102. Calculating a Creative's Currency - How To Manage Money With A Variable Income ft Susie Italiano (Idle Money Blog)

When you think about a professional dancer, does the image of a financial whiz come to mind? For Susie, this week's podcast guest, this unlikely transition from the stage to spreadsheets is her reality. Susie Italiano, the finance fairy godmother for small charities and creative freelancers, shares how to calculate your minimum monthly spend, the benefits of an emergency fund, and ways to diversify your income.

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Chapters

• 0:00 Navigating Freelance Finances and Stable Income
• 11:58 Developing a Diversified Offer Strategy
• 17:51 Managing Finances as a Freelancer

Transcript

Speaker 1: 0:00

Hey guys, welcome back to the Penny's the Pounds podcast with your host Kea, and this is a podcast. We aim to disperse your myths, simplify difficult financial jargon and rectify your own personal problems. Happy Monday, everyone. I'm so happy to be back. I know I've been gone for a little minute, but it was my birthday, so I am officially a year older and, as I say, a year wiser. And with that wisdom comes a gem filled episode. We're gonna be talking about everything that you need to know. If you're someone who is on a variable income, like your freelancer, don't worry, I've got you covered on this episode. If you haven't listened to the last episode, make sure you go and check it out. It's all about life insurance and getting yourself set up, because it's very, very important and it's not just for when you turn old. So make sure you go back and have listened to that one first and then come back to this one. But let's get straight into today's episode with my amazing guest guest, who are you?

Speaker 2: 0:52

Hi, hello everybody. I'm Suzy and I am a finance fairy godmother for small charities in the performing arts and also for creative freelancers.

Speaker 1: 1:04

Amazing. I am super, super happy to have you here. First and foremost, let's talk about your journey. So you have experienced in the freelance lifestyle. Talk us through your career path and what that's looked like so far. Sure.

Speaker 2: 1:16

Well, actually, funnily enough, my first job was as a dancer. Oh wow, it happened like a little bit like in the movies. So I always danced since I was little and then, when I was in the advanced class, the choreographer of the company that was connected to my dance school, he called me and he said Suzy, one of the dancers is ill. She's gonna be fine, but do you wanna learn her part and do the show in a couple of weeks time?

Speaker 2: 1:40

And I said, of course I want to be the protagonist of this movie let me in, and so that was my first little thing that I did for three years. But then after a while I just felt like it wasn't my, it wasn't a thing for me. I think that if you see a dance show, you look at the dancers and you say they are born to do exactly that. And I didn't feel like I was born to do exactly that. I was an okay dancer, but I wasn't at the top, and so I decided to merge my interest in theater and the performing arts with my background in business. I did a master's degree, then I did an internship in a theater in New York, then I moved here in London and I carved my way in the accounting world and specifically in charity and performing arts accounting.

Speaker 1: 2:26

Amazing, what a journey.

Speaker 2: 2:27

Like that.

Speaker 1: 2:29

That's why I love asking people about their journeys, because it's never that plain saving.

Speaker 2: 2:33

Ever linear, isn't it?

Speaker 1: 2:34

I knew I was going to do this from young. Some people do, but a lot of people. It's this back and forth, it's doing that and changing to here.

Speaker 2: 2:40

That's great. That's how we want it.

Speaker 1: 2:41

That's how we want it. It does make you an all-rounded person. I love it, indeed indeed, and we spoke before we recorded, and you mentioned that you love accounting.

Speaker 2: 2:50

Yes, I really, really do, and actually I found out that it's not uncommon for dancers specifically to then get a career either in maths or in accounting.

Speaker 1: 2:59

Interesting.

Speaker 2: 2:59

Because it has to do with well, you're always looking for perfection. When you're a dancer, you're surrounded by mirrors because every single part of you needs to be perfect and also it has to do with balance and rigor and discipline and all of that and accounting. I mean, I'm making it sound like it's quite stale, but actually I love accounting for how actually vibrant and interesting it is. But yeah, it's not uncommon for dancers to find themselves in an accounting world after they retire.

