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- ✂️ Do you have enough money?
In the last issue, we did something I haven’t heard in my 17-year career: we talked about healthy money for editors.
One of the goals of healthy money is to have sufficient cash flowing into your account. But how much is enough?
The first step toward knowing how much you need to make is to know your true needs.
There are four areas to look at, so grab a piece of paper and pen and let’s dive in.
Area 1: Your monthly needs
First up is your must-pays. (Otherwise known as bills.) This category includes things like:
Housing (Electricity, rent, etc)
Car insurance, payment, and gas
Groceries
Debt or loan payments
These are mission-critical needs. If you don’t pay for them, you can’t work or you’re living on the street. Or someone will come to your door demanding it (like debts or loans).
Area 2: Your yearly needs
This is the category that usually trips up our healthy money. This is any need that comes up less frequently than monthly.
Look over your calendar and find the things that you know are going to come up. THis might include:
Your cell phone bill that comes every 3 months
Car maintenance or tires
Christmas presents (because we all love our kids and family)
Anything that happens every year that you know you have to do
We tend to forget about these things, and when they come up they throw off our plan. and are surprised. Then we either have to dig into savings or borrow the money.
Avoid this by planning for these needs. You could divide the amount you need by how months until you need it, or set aside bigger chunks.
However you decide to do it, plan for your yearly needs so you aren’t surprised.
Area 3: Your editing needs
If you’re a staff editor, skip to #4. Your employer will likely take care of these for you. If you’re a freelance editor, or do editing on the side, read on.
This area is all the things your business needs to run. Yes, you are a business. You provide a service to clients and they pay you. So you know need to know what it costs to operate your business.
This can include things like:
Editing software
Cloud storage
Stock subscriptions
Bookkeeping/accounting software
Apps that help you work, like Spotify or Freedom
And most importantly, taxes!
Many an editor has been shocked by a tax bill they were not prepared for. Talk with your tax preparer to determine how much you should set aside from every payment.
The good thing about being an editor is our costs are very low. We don’t have offices or employees or products to stock. Personally, I set aside 2% of every invoice for my expenses.
Area 4: Your wants
The three areas above give us our survival number. This is the amount we need to make in order to pay our bills, put food on the table, keep a roof over our heads, and run our business.
But life is about living, not just surviving!
What are the things that bring you rest, joy, relationships, and fun? All of those things will make you a healthier person, which will bless all areas of your life.
This could be things like:
Netflix
Dining out
Movies
Vacations
I know personally I have never been good at taking time off, much less spending money on a vacation. But as my family has grown, I’m starting to realize the necessity of rest and time outside of the edit suite.
Know your true needs
Healthy money starts with knowing your true needs.
The lists for your four areas will look different. Maybe something is a need for you but a want for someone else. That’s okay!
The goal is to see all four areas accounted for, because you can’t make enough money if you don’t know how much is actually enough.
Thanks for reading!
What’s something that’s a necessity for you that isn’t for other people?
I used to skip coffee but with four kids it’s pretty much a necessity now 😅
Next time we’ll look at the most important step toward healthy money: Funding your peace of mind.
Until then, keep cutting!
– Jesse Koepke
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