Episode 95: How to Pay Yourself Consistently When Your Income Isn’t

Welcome to the Creative Minds Smart Money podcast, where we turn financial confusion into creative confidence. I’m Samantha Eck, bookkeeper and fractional CFO for creative entrepreneurs. Each week, I’m sharing my financial expertise and actionable strategies to help you build a thriving creative business. Plus, you’ll hear from industry experts who bring fresh perspectives on growing your business beyond the numbers. Because building a successful creative business starts with strong financial foundations. Your next chapter starts now.

Hello and welcome back to Creative Minds Smart Money. Today we’re going to talk about maybe a topic that’s a little bit different than just typical “pay yourself.” We’re going to talk about how to pay yourself consistently when your income isn’t. So for most creative service providers — and I’m talking about copywriters, website designers, graphic designers, occasionally social media managers, people that don’t have retainers — the income is not consistent. So the idea of being able to pay themselves and being able to understand their cash flow and everything, that seems like a wild idea because they don’t have consistent income. So how are they able to do all of this?

The feast or famine cycle is so common with these types of creatives because they’re not planning ahead. And I know that sounds very critical, but it’s honestly the truth because — I’ve said it before — if you don’t know what’s coming in and out of your business, you’re not going to understand what’s actually going on with your business, and you’re not going to be able to actually make the moves that you need to make, especially when it comes to things like inconsistent income and paying yourself.

So the core problem, of course, is that a lot of creatives will just kind of pay themselves whatever is left over at the end of the month, and that can often be zero dollars. That can sometimes be $10, whatever it is. When you leave yourself last — and we’ve talked about this before — when you leave yourself last, you end up being in this place where you’re just kind of okay with whatever’s left. So maybe it is $10, maybe it is $50, maybe it’s a dollar, and you’re like, okay, well, that’s all I have left. That’s all I can afford to pay myself.

But realistically, you probably could have afforded to pay yourself more during the month. You only paid yourself what’s left because you’re like, okay, this is what’s left. But then also, if you pay yourself what’s left, are you accounting for expenses that are coming up? Are you accounting for other things that are going to be happening?

The pattern that happens — and what happens to your personal finances especially — okay, let’s just say that you are a single mother and you don’t have a partner at home who is working a regular job. Your income is all that you have. If you just pay yourself what’s left, you end up putting yourself in this feast or famine cycle where you’re like, okay, I have more money coming in, I’m going to just pull it for me because I need the money. You don’t end up being able to plan appropriately and you end up panicking because you don’t have a set system in place. So that core problem becomes the fact that you are not planning ahead. You’re just taking what you kind of need when you need it.

I’ve had many clients do this — trust me. If they need $300, they’ll just pull $300. And there have been many times where I’ve told my clients, we need to get you on a cycle of paying yourself. Maybe you pay yourself once a month, maybe every week, maybe every couple of weeks, but it’s consistent and it’s the same amount every time. Because you want to make sure that you are getting paid and that you’re not last. You want to make sure that you have enough money for your finances, which is why in the last episode I said you’ve got to start from the back and then kind of build yourself forward.

So now that we’ve covered that, of course there comes budgeting with variable income. A lot of creatives — and most of the creatives that I work with — have very variable income. Their income is not set in stone unless they have some sort of retainer. This could be a coach, a graphic designer, a website designer. Maybe they book five projects so they know they have five projects coming in, but maybe they also have a mini website sprint they could sell throughout the month that boosts their income, or maybe they have cancellations or whatever it is. So how do you even start budgeting when every month looks different?

Well, the truth of the matter is you start with what’s recurring. You start with what you have that is recurring. Obviously your pay would be recurring. You start with your subscriptions, your utilities, whatever you know is going to come out of your bank account at the same point every month — you start with that. So if you have $300 in software subscriptions every month, you know that you need to at least have $300 in your bank account every month. And then if you’re paying yourself maybe $1,000 a month, you know that you need to have at least $1,300 in your bank account at the end of every month.

The mindset shift that makes that a possibility and that makes you understand that budgeting with variable income is possible is understanding that you do have to pivot. There are going to be times when things come up and maybe you missed something, maybe you owe an insurance bill, whatever it is — you’re going to have to pivot. But when you put down and write down what is recurring and you know what is absolutely coming out next month, it’s going to change the way you run your business. Because if you know you need at least $1,300 next month, you’re going to be like, okay, at the end of the month I have $2,600. That means I have an additional $1,300. That $1,300 is going to cover next month. What do I want to do with this other $1,300? Reinvest? Set aside for taxes? Pay myself more? It’s just going to change the way that you think and make everything feel less impossible. Because then you actually get a realistic perspective of what’s going on in your business.

