OK, we’re moving along here with YOU, the ACTOR, and your FINANCES! If you haven’t yet read Finances And The Actor Part 1, I highly encourage you to do so right now, before proceeding with this read. It’s a quick and easy read so go ahead and get yourself caught up. If you’re already up to date… LET’S MOVE FORWARD!
Keeping in mind that during the course of this teaching on FINANCES AND THE ACTOR, we’ll be discussing more THE MARGIN than THE AMOUNT. Meaning, it’s not about what you MAKE but what you have LEFT after all expenses have been paid that matters. So, regardless if you make what would be considered A LOT of money or A LITTLE, it makes no difference as we’re looking at MARGINAL PERCENTAGES which will factor in expenses as well.
Next, I’d like to lay out for you a simple set of FINANCIAL STRATEGIES that will put you in a stronger financial position than you may already find yourself. If you’re paid as an INDEPENDENT CONTRACTOR, meaning you’re not having taxes taken out of your pay under FORM W2, then you’ll be considered under a FORM 1099. That being the case, no taxes are withheld and you will be responsible for paying those taxes on your own.
Here’s what I’m considering for you. Again, we’re dealing with PERCENTAGES only here so this will work for most all of you. If you’re paid under a W2, just leave out the TAX ACCOUNT below and the rest will work just as well.
Whenever you’re PAID ANYTHING! Whenever you’re GIVEN FUNDS! Anytime you FIND MONEY! As often as you can… break it up as follows no matter what the amount is:
- 5%-10% – Give away (Benevolence/Tithing/Charity)
- 10% – 15% – Pay yourself in a savings account (Not to be touched)
- 15% – 20% – Place in a separate tax account (Consider this as never yours in the first place. Percentages are based on your tax bracket)
- Pay your bills (Pay what you owe until you can pay more than you owe – work on getting and staying out of debt)
- You get what’s left. (Place whatever is left in a personal checking account for you. (This is what you get to do what you want with))
- INVESTING would be the next step. [SEE HERE]
Track EVERYTHING that COMES IN and GOES OUT! KEEP CONSISTENT!! Just like EATING or PERSONAL HYGIENE, you just MAKE IT A HABIT!
Here’s a simple equation to remember — The better the records you maintain, the more money you get to keep! This is especially true if you ever find yourself in a tax audit with the IRS. Trust me, I’ve been there! One day, I was greeted at my mailbox with a letter from the IRS stating they were going to be conducting an AUDIT on me for TWO YEARS! I almost passed out on the curb. Once I settled back down, I went to work gathering ALL of my RECORDS for those two years and proceeded downtown to the OFFICE OF INTERNAL REVENUE SERVI
CES. Long, arduous story short, we argued back and forth for a few days until my records proved (over their records) that not only did they dismiss year one but they had to PAY ME BACK MONEY for year two! Simply stated, I WON because I had my FINANCIAL ACT TOGETHER!
We’re just scratching the surface here. There’s so, so much more to all of this — and it’s all QUITE EXCITING! When you begin to get truly EXCITED and PASSIONATE about your finances, your finances will give you something to get impassioned and excited about! But, you can’t put the carriage in front of the horse. NO STEP SKIPPING!
If you would like further detailed info about any of these points concerning your financial picture or if you have any questions, please feel free to contact me personally. We will also be examining all of this and so much more in our upcoming seminar — FINANCES FOR THE ACTOR!
Keeping Above The Line,
THE ARTISTS FREEWAY – [Your free weekly exercise]
A – After you’ve begun tracking your INCOME & OUTGO, set up your %’s for your new method of FINANCIAL MANAGEMENT.
B – Open PROPER BANK ACCOUNTS. Most banks will allow you to tag on ADDITIONAL ACCOUNTS alongside of your existing account to use for TAX and PERSONAL SAVINGS.
C – If you’re not already doing so, find places where you can GIVE and begin GIVING!