By Anjali Becker
Elaine Grogan Luttrull is not your average CPA. Through her company, Minerva Financial Arts, Luttrull works to build financial literacy in creative professionals and creative arts organizations, helping people figure out how to make the business side of their creative ventures a financial reality.
Luttrull is also the author of the book Arts & Numbers: A Financial Guide for Artists, Writers, Performers, and Other Members of the Creative Class, a resource for writers (and creative professionals of all stripes) who intellectually understand that financial literacy is important but may not be entirely clear on where to begin.
More information can be found on her site: Minerva Financial Arts
The Coachella Review talked to Luttrull about how she came to work with artists and artistic organizations, what writers can and should be thinking about in terms of their careers and finances, and some things to keep in mind when preparing for Tax Day in the future.
TCR: Why did you decide to focus your career on serving the creative entrepreneur class?
EGL: It was a combination of love and opportunity… I was working for a major accounting firm in New York when I started volunteering with the Arts & Business Council of New York. This group matches professionals (like CPAs) with arts organizations that need pro bono support. I came to volunteer out of a love for the arts and a desire to support the creative industry in New York, and that volunteer work led to a full-time position in the arts, followed by full-time support for the industry through my own practice. And now, of course, I am the luckiest CPA ever because I get to work exclusively with creative individuals and organizations to support the business and financial side of their creativity. What could be better?
TCR: In the introduction to your book Arts & Numbers, you define artistic empowerment as “the ability to accept or decline a project for purely creative, rather than financial, reasons.” This is The Goal, in other words, but getting there can seem extremely daunting. Be realistic: for the average creative person, what does it take to reach true artistic empowerment?
EGL: What a great question! Honestly, it takes time, saving a reserve fund that meets your needs, plus clarity around exactly what you do for whom (and why you do it). The time part is the trickiest because it takes some time to figure out a sustainable business plan, plus time to build up that emergency reserve fund. (And the timeline keeps getting extended when life gets in the way—like needing to dip into your emergency fund.) But with some good habits (building knowledge and taking action on that knowledge), plus some intention around your business plan, you can get there.
TCR: What are some common misconceptions that creative entrepreneurs have about financial literacy?
EGL: One misconception I used to hear (but I hear less now) is that financial literacy is only for “rich” people. The reality is that being financially literate and financially healthy doesn’t have anything to do with the number of zeros you have, but rather it is driven by your knowledge, your habits, and whether or not you are willing to spend the time getting there.
TCR: For a writer who has not thought much about their financial literacy, what’s a good place to start?
EGL: I love this question! Start with four questions: What does it cost you to exist as a human in the way you want to exist (and why)? What does it cost you to run your writing practice in the way you want to run it (and why)? What are you setting aside for taxes (and why)? What are you setting aside for short- and long-term savings (and why)? Once you know those numbers, you can figure out a way to make enough money to reach the total so you are saving and spending what you need to spend on your creative practice and your life.
But don’t let this be a daunting exercise. If you really, truly haven’t spent much time thinking about these things, write down your best guess for the answer to each question, and then pay attention to what you are spending for the next month. You can compare what you thought you would spend with what you actually spent to figure out how close (or not close) your guess was. Don’t worry about being wrong. You’ll be at least a little bit wrong. And as you pay attention and answer these questions, you’ll be able to have a bit more control over the results.
TCR: One thing that writers might not think as much about is categorizing things we do around our writing projects as business expenses. Are there any rules a writer should be aware of for what can or cannot be categorized as a business expense?
EGL: For tax purposes, your business expenses must be ordinary and necessary and effectively connected to your trade or business. It’s that “effectively connected” part that sometimes causes some trouble… Make sure what you are spending really is effectively connected to your trade or business, especially when it comes to research (which is an area where there could be some abuse). For example, let’s pretend I want to write a book about creative entrepreneurs in Belize and how their experiences differ from creative entrepreneurs in the U.S. Writing off a summer vacation for myself and my family to Belize to research this idea may or may not be effectively connected to my trade or business (especially if I enjoy the vacation and forget to do much research).