So again, how do you figure out what you actually need to cover personally every month? On your personal side, you look at how much you need to be bringing into your business to support yourself. On my end, I looked at what I needed to bring in in addition to my husband’s income that would allow us to live comfortably. So I said, okay, this is the dollar amount that I need to be bringing in every month. This is how much money I have to spend above that based on what I have coming into my business currently. So now I know I can spend this money, but I need to at least bring in this much money personally.

Again, knowing that number is going to change the way you run your business. Because if you need to bring in $5,000 a month to support your family and everything you have going on, maybe you need to bring in $9,000 a month — you know that anything over that you can spend on expenses. If you know that you have $9,000 a month that you need to bring in personally to sustain your lifestyle and you have $500 in monthly expenses every month, that’s $9,500. That means if you only have $10,000, you only have $500 left to wiggle with. Which means if you’re talking to a service provider and they’re saying, hey, my social media management costs are $2,500 per month and you only have $500 extra per month, you can say, I’m sorry, that’s not in my budget. I just can’t afford that right now. And that’s not saying that you don’t respect their pricing — but now you actually know what you have to spend versus what you don’t. It gives you that really realistic perspective on what your business is actually capable of because you have that baseline. You know what your baseline is. Now you can build the blocks above it.

Knowing the baseline is one of the most important things I can tell you. It’s also considered your cash floor. If you just took one thing away from this episode today, figure out what your baseline is. That is what I want you to do.

Now, of course, you want to build yourself a personal salary system. What does that look like — paying yourself a consistent salary even when your revenue is fluctuating? Well, like I said, if you already know what your baseline is and you know that next month you’re only going to be able to bring in $5,000 when you need $9,000, you know that in a successful month — maybe you have a really great month — you need to be setting aside an additional $4,000. Which means that if you’re bringing in $20,000 a month and you already have $15,000 of that allocated, you only have $1,000 in that month to spend. Because you are planning ahead and saying, okay, I know I need $9,000 a month to pay myself, so do I have that for next month?

And then if you want to push yourself during the next month to make more sales so you can make up for that, you can — but you already have that set aside. So you know you’re going to be able to pay yourself. You can also push for sales to make sure you have extra cash coming in, but at least you are covered for what you’ve already planned for.

So again, when you know your baseline, that’s how you can make sure you’re building a buffer. Because when you’re actually looking at it, you’re saying, I have $5,000 left in the bank, but I know I need $9,000 to run my household properly and for my personal pay. I need to make up that $4,000 somehow. Oh wait — I have another payment coming in at the end of the month. It’s $5,000. $4,000 of that automatically needs to be allocated to next month’s payroll for myself. You already know that. You’re taking care of yourself first, and then you’re like, okay, I have $1,000 left over for expenses. So it’s so, so, so important.

Similar to what I said in the profitable month episode, when you have a phenomenal month, you need to be thinking ahead and looking at everything going on in your business. You cannot just look at what is happening today. Because if you go and spend that money and next month is an absolute rough month — it happens, honestly, especially in a world where sales cycles shift. Sometimes we have bad months. Sometimes we have good months. Being able to say, okay, I have enough for this month, I have enough for half of next month, I need to make sure I set aside enough for next month — if you are able to plan ahead and have that foresight, you’re going to give yourself so much less stress in the following months. Because when you use that great month to protect yourself from a potentially slow month, it gives you the ability to go out and continue to make sales like normal. You’re not selling from desperation. You’re not scrambling. You’re not thinking, oh my gosh, am I going to have enough for next month? You already know you do.

So there’s just a way of making sure that when you’re actually planning ahead, actually looking at your business on the full spectrum of things, and actually making a baseline, you will not only understand your business better but also be able to pay yourself more consistently. Because you’re actually going to understand what you need to make.

Now, of course, when we first start, if we need $9,000, that’s probably not possible right away — but that’s something you can build up to. You can build in a percentage. Maybe you want to make sure you’re taking at least 30% of every payment. Whatever it is, you want to start with finding out the baseline and then building upon it.

When you are actually getting it right and paying yourself consistently, that financial stability brings you so much more peace. Because you’re not struggling. You’re not desperately pleading for sales. You’re able to let your systems work and do the jobs that they need to do. And that’s where cash flow becomes really, really powerful. If you are able to look at your bank account and say, okay, I have $4,000 in expenses every month and I’m covered for the next six months before I would hit zero — would that not bring you some peace of mind?

So again, if there’s one thing you can take away and start doing this week, it is finding your baseline. Not just what you want to pay yourself, but what you need in your bank account at the end of every month to survive another month. If that’s $10,000, you need to have at least $10,000 in your bank account. That alone — while you’re not yet predicting your cash flow — that alone, having your floor line, your baseline, is going to help you so, so much.

Okay, you guys — if you liked this episode, please make sure to like it, share it, and subscribe as always. If you have any topic suggestions, feel free to message me on Instagram, Threads, wherever you are. Let me know what you guys want to hear. I do wish you guys the best week ever. As always, we’ll see you next week. Farewell, fellow travelers.