Speaker 1: 3:26

That is really interesting to know Whoa. I'm gonna look at some of my dancer friends and say I know we're gonna end up, I'm gonna receive it. Send them over to me.

Speaker 2: 3:33

I'm gonna indoctrinate them in the finance world Now we know Now.

Speaker 1: 3:37

We know they're in career path, we know it, yeah, but let's get straight into it then. So I have been working doing what I do now for the past probably about three and a half years full time. So I know what it means to have income where some mumps things are great, yeah, and another month she's like, oh my gosh, maybe it's noodles for dinner and lunch and breakfast, because I don't know when the next paycheck is coming in. So I want to ask you then how does someone who is working freelance, who wants to work for themselves, or maybe just doesn't have stable income, how do they navigate the ups and downs of that very, very good income? Yeah.

Speaker 2: 4:17

Fantastic question. So I would say that there's one very important figure that you should know about your finances and that is what is your minimum monthly spend.

Speaker 2: 4:27

So if you took out all the fluff, if you took out all the non essentials that you spend every month, what is the minimum amount that you are able to spend without being kicked out of your house and without starving? So that would be the sum of your rent, your bills, your phone bills and your minimum groceries. And that is a very important figure because it tells you what's the minimum amount of income that you should have in order for you to be okay at the end of the month. And once you have that income, what I always suggest is to multiply that by at least three and that's going to be your starting emergency fund. So if you are a freelancer who is who you know as many to have variable income, my first suggestion is figure out what that figure is and then start saving towards an emergency fund so that in leaner months you have a little bit of a cushion saving you from ramen noodles.

Speaker 1: 5:20

I mean, they're really hitting. They are nice. I got my kinsen them. I wouldn't lie, they are really nice. They are nice, but you know what I meant.

Speaker 2: 5:27

And then, of course, you want also to prevent very, very high oscillations of income month and month, and that can come in many different ways. You can prevent this. So one is diversifying your income, so finding more than one way to earn an income, diversifying your offer, and also there's absolutely nothing wrong with sticky to a 95. This is something that. So I work a lot with creative freelancers and artists. Most of all, a lot of them are from theater, but not necessarily some illustrators and designers, and all of them have this narrative that if you you're only successful if you're able to leave your 95 until then, then you're not making it quote unquote. And I completely push back.

Speaker 2: 6:14

If it makes sense to you, if you get to a place where you want to and it makes sense financially for you to leave your 95 and focus 100% on your freelance job, fantastic, go for it. Amazing, it doesn't need to look like way, like that way. It doesn't need to look like that way. So, for example, I still have a 95. I do it to today's per year and because I work in an accounting firm, it makes sense to me to continue to work there, and all the clients that I manage in my employed job are all charities or our purpose led, so they're perfectly aligned with the way that I want to spend my time and I learned from that job too. So nothing wrong if you decide to pick up a shift in your local cafe or hold on to a 95 just to keep a little bit of that financial stability month in month.

Speaker 1: 7:02

I think that's a great point that you make because, like you said, a lot of people believe, if I haven't been able to completely swap out my full time income with my side hustle effectively, that you're not doing well. But I think, if anything, the smarter way is to carry on that job, to have it supplement. You know what you're trying to build to give you some financial stability and help you to plan and reach financial goals, because I know for sure when I left my job. So I left my job when I was 21 slash 22. And that's when I started pennies pounds and I left it. You could argue a good and a bad time was right when the pandemic started. So you know we were at home, but you know it was going away.

Speaker 2: 7:44

Yeah, yeah, but then since then.

Speaker 1: 7:45

After that, I picked up some different things where I'd work six months here, I do three months there, just because it gave me that stability and it gave me some income to actually be able to continue building what I was working on Exactly and obviously, like said, for the last three and a half years I have been full time on this, but that has been a gradual process to build myself up to this point and I think I have a lot of friends who are content creators, creatives, who are going back to nine to five because they just physically can't sustain this. You know, this income that isn't stable, yeah, and I think there was no, shaming it, absolutely no.

