Taking the plunge into entrepreneurship, especially creative entrepreneurship, is intimidating. One of the scariest parts of entrepreneurship, is never knowing where your next paycheck is coming from. Which means most creative entrepreneurs live paycheck to paycheck.
But, what if you didn’t have to live paycheck to paycheck. What if you could be a creative entrepreneur without living on a fixed income. There are ways to stretch your paycheck so that you can stop living paycheck to paycheck and start building financial stability. We want to help you break the paycheck to paycheck cycle.
Start Saving
When you live paycheck to paycheck, you typically aren’t saving a lot of money. However, if you want to stop living paycheck to paycheck, building a savings is the first step.
Having three to six months worth of savings will help you stay out of future debt. Even if you have a great debt reduction plan you never know when you’ll have an emergency and need to make a payment that is outside of your budget. If you don’t have savings then you’ll end up creating more debt to cover the emergency expenses.
It may seem impossible to save money when you live paycheck to paycheck, but there are ways to make it happen. We’ll suggest a few as we go along.
Reduce Debt
Most people who live paycheck to paycheck are swimming in debt. They rely on credit cards to get through their monthly expenses. Like we mentioned before, unknown expenses can really hurt, especially when you rely on credit cards to cover those expenses.
We know what you’re thinking right now. “How am I supposed to pay off any debt when I live paycheck to paycheck?” There are ways to reduce your debt even when you don’t have an influx of cash.
If you have bigger loans, like a car loan or mortgage, see if you can restructure your loan and roll your debts into one payment instead of many payments.
Loan restructuring works because car loans or mortgages typically have lower interest rates than credit cards. If you have the equity in your car or home, you can get the money to pay off the credit cards. You can then make a bigger payment, at a lower interest rate, on the newly restructured loan.
This method can be complex, so speak with an accountant before you jump right into restructuring your loans. You should always understand what you’re doing with your money before you make a big decision such as this.
Build Wealth
There are two ways to increase your cash flow: reduce your expenses or bring in more money. Both options can help you break the paycheck to paycheck cycle.
You can determine what expenses you can reduce within your own budget. We want to talk about how you can bring in more money.
As a creative entrepreneur, this is easier said than done. You have to either find new clients and put in more hours or find a way to use your skills to create a passive income.
Work on Getting Consistent Clients
The hardest part of being a creative entrepreneur is that your clientele is not consistent. You usually work with someone once and then don’t hear from them again until they need your services. This cycle is what keeps you in the paycheck to paycheck predicament.
If you want to break that cycle, you need to change how you run your business. Try setting up packages that will commit clients to more than one service. Or you can use an email list to reach out to your clients and see if they are interested in other services you offer.
Whatever strategy you choose, try to generate new sales from your current clients so that you don’t have to work as hard to bring in more revenue.
Create Passive Income Streams
Passive income streams are a great option for creative entrepreneurs. With a passive income stream you create a product that you can sell to multiple people. Passive income streams are helpful in generating new revenue. It’s also great when you don’t have time to devote to individual projects.
As a creative entrepreneur you can sell photographs, printables, pre-made products. The main point is that you don’t have to spend a lot of time producing each individual product.
Ultimately, you can choose if you want to stop living paycheck to paycheck. you just have to make decisions that will lead you towards a financially free life.
