Personal Finance & Photography

December 18, 2020

Anyone that has shopped for a camera or browsed a B&H catalog knows that photography equipment can be rather expensive. So you might be wondering how do all these photographers afford such nice equipment and seemingly travel to exotic destinations all the time? The truth is that photography is a lot like golf. It tends to be a “rich person’s” hobby filled with doctors, lawyers, corporate execs and trust fund kids. A very small percentage of people do photography “full-time” as in not have a day job. Contrary to popular belief, full-time photographer status is not some mythical achievement for people who have “made it”. Some photographers really are successful and grew their business out of a shoestring budget but perhaps more common is someone who started off with a lot of money then lost a lot of money in the process before getting any sort of traction if even that. Others have a spouse that work full-time while they scrape together what they can as a freelancer. It’s easier to try things and make mistakes when you can afford to. Some people even go severely in debt trying to live a certain lifestyle beyond their means. I’m not judging; all are perfectly fine with the exception of the latter. That’s just how economics work. You have to focus on what is best for you whatever that may entail.

There’s also people out there more like myself who started from more modest means. When I started off in photography I was your average college student from a middle-class background. I started off shooting film on my dad’s Nikon N8008S then eventually probably paid a bit more than I could afford for some early digital cameras. I was not jetting off to exotic places like Iceland and Norway every few months though. I had never heard of those places for that matter. I had to build up my experience and image library as a budget traveler by doing day trips, road trips and camping trips. Would I rather have been traveling to exotic locations and shooting amazing scenes? Yes! But that was more of a pipe dream and would not have made any financial sense in my 20’s.

Unbearable Headache

Unbearable Headache

Travel and landscape photography can be very seductive in the sense that when you open any magazine or visit any social media site you are probably bombarded by amazing photos from places you wish you were at. Unless you can really afford to travel like that and afford to live comfortably it’s probably not healthy to look at what other people are doing too much. So you’re not rich but want to have some adventures of your own without becoming bankrupt so what next?

I’ll start with this disclaimer. I am no financial expert so don’t take what I’m saying as “advice” but I do know enough about personal finance to at least bring up some ideas to think about.

Photography Expenses

  • Camera equipment (camera body, lenses, tripod, etc…) = $1,000 - $15,000
  • Powerful computer to process photos with = $750 - $10,000
  • Hard drive backups - $150 - $2,000
  • Travel expenses (the most fun way to blow all of your money) = $100 - Infinite
  • Marketing expenses
  • Insurance (business liability) = Starting from $50 / month
  • Studio space
  • Permits
  • Taxes
  • Paying yourself??

Photography costs a boatload of money whether you are a professional photographer or a hobbyist. Let’s be honest. The economics of photography is really not sexy at all unless you love being a “dirtbag” or don’t care at all about the financial aspect of it but my guess is that if the latter describes you then you’re probably not reading this article.

Making Money From Photography

Stock Photography & Assignment Work: The most obvious way would be to shoot quality images of everything you do and everywhere you go then submit them to stock photo agencies and/or sell direct from your own website. I do this and so do many others. What you may find out is that over time these efforts will help to pay for your travel expenses. You can also try to solicit assignment work during your travels. Commercial work can be quite lucrative but often requires a lot of “hustling” to get regular work.

Sell prints: People have varying degrees of success selling prints either through galleries in wealthy tourist destinations, local art fairs and on websites such as mine. Owning a gallery is probably the riskiest and least likely to be lucrative unless you are Peter Lik or are independently wealthy and can afford to lose money. There is a popular saying that if you want to make a million dollars in photography then you should start with two million dollars. There is some truth to that joke. Also don’t under-value the cost of your time. Could you be doing more productive things with your time?

Service-oriented photography - weddings, portraiture, etc... The demand for these services is almost limitless so these genres are arguably the most common ones for photographer's looking to make an income. Customer service and people skills are critical here.

Other ways that photographers make money these days is by teaching workshops, sponsorships and selling educational products / services. That is a complex subject in itself that I’m not really qualified to elaborate on but it’s clear that a lot of people are hawking photo workshops on social media these days. I personally know a few photographers that do this and are quite good at it. I’ve paid to join a few myself. I would just say that if you are not really passionate about teaching others then it’s probably best for everyone to not offer photo workshops. You need people skills and a desire to teach more than anything if you’re running educational services as a business. It shouldn’t be about building your own portfolio on someone else’s dime. If you’re considering this path then be sure to do your homework when it comes to permits and insurance. I’ve heard quite a few stories about “fly by night” photo workshop operations that didn’t end too well for the instructor and students.

Keep your day job

I had one prior to the birth of my 2nd child and my wife works full-time. If you are primarily interested in just creating photography and don't want to spend most of your time on marketing, sales & accounting-related tasks then it's probably more fulfilling to just keep your day job. You'll have money to afford to do whatever you want, health insurance will cost less and won't have to compromise the quality of your artwork or act like a schmuck on YouTube just to make ends meet. And if you have interested in the business aspect then you can reinvest some of your personal earnings into your photography business without worry of failure. The only drawback is you have a demanding job that doesn't afford much free time. Startups, healthcare and legal careers often have longer than normal work weeks.

Another option is to work in the travel industry in a role that allows you to travel frequently. Teaching English abroad is also a nice way to travel when you're young though it probably doesn't pay too well. The cheapest way to travel is to travel on someone else's dime. Bring your camera everywhere and shoot photos during your downtime. You'll have lots of exotic images to market and sell as a result not to mention a lifetime's worth of adventure. If I could re-do my 20s again I would have pursued this path for a few years rather than a soulless corporate career right after school.