Speaker 2: 8:18

It's very clever and it's a smart thing to do. And also it takes the pressure off your creativity. Sometimes. You know we're talking with a stand up comedian and she also was telling me, oh you know, maybe I'll have to pick up my temp job, like that's amazing. And so we were having this conversation that we're having and at the end she was like oh, you know what some of the stories that I tell as a stand up comedian have to do with the clients that I have in my admin jobs. And it's like, well, there you go. Sometimes they even do feed one into the other and, you know, you learn transferable skills. I'm all, I'm all up for it.

Speaker 1: 8:52

I'm all for it as well when it comes to Budgeting and saving. Yeah, another big thing when it comes to freelancers is you, and I know how important it is to budget right and obviously to save, as you mentioned, is very important.

Speaker 2: 9:05

Yeah.

Speaker 1: 9:06

But some people will say well, I can't really create a budget because my income is just so varied that I can't sit down and say for sure I'm going to get paid this in a month or I'm going to have this to save. So what would you say to someone who's having that challenge to perhaps overcome that when actually creating those budgets and planning those savings?

Speaker 2: 9:26

Yeah Well, I would recommend so in terms of, like, physically setting up the budget. You always start with your expenses and then you move on to the income. If it's difficult for you to predict how much you're going to do, there's a couple of different ways to do that. So you can either go back a few months and just average out the income that you made over the past few months and just put that as a target income, let's call it, or you can do what's very, very prudent, which is you just pick the lowest income from the past few months and use that so that you know that if you are more than great, that's all of that is extra. So that's what I would usually recommend. And also, don't forget to when you budget. Don't forget to take the tax out of the income. When you budget for your own personal expenses, make sure that you're accounting for what you estimate is the net income that you would have, so net of tax, so that you're ready accounting for that?

Speaker 1: 10:23

Yeah, amazing. So basically, whenever you get your income, we're making sure to factor in whatever taxes you might have to pay on that. You know you're working freelance. You're probably not paying that straight away like you wouldn't a job but it is still worthwhile. Very important because when that tax bill comes, you want to make sure that you want the cash ready as well.

Speaker 2: 10:43

Especially, if you're one of those who files like last minute, you don't have a lot of time to save up for it, so make sure that you put aside I usually recommend that, as soon as you get paid as a freelancer, 20% of that, just chuck it away. Just forget that it's yours. Don't even, don't even get cash to it.

Speaker 2: 10:58

No, just like move it out and that's going to be your tax bill. So if you save about 20% of each invoice that you get paid for, that should be enough at the end to pay your tax bill, Unless you have to pay a payment and account for the first time. In that case you have to save a little bit more. But in general that works out, that's a good, really good tip.

Speaker 1: 11:17

Now I want to touch on something that you mentioned a little bit earlier, and that's on diversifying your income, because it is so important, and I think, as the time goes on, more and more people are realizing how important it is to not just have one stream of income where we talk about nine to five. A lot of people are realizing I can't just get paid 12 times in a year, I need to have other means. And then look on the flip side as a freelancer, you're like I can't just do one thing, I can't just do coaching, I can't just do events, I need to do more things. So what would you say or what tips would you give to anyone when it comes to practically building out and figuring out how to diversify their income?

Speaker 2: 11:53

Yeah, I love this question so much because that's an exercise that I had to do myself, so I'm ready. So there's one thing that you have to do before you launch into whatever offer you have. It's like a kind of like internal audit, where I would suggest you answer two questions. The first question is what problem are you resolving? Be very specific in articulating exactly what kind of thing you're set out to do and how you do it, and how you do it differently from other people, because that is gonna be at the very core of whatever offers you're gonna launch in the future. They're all gonna span, they're all gonna depart from this question what is it that you're doing? What is it that you're resolving? Who are you talking to? And then the other question that you should answer is what am I good at? And also, what do I need more training on? So, what are your strengths? What can you do with your eyes closed? And that's important, because that's probably gonna be the basis of the first few offers that you're gonna be able to put out there.