The other thing to pay attention to is whether or not you are actually running a business (in the eyes of the IRS). If you are actively pursuing work, attempting to make a profit from your writing, and maintaining good business practices (like keeping excellent books and records of your income and expenses, including documenting the business purpose of each expense), then you are probably actually running a business. But dreaming of writing one day (and not actually taking the steps to do that) feels more like a hobby and less like a business.
TCR: Are there any absolute no’s when it comes to dealing with finances that writers should keep in mind?
EGL: I would suggest only working with a fee-only financial advisor (if you choose to work with a financial advisor). And I’d suggest being skeptical of something (especially something financial) that seems too good to be true. I’d also suggest not relying on finding the “perfect app” or the “perfect tool” that will solve all of your financial problems. Sometimes it is easier to spend time researching tools, rather than thinking about money or answering those questions I raised earlier. (Researching apps is something we are comfortable doing; thinking about our financial habits is not always comfortable.) I’d also suggest making sure you know yourself and what you need, rather than relying on what someone else is doing. When it comes to money, we are all pretty unique, so make sure you are making choices that make sense for you, in your situation, rather than searching for someone else’s perfect solution.
TCR: Is there anything that we should absolutely start doing that would make our financial lives easier?
Just by reading this far, you are already doing something that will make your financial life easier. Thinking about money—in the context of your creativity—is always helpful. If you are informed about what your expense and revenue goals are (informed by your life goals and savings goals), it will be easier.
I’ve also worked with writers who really love financial journaling. This is the idea of taking note of how you are feeling about expenses or earnings in the moment and noting those feelings in a journal (ideally to reflect more deeply upon later). This can be helpful especially in the context of building a portfolio career—that is, income from a variety of sources related (and sometimes unrelated) to writing.
TCR: Can you expand a little on the idea of a portfolio career?
EGL: A portfolio career is basically a framework for identifying and classifying the different ways you earn money. It starts with identifying a “starring role” — the thing you would do if you had all the time and money in the world. The thing that fuels you and fulfills you creatively. You can define this narrowly or broadly. For example, a broad definition might be “writer” while a considerably narrower definition might be “writer of Twilight-inspired haikus.”However you define it, it’s your thing.
Supporting cast roles are related to your starring role, but they’re not exactly the same. They may use some of the same skills or techniques or knowledge, but these aren’t necessarily the roles that fulfill you creatively all the time. For writers, these roles might include work as teachers, freelance copy editors, ghost writers, or even SAT tutors. This could also be writing — but not the kind of writing you really want to do. Maybe you are a playwright, but your supporting cast role is writing for film and television. That’s okay. In all of these roles, you are matching your strengths with opportunities, in order to monetize those strengths. And the opportunities usually give you something intangible that supports your starring role. But these roles aren’t exactly the same thing as your starring role.
The third category is production assistance work. You’ve probably noticed the performance analogy by now, where the star gets the most attention and glory, but the star is made better because of the supporting cast. And of course, the entire production collapses without lights, a theater, costumes, special effects, and all the other behind-the-scenes work that makes it possible. That’s what the production assistance work is in a portfolio career. It is the work that is temporary, repeatable, and stable. The work you can go back to when and if you need it. The work that lets you stay in the game. Classic examples of production assistance work include waiting tables, nannying, working retail, or taking on temporary office work. This work gets a bad rap sometimes, but it can offer a predictable schedule, benefits, paid time off, and even material if you pay attention.
The trick is to figure out what your ideal balance of work is within this framework. Would you rather do a lot of things related to writing and figure out how to make your budget work? Or would you rather write what you want to write and have a stable source of income that is totally unrelated to your writing, while your writing career is evolving organically? Or would you like some combination of roles? There is no right answer, and there are pros and cons to each type of work. That’s why I find the framework so empowering. It is a starting place that someone can use to organize their thoughts and plans around monetizing creativity. And having an organized plan that works with your own goals and creative pursuits is definitely more empowering than aimlessly hopping from gig to gig.
