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The 3 Basic Money Skills Every Creator Needs (or Die Trying)

3 Basic Money Skills

If you’re a creator (or just a lovable human), there are 3 Basic Money Skills you absolutely, positively, have to wrap your mind around – even if you’re one of those mad creatives who can’t remember where they put their car keys. 🙂

Revenue. 

Cash Flow. 

Profit. 

If you can grasp these 3 Basic Money Skills, you’re on your way to owning a private island somewhere. No lie.

It’s business for creators.

3 Basic Money Skills Every Creator Should Know
The island you just bought because you’re so smart

The 3 Basic Money Skills Every Creator Needs (or Die Trying)

Intimidated? Don’t be.

Let’s break down these 3 Basic Money Skills in a fun and simple way, in a way that everyone could understand. Even me.

REVENUE

Imagine a Lemonade Stand: You set up a stand in your front yard and sell lemonade. Each cup costs $1. You’re in the San Fernando Valley, so customers are lining up on a hot day.

Selling Lemonade: Each cup of lemonade you sell for $1 is earning money.

Counting Money: At the end of the day, you count all the dollars you got from selling lemonade. That’s your total revenue!

You sold 100 cups? Yep, your revenue was $100. Take a bow. It’s business for creators.

CASH FLOW

Now Imagine your Piggy Bank: Think of cash flow like the money going in and out of your piggy bank.

Money In: Every time someone buys your lemonade, money goes into your piggy bank. That’s cash coming in! How awesome is that. Remember, this is your revenue.

Money Out: But wait, you have to spend money to buy lemons and sugar, right? When you take money out to pay for these, that’s cash going out. This is called your expenses.

Checking the Piggy Bank: Cash flow is looking at how much money you have at the start of the day, then after buying supplies and selling lemonade, how much is left at the end of the day. It’s really this: the cash you have on hand to pay for things. This is cash flow.

PROFIT

Your Lemonade Stand’s Victory Score: Profit is like the score you get after playing a video game. It tells you how well you did – or didn’t do.

Calculating Your Score: After selling lemonade all day (your revenue), you subtract (take away) the money you spent on lemons and sugar (your costs, or expenses).

Winning the Game: If you have money left after subtracting the costs from your revenue, you made a profit! It’s like having more points at the end of the game. You won!

No Profit, Big Problem:  If you don’t have money left over or if it costs more to make the lemonade than what you earned, that’s okay in the short-term. It means no profit this time, but now you know you need to adjust things so you make profit next time.

Profit is a good thing. You hear about a lot of companies (even really big ones) that don’t make a profit. Sad, but true. Don’t be like that.

Remember, running a lemonade stand (or any business) is about balancing how much money you make, how much you spend, and how much you keep at the end of the day. It’s a game of numbers you need to understand. Period. End of story.

READ How Pro Content Creators Master Their Money for more great tips. 

Revenue, Cash Flow, and Profit for Creators – The 3 Basic Money Skills

Now let’s explain Revenue, Cash Flow, and Profit for creators using a simple model that applies to stuff in the real world. In other words, the 3 Basic Money Skills in action.

REVENUE

Views and Ads: Imagine you’re a YouTuber or a streamer. Every time someone watches your videos or streams, and ads are shown, you earn money. This is your revenue.

Sponsored Content: If a company pays you to talk about their product, that’s also revenue.

Merchandise and Memberships: Selling cool swag like t-shirts, hats, or offering paid memberships to your fans? That’s more revenue! You’re killing it!

Total Earnings: Add up all the money from ads, sponsorships, merchandise, and memberships – and anything else that is money coming in. That’s your total revenue! It’s business for creators.

CASH FLOW

Your Creator Wallet: Cash flow is like the money moving in and out of your wallet.
Money In: Every time you get paid for ads, sponsorships, or merchandise, money flows into your wallet. Boom!

Money Out: But, you might spend money on new equipment, editing software, or paying an editor. When you pay for these, money flows out. Ouch! But often necessary. 

Checking Your Wallet: Cash flow is about tracking how much money you have at the beginning of the month and how much is left at the end after all your earnings and spendings. How many dollars are in there, at any moment? This is your cash flow. Cash flow is very important, because it allows you the freedom to invest back in the company (your efforts) or save it for a rainy day (emergency fund).

PROFIT

Your Creator Scorecard: Profit is like your final score after playing the video game called ‘Business’. It’s the one with the late night dragons and other challenges. The scorecard shows how successful your content creation business is.

Calculating Your Score: You take your total earnings (revenue) from your content and subtract the money you spent on making that content (like equipment, software, etc.).

Winning the Game: If you have money left after paying all your expenses, congratulations, you made a profit! It means your content creation is not just popular but also financially successful. You are on the way to your prviate island after all!

Learning from the Score: If you don’t make a profit, it’s a chance to learn. Maybe you need to adjust your strategy, like finding more sponsors, increasing your viewership, or managing your expenses better.

Pro Tip: If you can pay yourself a salary, and still have money left over, that’s the best profit of all. This is money that goes into the company. Treat the company also like another person: they need to be paid too!

Monday provides a really cool template you can check out to keep track of your scorecard. Or you can make your own!

Want to go even deeper. This guy walks the walk when it comes to money skills. 

Business for Creators, the Easy Way

For content creators, understanding these 3 Basic Money Skills is crucial. It’s not just about getting likes and views; it’s also about managing the money side of things to keep creating great content again and again. Because more money (profit) means more time you can devote to the things you love making.

Another big tip we’ve found along the way (which has everything to do with profit): keep your overhead low. Don’t be suckered by expensive gear or courses (believe us, we’ve made that mistake) or the swank new office space. Live within your means.

Focus on these 3 things (revenue, cash flow, profit) and watch the rest take care of itself. That is good business for creators, using the 3 Basic Money Skills we should all know (or die trying).

That way, you can go out and keep making the good stuff.

Have any questions? Email us!

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