Speaker 2: 12:51

And then the things that you still need some training on or a little bit of knowledge on still is the thing that you're gonna wanna invest in as soon as you get a little bit of return and then, after you figure out these things, you just map out what your offers are. So you wanna have a good mix between active income and passive income. So active income is the thing that you get in return normally for your time. So I design a commission for you and you pay me for that commission. I work three days for you, you pay me for those three days, so you exchange your time for your income. And passive income is the income that you receive while working disproportionately Like, yeah, when you work much, much less than the potential income that you have. So a good example is digital, the sale of digital products.

Speaker 1: 13:38

Yes, that's a really big one. Right now, a lot of people creating digital assets to sell, exactly exactly.

Speaker 2: 13:44

It's a buttload of work to put it on and of course it depends on what kind of product you're looking at, but it's usually a lot of work on the upfront. But then, once it's out there, you just need to put it in front of people's noses and the income potential is much, much higher than the time that you employ in it. So when you figure out your offer, you go back to that first question what problem am I resolving? You break it down in several smaller mini problems and for each one of those you say, okay, so that thing I can resolve with this offer, that thing I can do through consulting, that thing I'm gonna create an online course for. And you slowly start to devise the various different things that you can offer. Make sure that you calibrated with how much capacity you have. So, depending on how many hours you have in a week, you can dedicate a little bit of time, maybe half a day on creating your online course and then another day on consulting. So make sure that the mix is a mix that will allow you to get to the income that you need, but also that you're able to work on consistently.

Speaker 2: 14:43

When I first started really investing in my business. Well, when I talked to you about my career before, I told you that I had a career in accounting, so I was employed full-time up to very recently up to 2022. And then, on the side, freelancing, I was having these one-on-one sessions with creative freelancers, helping them understand their self-assessment, helping them budget for themselves and set up limited companies and stuff like that. But it wasn't really strategic. I was just being recommended here and there, but I wasn't really thinking deeply about what my offer was, and so I sat down and said, okay, so my goal in about a year's time is to work two days a week employed. That was part of the plan. Very happy to be sticking to it.

Speaker 2: 15:26

And then I want my active income to be the highest earning thing, because my time is precious and so if I need to give it to someone they need that. That's gonna be my higher price point, and I'm gonna be able to work one to two days a week with, maybe charities or companies that need my financial services. So that's one part of my offer. My mid-range price is online courses and financial education. So I actually just launched a course called Making Friends with Self-Assessment, where I teach creative freelancers to submit their self-assessment. But not only that I actually teach a bookkeeping method that they can stick to, so that they can eliminate the stress from self-assessment and submit months in advance, and I have plenty more ideas of what's to come after that. And then my lower ticket offer are templates. So I love Excel and I love a good spreadsheet, so I have set up a few budget templates that people can download. So that's more or less how I've diversified my offer, so that not all of my eggs are in one basket.

Speaker 1: 16:30

I think it's really good that you've got it high, medium and low tickets, because then you can, like I said, your time is very precious. That should be the most, and you've got things that still require some of your time because it took time to actually create this course.

Speaker 2: 16:41

And they're higher in value as well. There's a lot of stuff in it.

Speaker 1: 16:43

Exactly, yep, so that's in the middle. And then things, like you said, templates. Like I said, it takes time to create it and then, once it's created, you can sell it infinitely.

Speaker 2: 16:50

It's there.

Speaker 1: 16:50

Yeah, it's there, it's created. So I think that really does give a bit of an insight to anyone who's looking to put together their own. I love that question that you said, those two questions. Yeah, to ask all those questions to really get us all thinking, because I think sometimes you don't realize how many more ideas can come when you actually ask all those questions and delve deeper. For sure, Things that you can think of.

Speaker 2: 17:11

Absolutely, and they can serve also many purposes, not only for your offer, but if you're a content creator, those are blog posts or Instagram reels, or it's very helpful to think about. What do people need and how can I help them. Yeah, absolutely Mainly, absolutely.

