiate. It’s also a good time to see what income streams are doing the most for you. If you’re putting in a ton of effort on one platform but seeing much better return for lower effort on another platform, maybe you want to shift how you’re allocating your time and money.

"If you or others rely on your creative business as a primary source of income, it’s a very good idea to leave enough wiggle room in your budget for unexpected expenses or loss of income."

Step 5: It’s budgeting time

With a clear picture of your income, expenses, and goals, set some boundaries around how much money you’re willing to spend on various categories and, if you haven’t already, identify the baseline of profit you want to earn.

As you start to set those targets for how much you should be spending in each category, keep in mind that, well, surprises happen. If you or others rely on your creative business as a primary source of income, it’s a very good idea to leave enough wiggle room in your budget for unexpected expenses or loss of income — and to set up an emergency fund, too. As you decide how to allocate your overall cash flow, aim to set aside at least three months of cash as fast as you reasonably can, and then continue to sock away some money each month until you’ve got a six-month buffer in the bank. An uh-oh cash plan might not be as sexy as your growth strategy and new merch or what have you, but you’ll never regret having the safety net.

Using your budget

Congratulations, you made a budget! Now it’s time to make it work for you. First things first: Keep track of your target income and spending each month and assess. Plug planned and actual spend into the “Monthly Assessment” tab in the spreadsheet to see your progress and ensure you’re staying on course. (If you’re using one, many expense-tracking or other financial softwares can automatically deliver you some reports or numbers to streamline this process.)

As you move with more direction toward your goals and keep an eye on these numbers you should be able to easily spot changes that can make things more sustainable, anticipate bumps in the road, or put a surprise windfall to great use. And don’t be afraid to keep things fresh. Most folks find recalibrating their budget about once a year is a perfect cadence.

Need a hand?

A professional accountant or financial planner can help you crunch numbers. (Check out Fivver for some temp/contract resources.) Popular accounting and expense-tracking software, like QuickBooks, PlanGuru, Expensify, and Freshbooks can be great tools, too.

Want to share your budgeting stories or get advice from other creators? Check out the Official Patreon Creator Community Discord server.

P.S. This article is intended as knowledge-sharing, not financial advice. Consult a financial professional to determine what's best for your business.

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