Learning how to manage money is one of the most important traits of an independent filmmaker. Because many filmmakers are focused on a big Hollywood payday, they have decided to live paycheck to paycheck, shackled by high debt.
If you’re that person right now, you’re not alone.
It wasn’t too long ago that I lived with no savings and thousands of dollars in debt. I had no idea how to turn myself around. Luckily, I met some very successful people who set me straight.
They told me about “FU money.”
In Hollywood, when you get a bunch of money in the bank, it’s called FU money. You know you have FU money when you can enter into negotiations and walk out of the deal without the fear of starvation.
The most valuable success strategy for acquiring FU money is: “Pay Yourself First.”
When I first heard this concept, I had no idea what the heck people were talking about. But after meeting with some power players, I realized the idea is simple. Whenever you get a paycheck, before you pay any bills or fill up your gas tank, set a little money aside and never touch it. That’s all you gotta do.
I know. I know. Most independent filmmakers want to save money but feel too strapped to take action. This is because each month is filled with bills and other unexpected expenses. For this reason, most people put off saving until the end of the month. The problem is, by that time, there is nothing left to save.
And please let me remind you, as a general disclaimer, since I’m a filmmaker and not a qualified legal, tax or financial professional, even if the following strategy provided me with a bunch of FU money, this stuff may not be right for you. So, please talk to a qualified professional first.
One day, I decided to follow a successful friend’s advice. And while it took me a long time, I eventually dug myself out of debt and lifted that financial weight off my back. Here is what I did:
- I wrote down all monthly income, including paycheck, extra jobs, etc.
- I wrote down all monthly expenses, including bills, groceries, gas, etc.
- I subtracted the expenses from the income.
- I had some money left, so I figured out how much to save.
- I opened a high-interest online savings account.
- I set up automatic withdraws each payday and pretended it was a bill.
- No matter what, for one year I didn’t touch the money!
- After one year, I paid off my credit card debt.
- After another year, I spoke to a financial adviser and started investing.
- After another year, I built up an emergency fund.
After saving, I not only had enough money to get out of debt, I had also developed the valuable life-long habit of always paying myself first. FU!
Learning how to manage your own money will give you confidence when you begin managing your movie projects. Thankfully, there are many financial software programs and online services to help you stay on top of your finances.
Since 2001 (when I was making about 10K a year – I wish I was kidding), I have been using one of the popular accounting software programs. Since that time, I have migrated into the free version of Quicken online. Other friends use Yodlee. And some of my other friends still use a spreadsheet. All of these programs will give you a daily snapshot of your net worth, your spending habits, your bank accounts and your credit card accounts. Most will also chart your investment activity. Some of the more advanced programs allow you to work out a budget and offer debt elimination tools.
The reason why becoming a good money manger is essential to filmmaking is because most prospective investors will sense how you feel about money.
If you liked this sort of unique filmmaking advice, you’ll love the independent producers guide to movie finance.