Speaker 1: 17:25

Now I want to ask you something about skills. So I've like said I've been working for myself. I've been a freelance for almost five years now and I started very young, so I had a lot to learn when I started. Now I'm at a point where I know I know quite a bit more. I want to ask you for someone who's starting off they want to get some employed and freelance what would you say? What would you say some of the key skills that someone needs to start working on? You mentioned there you've got your course. When it comes to self assessment, when I did my first self assessment return, I absolutely watched it because I had no idea what I was doing.

Speaker 2: 17:59

No one ever teaches you that Nobody does Just expected to just know what it is.

Speaker 1: 18:02

Figure it out, yeah, and just send it in, and if you don't know, then you get someone to do it on your behalf. Yeah, but what would you say is some of the skills that a freelancer some play person should aim to learn as like a basis to get them going when they're working that way.

Speaker 2: 18:17

Well, I would really start by saying that it's not really a skill, but it's more of a mindset shift that you need to adopt in the first place and especially again, I speak to creators most of the time and the hardest thing is not really about learning the new skills, because most people are capable to do financial stuff, but it's about the mind block around it. And there's this I think everybody who didn't receive financial education has a hard time approaching finances in general, but I think artists and creatives in general. There's this narrative that says artists pure and money is evil.

Speaker 2: 18:52

And so if you're good at money, it means that you can't be a good creative. Sometimes it's even cool to say oh, I'm a mess. I'm a mess with account.

Speaker 1: 19:01

Leave me be.

Speaker 2: 19:02

I want to like paint all day, and so it's almost like they're sticking it to the man. If they don't deal with finances, arguably there's one person that they're sticking it to, and it's themselves and they don't engage.

Speaker 2: 19:16

So I work a lot in just like separating that out, and of course that's. That's just a narrative that people tell them. Tell themselves, money is not good and it's not bad. It's a resource that we have, just like our time and our relationships and our intelligence, and by intelligence I mean you know your talents, your ability to learn, like all three of those. All those things are neither good or bad. They are what you make them to be and so why wouldn't want you, why wouldn't you want to grow them and and really just approach them in a way that that will enable you to find success.

Speaker 2: 19:55

So, first thing, just take the fear away. You know why I always say to my clients there's no like negative effect in becoming financially literate, there's no negative effect with engaging with your finances. It will only only only bring good things to you. So why don't we do it? Probably because we are a little bit scared of the story that the money tells us about ourselves. We don't, we might not want to learn about that, because we take it very personally. We were like, oh, I've overspent, I'm a bad person, or I made that decision, I'm a bad person. It's not about that. It's about identifying behaviors and just finding behaviors that are better.

Speaker 1: 20:35

That's that's just it, that's it.

Speaker 2: 20:37

So I would say allow yourself, give yourself permission to just approach it. Take your fear, put it in a jar on your desk. You can always go back to it later and just sit down and say, okay, what did my income look like last month, etc. Etc. Ask yourself the important questions and in terms of skills, I would say it really, if you really boil down to it, it comes down to just being a little bit organized Just blocking your time in your calendar to sit down and categorize your transactions. Block your time to just like do the slightly boring but still very, very important financial care that you need to provide to your business Most of it is going to be reconciliations and running a little bit reports and saying, okay, so last month this went well, that thing went a little bit less well.

Speaker 2: 21:23

What's my margin? What makes me happy? That's important. Always tie it back to those values that make you who you are as a person. A little bit of organization is probably a good place to start and just like giving yourself permission to sit down and engage with the work and, of course, ask for help if you don't know where to start, absolutely I agree with you, I think, especially when you say sitting down with yourself and your money.

