This Is How I Tackle Financial Risk

Risk is the four-letter word creatives would rather not mention out loud.

The path of a creative comes with a lot of financial risk and it can take years to build a foundation that allows them to truly feel like they are doing the work they are meant to do.

Much of the time, creatives avoid planning for financial risk because doing so might mean that they have to give up on the pursuit of the things they love most, like creating beautiful things for the world to enjoy.

The logical approach to mitigating financial risk is to pursue a more traditional 9-5 job, which brings regular, predictable income but often lacks the flexibility to pursue work on their terms and without interruption.

What Can You Do To Lower Your Financial Risk? There are many ways to make more money to lower your financial risk, however, what is often missing from the discussion is how much financial risk tolerance creatives have. For example:

  • Some creatives need rock-solid financial stability to feel comfortable creating, so they tend to spend more time working in a job that has predictable hours so that they can create during their non-work time.
  • Other creatives are comfortable taking on a relatively high amount of financial risk so they are more in control of a flexible career. The trade-off is that they are often more dependent upon taking work in their area of creative expertise to make ends meet, which is not always satisfying.

Neither path is wrong, however, despite a pretty clear way of thinking about risk tolerance, I have seen countless creatives dive headfirst into their career with blind faith that it will all just work out. Without a plan for understanding how much financial risk you are comfortable taking on, it is easy to get stuck.

Luckily for all of you, I have a system to help you think about the amount of risk tolerance you are comfortable taking on!

How To Determine Your Financial Risk Tolerance
Take a look at the chart below, which has been divided into four separate columns—family, location, material things, and debt. These columns represent the four main areas that come up most as financial risk factors when I work with creatives. Each column has a row that represents low, medium, and high levels of risk tolerance. The bottom of the chart represents the lowest financial risk tolerance, while the top of the chart represents the highest amount of financial risk tolerance.

Here are two scenarios to help you think about where you might sit when it comes to risk tolerance:

  • Scenario 1: You are a freelance artist who lives in a studio apartment in Brooklyn, NY by yourself. College was expensive and you continue to pay off your loans which total over $50,000. While you don’t have a family yet, you and your partner (an artist) have started discussing living your lives together and you believe marriage is in your future. Finally, you can’t live in Brooklyn without enjoying all of the great food, seeing the latest shows, and enjoying the incredible exhibits at all of the great museums around town.

    Under this scenario, you would have a low financial risk tolerance. That means you have a combination of expenses and debt that likely force you to take on work that is regular and predictable so you can make ends meet. All signs point to this freelance artist needing some 9-5 work in order to stabilize.


  • Scenario 2: You graduated from college and moved to Madison, WI with two of your friends to launch a new business. You don’t have any debt (thankfully) and because you have roommates, you are able to share a lot of your expenses. You don’t see a family coming into the equation for several years and you are content to live without material things for a period of time until you can stabilize financially.

    With a lower cost of living and no debt, you would have high financial risk tolerance in this scenario. That means you can take more risks and, relatively speaking, wouldn’t need to make as much money on a monthly basis in order to survive.

Your ability to pursue work that comes with a higher financial risk also needs to be considered in parallel with other factors in your life. Taking into account the four buckets (family, location, material things, and debt) listed above will ultimately help you plan and understand the level of financial risk you are able/willing to take on.

Looking at this graphic, I want you to think about the following things:

  1. This is not a fixed equation—Think of this graphic as a way to get you close to the type of financial risk you are comfortable taking on. Just know that things like having a lot of debt, living in an expensive city, or owning a home all represent higher financial risk activities that need to be figured into your career plan. Only you can determine where you sit on the financial risk spectrum so use this graphic as a guide to plan strategically for your financial future.By the way, this graphic also serves as a fantastic conversation starter to have with your significant other as both of you think about next steps in your life and career.


  2. When in doubt, live the minimalist lifestyle—One of the best ways to lower your financial risk is to live a minimalist lifestyle. That means setting a low food budget, continuing to drive your grandmother’s sedan even though you could technically afford a new car, and having roommates. This will give you some financial flexibility while you figure things out.


  3. This is not forever, this is until you stabilize—Regardless of what you end up doing for your life and career, the one thing you have going for you is time. What represents high financial risk now becomes a lot less risky five years from now when you have paid off your debt, or you saved up enough money so you have a safety net in place when you move to a more expensive city. Set a timeline now for when you plan to stabilize your finances so you have a goal for a time when you can potentially take some greater financial risks.

I hope this gives you some things to think about as you consider your financial risk. Where do you fit on the spectrum? Share your thoughts below and I’d love your thoughts on the graphic I created!

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Nate Zeisler is the Dean for Community Initiatives at the Colburn School in Los Angeles. He envisions a world where students majoring in the arts have a clear path to a sustainable career, where creative minds are empowered and inspired to rule the workforce, and where access to the arts is not just for the privileged few, but for all.

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