TCR: In Arts & Numbers, you talk about “masochistic volunteering”—that is, agreeing to do creative work for “exposure” or without adequate compensation. What dangers arise from masochistic volunteering, and how can we determine when a gig has fallen into this category?
EGL: There are personal dangers and industry dangers associated with masochistic volunteering. In the industry context, agreeing to perform a creative task for free diminishes the perceived value of the writing profession, which hurts anyone who makes their living by writing.
In the personal context, you are in an unbalanced transaction. You are providing something of value without receiving something of value in return. That’s awful from a financial perspective, but also from a time perspective and an emotional perspective. You’ve said yes to something, which means you have (unintentionally, perhaps) said no to something else. And that can be tough.
I do want to note, though: You may choose to do something for the exposure (or for some other intangible that makes sense to you). But you have to be the one who decides if what you are receiving in return equals the value of what you are delivering. (Then it’s not masochistic; it’s smart.) Maybe you are exploring a new genre so you write something for half of your normal rate so you can get a few pieces into the world or work out the kinks of your process. Maybe you are really passionate about a cause, so you agree to edit an organization’s marketing materials because you want them to be successful. Maybe you are looking to break into a new market, so you agree to participate in an event in that new market without being paid for travel or time. In each of these cases, doing something for less than you would normally charge may make sense for you… But you have to be the one who decides that. (And by all means, make sure you are taking full advantage of what you choose to get in return. Share the pieces in the new genre with influential people in that genre in order to advance; ask to attend the organization’s gala or other events in exchange for free editing services and see who you can meet while you are there; set up meetings with key players in the new market while you “just happen to be there” for an event.)
I think you know when something has fallen into the masochistic category when what you are getting is less than what you thought it would be, and you can’t figure out a way to make it more. If you find yourself there, practice a few phrases that can help you re-balance the transaction.
TCR: So many writers who are just starting out land their first few jobs but have no idea of what their time is worth. What advice do you have for people who are trying to figure out what is a reasonable amount of money to charge for freelance projects?
EGL: I work with a ton of clients on this exact question. It comes down to four things: (1) what costs you have, (2) what your customers are willing and able to pay, (3) what your competition is charging, and (4) what competencies you bring to a project—that is, what makes you the best, most capable person of doing what you do. If you do a bit of research into those four things, you’ll get closer to figuring out your rate, whether it is a flat fee or an hourly rate. Then try it out, and adjust it based on what you learn. (Oh, and having a mentor in your specific creative field to help you do that research is insanely helpful.)
TCR: The book has an entire chapter on taxes and unfortunately we don’t have time to get into all of it, but what are your top three tips for creative entrepreneurs regarding Tax Day? What can we be doing throughout the year to make the lead-up to April 15th less scary?
EGL: (1) Use this year’s tax season to check in with yourself. How did your taxes go? Was it a miserable process or was it okay? What can you do now to make next year less painful? While taxes are fresh in your mind, it’s a really good time to notice what didn’t work as well as you hoped it would this year, and make a change for next year. (2) Definitely stay organized. Whether that means listing all of your expenses in a spreadsheet or using a formal system like QuickBooks for tracking expenses, stay organized and embrace the discipline of managing your financial life on a regular basis (say, monthly). (3) Take a moment to celebrate the successes you had in 2018. As you are going through last year’s income and expenses, take a moment to notice how many things you applied for, how many words you wrote, and what income you earned from your writing. Celebrate those accomplishments! It’s easy to dwell on the things we didn’t get or the projects that didn’t pan out, but your tax return will show you what really happened last year. And that’s worth celebrating.
spent the first three decades of her life in the Midwest, growing up in Minnesota, getting her B.A. from Northwestern University, and then refusing to leave Chicago despite living through several Snowpocalypses/Polar Vortexes. She’s since lived in South Africa and Malaysia, where she learned how to drive on the other side of the road and became obsessed with birdwatching. She finds herself now in New Jersey, which is not a sentence her younger self would ever have imagined writing. She’s an MFA candidate in Creative Writing at UCR Palm Desert, and her Instagram is too boring to bother linking to here.