Financial Planning for Professional Gamers, Streamers, and Influencers
Professional gaming, streaming, and influencing careers have become increasingly popular in recent years. With the rise of e-sports and social media platforms like Twitch, YouTube, and Instagram, more people are turning their passion for gaming into profitable businesses. However, with great success comes great responsibility – especially when it comes to managing your finances.
As a professional gamer or influencer, you must consider multiple factors when setting up your financial plan. In this article, we’ll cover some key points that will help you make informed decisions about your money.
1) Determine Your Income Streams
The first step to creating a solid financial plan is understanding where your income is coming from. Depending on the platform(s) you use to stream or create content on, your revenue streams may differ. Here are some common ways gamers and influencers make money:
– Ad revenue: This is the income generated from ads displayed on videos or live streams.
– Sponsorships/Brand deals: Brands pay influencers to promote their products/services.
– Affiliate marketing: This involves promoting a product/service through an affiliate link that earns them commission for each sale made through the link.
– Merchandising: Selling branded merchandise such as t-shirts or hats can be a lucrative source of income.
– Donations/Tips: Fans who enjoy watching your content may donate money as a way of showing support.
2) Set Up Separate Bank Accounts
Once you determine where your income is coming from, it’s essential to set up separate bank accounts for business expenses and personal expenses. Keeping these two accounts separate will not only simplify accounting but also make it easier to track business expenses come tax time.
Consider opening one checking account specifically for business transactions (e.g., receiving ad revenue payments), while using another account for personal purchases (e.g., buying groceries). Additionally, having separate credit cards can be beneficial if you need to keep track of business expenses or for tax purposes.
3) Budget, Budget, Budget
Budgeting is an essential part of financial planning. It’s important to track your income and expenses regularly, so you know where your money is going. Having a budget helps you prioritize spending and ensures that bills are paid on time.
To create a budget:
– Determine your monthly income: This includes all revenue streams mentioned earlier.
– List out monthly expenses: These can include rent/mortgage payments, utilities, groceries, transportation costs (e.g., gas), entertainment (e.g., video game purchases), subscriptions (e.g., Netflix), etc.
– Subtract the total expenses from the total income: Ideally, you should have money left over after paying all monthly expenses. If not, it may be necessary to cut back on non-essential spending.
4) Save for Retirement
As a self-employed individual without access to employer-sponsored retirement plans like 401(k)s or pensions, it’s crucial to plan for retirement independently. Consider opening an Individual Retirement Account (IRA) or Roth IRA to save for retirement.
An IRA allows you to contribute pre-tax dollars up to $6k annually ($7k if you’re 50 years old or older). The Roth IRA allows contributions with post-tax dollars but provides tax-free withdrawals in retirement. Consult with a financial advisor who can help guide you towards which account type will suit your needs best.
5) Pay Estimated Taxes Quarterly
Self-employed individuals must pay estimated taxes quarterly since they don’t have their taxes withheld by an employer throughout the year. To avoid penalties come tax season:
– Determine how much estimated tax needs to be paid each quarter
– Use IRS Form 1040ES as a guideline
– Submit payment using IRS Direct Pay or by mailing in form 1040ES along with payment before each deadline – April 15th, June 15th September 15th and January 15th.
6) Plan for the Unexpected
Life is unpredictable, so it’s important to have an emergency fund set aside for unexpected expenses. Financial experts recommend having three to six months’ worth of living expenses saved in case of job loss or other emergencies.
Set up a separate savings account and contribute regularly until the desired amount has been reached. If you can’t save that much right away, start small and work your way up over time.
7) Consult a Professional
Finally, consider consulting with a financial advisor who specializes in working with self-employed individuals. They can help you create a customized financial plan tailored to your specific needs and goals.
Additionally, they can assist with tax planning strategies, retirement planning, investment advice, debt management and more. While it may seem like an unnecessary expense initially, hiring a financial advisor can end up saving you money in the long run by ensuring that your finances are being managed efficiently and effectively.
In conclusion:
Financial planning is essential for anyone who wants to take their gaming or influencing career seriously. By following these tips – determining income streams, setting up separate bank accounts/budgeting regularly/saving for retirement/utilizing estimated taxes/planning for the unexpected/consulting professionals – you’ll be well on your way towards achieving both short-term and long-term financial success!