In the last lesson, we looked at the wide range of computer graphics career opportunities. Now, we're going to talk about how to be financially stable.
Financial stability affects everything. It spills out into all areas of life, including your work – it helps you focus better by knowing your finances are in order and saves you from having to take on undesirable jobs just for the money. Here are some specific guidelines for achieving financial stability.
Pay for an education responsibly. As discussed in Lesson 2, there can be a huge cost disparity between different types of schools. To save as much money as possible, I would follow these guidelines for school selection.
If you want a four-year-degree, steer toward an in-state public university. If you want only specific training with a clear path to a job in that field, go for a trade school or even online program to save the most in costs. Remember that, in general, your computer graphics portfolio is going to be much more important to a client than the name of your school or degree.
Think about how much you can reasonably expect to earn in your career. An animator does not have the same earning potential as a doctor or lawyer, so you shouldn't be spending anywhere near as much on your education as they would.
Also, take out as little in loans as possible. Just because you can get a huge loan doesn't mean you should. Calculate how long it will take to pay off your loans. Some people carry student debt until retirement, with it weighing and slowing them down for their entire career. Pay close attention to the interest rate and repayment terms, and shop around. Generally, federal loans have much lower interest rates than private loans.
Apply for as many scholarships as possible. You won't get them all, but even a few can add up to thousands of dollars.
Know what you're worth, and charge a fair rate. Research what typical salaries are for your profession, experience level, and location, then price your services appropriately. If you start too low, it can be much harder to get up to a reasonable rate.
Also, work hard, practice your skills, be a great employee, AND use that to negotiate for a fair salary. Ramit Sethi has some great free advice on how to do this. If you can prove your value and worth to your employer and show that you're continuing to grow, they should be happy to pay you more in return.
Budget! Get some good budgeting software, like "YNAB," aka "You Need a Budget." This particular program really helped to turn my own financial picture around. Get in the habit of not just tracking but _planning _your spending. Track it for a couple of months to figure out what your spending habits are, then leverage your budget to make methodical decisions. You might realize you're spending way too much on restaurants and games, to the detriment of paying off your loans early, saving for retirement or saving for that new computer.
One way I'm using my budget for computer graphics is that I know I will someday need to upgrade my computer. So, every month I'm adding about $50 to a "Computer Upgrades" category. That way, when something eventually breaks or needs to be upgraded, I'll have the money already allocated for it, instead of needing to frantically scrounge up several hundred dollars.
Avoid debt. Beyond some debt that is hard to keep away from, like student loans and perhaps a mortgage if you buy a house, avoid debt at all costs. And if you already have existing loans or other forms of debt, pay it off as fast as possible. Being in debt not only puts you more at risk in case you suffer a hardship and can't make payments, but you're throwing money away on interest that you could instead be saving.
A budget can help with avoiding future debt by giving you clarity on big expenses you know you'll incur someday, such as a new car, emergency home repairs, or medical bills. By setting aside some money each month into designated categories, you can avoid going into debt when hit with a major expense.
Don't let tax deductions influence purchases. While I can't give legal tax advice, I'll say generally that there are a lot of possible tax deductions a freelancer can claim, and it's important to not let those shiny deductions influence purchases. Want the biggest deduction possible? Don't buy it in the first place! Only buy something for your freelance business if you absolutely need it.
Shop smart. If you truly do need to make a purchase, then that is the appropriate time to look for sales and shop around. If you're making a big purchase, also be careful of the slippery slope of extras, upgrades, and bundling discounts. If you're spending $2,000 on a camera or computer, it becomes much easier psychologically to add little upgrades here and there for $50 or $100 apiece, because relative to the purchase price of $2,000, they aren't that big. Before you know it, you've spent hundreds of extra dollars. Make a plan for what you need before you start shopping, and don't buy anything you weren't planning on in the first place.
Also, note that many computer parts offer rebates when bought individually. But it requires diligence to keep track of them. Some rebates arrive in the mail weeks later and then only have a short window before they expire. This is by design. Set reminders on your phone, in your calendar, or whatever you need to make sure you take advantage of these.
Take care of your computer and equipment. In the field of computer graphics, your computer is your lifeline. It is your instrument. Take good care of it so it can last as long as possible. Use virus protection. Make sure it has good airflow. Keep track of warranties on individual parts. Don't leave your computer on if you don't have to. Remove dust regularly, and always back up your files!
Your task: Considering the different ways you can maintain financial stability, compare these with how you're currently handling your own money. Are there big or small tweaks you could make to feel better about your financial situation? Is it time to ask for a raise or refocus on managing your budget? Do you really need to buy that third computer monitor?
With some regular attention and occasional big steps, you can live a much calmer and happier life knowing your finances are in order.
In the next lesson, we'll talk about taking calculated risks.