Speaker 1: 21:46

I think one thing that I'm always a big advocate of which I do myself is have, like money dates. Yes, love that, love that, love a good money date. I love just sitting down my finances and I'm just saying, right, for the next hour, the next two hours, however long it takes me, this is all about my money. Yes, I do both my personal finances and for business finances. So anything that needs doing, anything that needs a cent of this person, I need to chase up that thing. That is my dedicated time to do it and I think, like you said, sometimes it is going to be mundane, sometimes it is going to be quite boring. Not everything can be fun in life. Something just needs to get done.

Speaker 2: 22:17

But so is brushing your teeth Right. It's not fun. I don't know if it's there as well. I never look forward to it.

Speaker 1: 22:23

I mean if you do, fine. But I mean something just has to get done and that is one thing you just kind of have to do when you come to your finances. But even with money dates, I like to say to people jazz it up however you want. You know, if you want to have it over your favorite snacks, you want to have your favorite drinks there.

Speaker 2: 22:36

Oh, my gosh Jazz it up however you want to. Exactly, exactly. Make it as fun as you want it, and, in fact, one of the things that I'm suggesting in my course is to do tax parties. So if you have or finance parties.

Speaker 2: 22:45

So if you have also freelance roommates that you can work with, just like meet somewhere, either at your favorite cafe or someone's house. Everybody brings their own, their own snacks and favorite drinks, put on a nice playlist and let's just get our taxes done, baby, just get the financial admin done, yeah, and it's like one of those things like, once it's done, it feels amazing and you feel really in control and it's going to give you like a nice boost. And then after a while it just becomes a habit, it just becomes something that you incorporate as part of your practice, rather than this thing that sits far away. You're going to, you know, kick it down the road until you you cannot do it anymore Completely.

Speaker 1: 23:22

Absolutely. I love that, oh I love. I'm going to start throwing finance parties, my friends are going to be sick of me.

Speaker 1: 23:27

I'm going to be having finance parties every other month. I love it. That's going to be me. You give me a great idea. Sorry, friends, sorry, sorry guys. I'm so sorry, but now, just to round off all the amazing gems that you've given us, what would be your top three tips that you want to leave everyone with when it comes to managing your money, when we've got variable income, and just bossing it when it comes to being freelance?

Speaker 2: 23:51

Yes, I mean, I always say to start with a budget. There's plenty of resources out there on how to start a budget and also give yourself permission not to get it right the very first time. But it can be as simple as just like listing out all of your expenses and just starting small and then building up on that. But the budget is at the core of financial literacy because it's about you know. Many people think that it's like a slap on the wrist oh, stop spending. But actually it's an internal check on whether your spending behaviors align with what's important to you. So that is a good place to start. Just like build on a budget and start there. The second thing might be put your fear in a jar. I like that.

Speaker 1: 24:37

I'm going to have that right there.

Speaker 2: 24:38

Yeah, I mean, it's normal to fear it a little bit, especially like it's a change that you will make and it's something that perhaps you've never engaged with before. It's absolutely normal to feel a little bit nervous about it. Just leave it there for a while. It's there, but you're still going to. You know, create that time in your diary and engage with the numbers. And the third thing keep learning, keep learning, keep engaging with content that is going to make your financial processes better and your financial awareness better, like your podcast, of course, thank you and everything that you've got as well, which will all be listed in the description, by the way.

Speaker 1: 25:16

So everything that Susan mentioned will be there, thank you.

Speaker 2: 25:19

Yeah, keep engaging with it, Keep normalizing this behavior and eventually it's just going to become part of your practice and of your creative freelance job Amazing.

Speaker 1: 25:30

Thank you so, so much for coming onto the podcast. No, thank you for having me For everyone listening and watching. Where can they find you?

Speaker 2: 25:36

So my website is called idolmoneyblogcom. You can follow my courses and my resources there, and I'm Susie Italiano on Twitter. Oh, I love that Italiano.

Speaker 1: 25:46

That's my actual surname, really. Oh, that is an incredible surname. It's a fantastic icebreaker. Yes, susie Italiano. Whoa, that's great, that's me. Thank you so much for coming to the podcast and for everyone watching. Thank you, and back again next week with another episode. Bye guys.