“If you were to fold a piece of paper in half 42 times, it would reach the moon. This is the power of compounding; it is the small numbers that add up,” declared Arts Development Consultant Shreya Nagarajan Singh. She was introducing her registrants to a workshop last week, ‘For the Future — The Basics of Personal Finance for Artists with Lavanya Mohan.’ “Revenue streams such as teaching, performances, part-time or full-time jobs, social media, etc., are mostly linear but the concept of money isn’t linear, it is exponential,” she added. The discussion on finance was indeed timely what with the extended Lockdown, keeping both artistes and the audience behind closed doors.
Shreya tackled a sensitive issue for artistes next — performing for free. here, she shared a strategy for the evaluation of a proposal. “It is a simple exercise — give 10 points each for payment, career building, enjoyment. I call it Perfect 30. Rate every opportunity — if the score is 15 or greater, say yes; if it is between 10-15, consider strongly, and if the score is below 10, say no, it is not worth your time. You can perform gratis only if it is a good cause, to return a favour, for a non-cash exchange, to break into a market, a select venue, a special opportunity or to test a new production. Don’t be afraid to say no. Be comfortable to talk about money,” she explained.
Taking over the session, chartered accountant, Personal Finance Blogger, Lifestyle Writer and Marketing Professional Lavanya Mohan said, “Money and ambition are often considered bad words in the artistic community. While there is absolutely no doubt that the pursuit of art is important, the pursuit of money is just as important if one wants a sustainable future in the arts. You must understand the time value of money to plan ahead. I would advise you to be like a squirrel and save money, to lead a debt-free life and get working on steady income streams.”
Giving another piece of advice, she said, “Don’t undervalue yourself.” ‘Learn to ask for money. It is not easy,” she continued. “I found that the more I asked, the more comfortable I got. It is not about being ambitious or making money, it is about giving yourself worth. The moment you undervalue yourself, the value of your art also comes down,” she explained.
So how to be comfortable asking? Lavanya’s choice is E-mail. “On the phone too, one can be upfront without being offensive. Be prepared, remember you are the CEO of your own business. Be serious about what you do and attest a lot of value to yourself,” she said. Shreya chipped in to say, “I send my rates earlier by mail, and if the client negotiates, I do not come down less than 10 per cent. Ask yourself, ‘Are you ready to walk away?’”
Lavanya spoke about savings, the most important tool of Financial Planning. Here again, she had strategies. “First, label your savings, say for travel, for a production, for professional development and so on. This will give clarity if the savings for different purposes is parked in a single investment. Use Excel sheets if possible. Next, separating savings into buckets, according to the time frame of requirements; creating an Emergency Bucket, with savings that are invested in liquid investments; an Aspiration Bucket for travel or a car, etc., with a short to medium term investment duration (3-5 years) and a Long Term one for retirement plans, especially important for independent artists who are not eligible for retirement benefits. Investments such as Equity Mutual Funds, LIC Jeevan Anand, NSC, PPF, etc., are your options, but seek the advice of a certified Financial Planner. For this exercise you will have to work backwards and you will understand how much you have and what you need in the future.”
Lavanya spent time educating artistes on Insurance — Life, Term and Health. and insurance-linked investments. She urged artistes to take advantage of their youth, as premiums are cheaper for the young.
Shreya Nagarajan Singh
The duo Lavanya and Shreya moved to Budgeting as an essential Financial Planning tool. “Money without a budget is like Champagne without a glass,” quoted Lavanya. “Budgeting is to document what comes in and what goes out. It need not be complex, but it needs to be done regularly, every few days, as you may have no idea what you are spending on. There are many smart phone apps that are useful,” she expanded.
While Shreya shared a thumb rule for Budgets — Obligations (bills) 50 per cent, discretionary spends (food, transport, cosmetics) 30 per cent, Savings 20 per cent, Lavanya suggested putting aside savings as soon as the money comes in to maximise it. “Instead of treating savings as the balance after expenditure, move it up, so deduct savings from Income right away. For freelancers, excess income must lead to excess savings. Plan for the future, why don’t you make a June-December budget estimate now? Take some time to analyse and take stock of your financial health on a regular basis,” she urged.
On a concluding note, Lavanya said: “Money can work for you. Do not be condescending about saving, and try to lessen discretionary expenditure. Always have a cushion of savings that you can dip into during times of uncertainty. Find ways to replenish it; we have to be creative as regular income streams dry up during such times.”
On the whole, a useful session, in which at least the younger ones would have found some direction in these uncertain times.