Do you handle your own finances as carefully as you would a client’s budget, or your agency’s cashflow? If you see the financial side of your day job as a necessary evil, you may lack the motivation to think beyond the next few months or years when it comes to your personal affairs – never mind the next few decades.
“Typically, ‘creatives’ don’t get into their careers to become rich,” reflects Silas Amos, a designer and design strategist with more than three decades of industry experience. “This is all very well for youthful idealists, but as the years pass and personal and family responsibilities increase, the ‘real world’ needs to be attended to. Once, we were called ‘commercial artists’. The commerce part shouldn’t be an afterthought.”
“The last year has taught us that life is impossible to predict,” points out Gary Morris, Principal at Morris Powell Financial Management, and a member of the Design Business Association’s Expert Panel. “However, while we can’t control everything, we can take action to be as prepared as possible when challenges arise.”
Think about the position you’d like to be in when you stop working. Ask: ‘Where do I want to be by the end of my career?’
Morris Powell specialises in financial advice for the creative sector, and Morris has seen first-hand how reticent some creative people can be when it comes to planning long-term personal finances.
According to Morris, even taking a few minutes to consider your longer-term priorities – and what you want to protect – is a useful starting point. “In a world where so much feels out of your control, acting decisively and being in control of your finances is enormously empowering,” he says. “It will give you the foundation for building a sound financial plan, as well as a much better night’s sleep.”
START AT THE FINISH LINE
Only once you have a clear picture of your goal can you start making plans. “Think about the position you’d like to be in when you stop working,” is Morris’ advice. “Ask: ‘Where do I want to be by the end of my career?’ Then think about what retirement looks like to you, and how much that will cost, and whether those goals are aligned.”
One of Morris Powell’s clients is Paul Taylor, Chief Creative Officer at BrandOpus. “Force yourself to sit down and map out what the next 10-15 years might look like for you financially, in terms of both necessity and desire,” is Taylor’s advice. “Then commit to a plan that will allow you to achieve those goals. Yes, the plan will change and develop as time passes, but at least you’ve drawn a line in the sand.”
A busy work life, especially if you have a young family to consider, can take up all your time and leave little space for future planning
Taylor has a 10-year plan, which he revisits annually. “Trying to plan that far ahead may seem like a wasted exercise – it’s so difficult to predict what might happen when – but it forces you to consider what kind of financial milestones might exist in the future,” he says. “Peace of mind comes from anticipating the surprises and challenges that may lie ahead.”
TAKE STOCK OF THE HERE AND NOW
Once your end point is clear, it’s time to focus on the present. “Take an honest look at your finances, noting as accurately as possible what your income is, what expenditure you have and what you are setting aside for the future,” advises Morris. “Seeing the reality of your current position in black-and-white may be an uncomfortable exercise for some, but it’s the only way you can take control and begin to make effective plans.”
Maura Fernandes is a production manager at Luttrell Productions, and another Morris Powell client. Fernandes takes stock of financial matters “sporadically”, often driven by key deadlines like the end of the tax year. “It’s a bit of a chore, but also a necessity,” she says.
Look at all the ways you save, invest or protect your finances. You may be doing more already than you think
For Fernandes, an external sounding board has proved essential. “A busy work life, especially if you have a young family to consider, can take up all your time and leave little space for future planning,” she adds. “With the right guidance, creating a plan is less time-consuming than you might think.”
PLAN YOUR NEXT STEPS CAREFULLY
“Next, consider what actions you’re taking now to help you get where you want to go,” continues Morris. “It’s a legal requirement for all employers to offer a workplace pension scheme, so the vast majority of people are doing something at least. Look at all the ways you save, invest or protect your finances. You may be doing more already than you think.”
The earlier you start, the more long-term impact you can make by making small changes. “Start early and squirrel away little and often. You have to enjoy life, so it’s a balance,” suggests Michael Murdoch, CEO and founder of The House London.
With so much uncertainty and IR35 being introduced, significant pay cuts are the new norm. I try to be as efficient as possible with what I have
Excluding his pension, Murdoch tries to plan his personal finances up to five years in advance. “Of course, if you create enough value for customers, you can charge more and hence save more,” he smiles.
BE AWARE OF ALL THE RISKS
Finally, take the time to consider the biggest risks you face. “What is the primary financial danger to your family and your current standard of living?” asks Morris. “Once you have this clear in your mind, think about what steps you’ve taken to mitigate this risk.”
Freelance graphic designer Hugo Lees-Jones spends a few hours a month checking that he’s managing his personal finances as well as he can. “With so much uncertainty and IR35 being introduced, significant pay cuts are the new norm,” he says. “I try to be as efficient as possible with what I have.”
These simple steps will help you take charge of the things that you can change, and hopefully, reduce your worries about those things you can’t
Lees-Jones has planned the next 5-10 years in reasonable detail, but the current uncertainty put longer-term savings plans on hold for now. “So many people are living day to day,” he says. “Plan early, even if you’re only saving a small amount.”
FOCUS ON WHAT YOU CAN CONTROL
In the face of ongoing global uncertainty, it’s easy to worry about the future. “These simple steps will help you take charge of the things that you can change, and hopefully, reduce your worries about those things you can’t,” says Morris. “Being proactive, having a plan and making positive changes can all boost mental health and build resilience, ensuring you are as prepared as you can be for whatever life throws at you.”
“Once you’ve mapped out the outline of your financial future, it should be much clearer whether you need to save more, have more protection in place, plan better for your retirement or to ensure your estate is in order for your dependants,” he adds.
“Where do you go next? In your professional life, if you have a project that you don’t have the skills in-house to complete by yourself, you hire in outside resource,” Morris points out. “The same principle applies here: look for an expert you can trust, and use their knowledge and experience to find savings, protection or retirement plans best suited to your needs.”
For Taylor, having an objective advisor has proved “absolutely vital”. When he first sought advice almost 25 years ago, he had never even considered starting a pension. “It was the kick-start I needed,” he recalls. “It’s become a key long-term relationship that is now a trusted friendship, and a constant source of reassurance for my plans.”