DO NOT Go Into Debt

When I was a college student, I was shocked to hear how some people I knew had 8+ credit cards and debt. I had no idea what they were spending on but that sounded crazy to me, and still sounds crazy to me. My parents always taught me to not spend more than you have in the bank and that credit card bills needed to be paid off by the monthly due date. Paying 29% interest rates on anything is outrageous and not a good idea to say the least. If you think you might need to finance your photography gear and travel then I hate to say it but photography probably shouldn’t be your top priority until you get your finances in stronger shape.

Another type of debt that is a lifestyle killer are large student loans with high interest rates. It’s unfortunate that by the time most people realize how difficult it is to live with student loan debt it’s too late. You’re asking 18 to 20 year olds to make financial decisions that could haunt them for the rest of their lives. Unless your studies will prepare you for a lucrative career and/or improve your chances of having a career in your chosen field then it’s probably not a good idea to go to an expensive school unless you or your parents can afford it. I went to the local state university for undergrad and had no student loan debt coming out of school. State colleges were not that expensive when I was attending, and are still much less expensive than private colleges today. It also helped that my parents had invested money for my college education at a young age. Back in the 80’s, bank CD’s paid somewhere around 7% annual interest I believe. Nowadays that is unheard of but 7% or thereabouts also happens to be the historic average annual rate of return for the stock market so there definitely ways to save for college. I started investing for both of my kids' college education almost from the day they were born. I’ve been told that going to college will cost an estimated $100,000 by the time my kids are of age. I have no intention of paying that much straight out of my own pocket so that motivates me to invest early on so I can sleep at night and hopefully be retired by that point. More on this later.

Not all debt is necessarily bad in my opinion. Depending on your personal situation, home mortgages can be an advantageous type of debt to have since they can be used to lower your taxable income if you're in a higher tax bracket. Generally the more income you make the more important deductions become unless you love giving all your money away to Uncle Sam. Debt is only good when you can leverage it to make more or save money elsewhere.

Invest Your Money

If you ever expect to retire and/or want to pad your nest egg for future adventures then you should spend more time becoming financially-literate than looking at other people’s photos.

If you haven’t heard of these things below then I would encourage you to Google them.

  • 401k
  • IRA
  • Brokerage account
  • Mutual Funds
  • ETF’s
  • Individual Stocks
  • Real Estate

There are several ways to build wealth aside from inheritance. Solely working for a paycheck without investing is the least likely path to retirement before social security age unless you are one of the few that become a CEO, CFO, doctor, lawyer, engineer or founder of a successful company. The other thing to consider is that social security might not even exist in its current form by the time Gen-X’ers like myself and Millennials are ready to retire. There is a reason why most financial planners suggest putting away a certain % of your monthly income into a 401k or IRA and the younger you can start the better. The basic concept of this is compound interest. Rather than try to describe this concept - try this calculator. Assume that the average annual rate of return is somewhere between 5-7% and see what you come up with. A $10,000 initial investment with $150 / month contributions over 30 years could compound to an estimated $250k. Now imagine if you were able to save a bit more than that per month and see how much you could earn tax-free until withdrawal. The current annual contribution limit to 401k as of 2020 is $19,500. Many companies also provide at least a partial contribution match up to a certain percentage so you're essentially leaving money on the table when you don't contribute enough to your 401k. With the right decision-making early in life and good health, it’s certainly possible to become a multi-millionaire on middle-class income. Believe it or not there are people out there who make large sums of money who have minimal savings and might never be able to retire. Financial health doesn’t necessarily correlate with income though it helps.

Oysters and Pearls - The French Laundry

"Oysters and Pearls" - The French Laundry

As for what to invest in? Again that is up to you. But a basic rule around investing is to not put all your eggs in one basket. Index funds that merely track stock market indexes like the S&P 500 are very popular these days because they are considered to be “diversified” and low-cost. They are low-cost because they are not actively managed by people so there are less overhead costs involved. Vanguard has a very popular index fund for this and so do companies like Fidelity. Index funds are among my largest holdings though just a piece of the puzzle. (As a side note, notice how I didn't mention the Dow Jones. Dow Jones is an old stock index that is more symbolic these days than a benchmark that investment professionals use.) There are also actively-managed mutual funds which are run by fund managers and a team of analysts. These have sort of fallen out of favor in the investment industry post-recession but I am still a fan of some these that outperform the S&P 500. I have a personal affinity for healthcare funds because they are generally “recession-proof” and it’s obvious that healthcare costs are skyrocketing due to various factors that I won't get into here.

I’ve been investing since I was in college and having been through three bear markets so far during my adult life, my personal philosophy is to look for funds and companies that have a track record of solid long-term growth but also fared reasonably well during the worst of the Great Recession in relation to the benchmarks. The reason for that is that not only is it important to know how much you can earn but to see how much you might lose if all shit hits the fan. Everything goes up and down. If you can’t sleep at night with your decisions then it’s probably not a good idea. I would highly recommend reading the fund prospectus that comes out every quarter for your funds whether you have a 401k, IRA, etc… If you don’t know what it is that you are investing in then why would you hand over your money blindly? There is no such thing as smart “passive investing” in my opinion. You should pay close attention to everything you invest in whether it’s index funds, mutual funds, ETF’s or common stock and learn all you can about your investments. At a minimum you should review your accounts several times per year not only to track performance but to also make changes if necessary.

Individual stocks are arguably the most risky type of investment you can make so it’s probably best to keep these as a small percentage of your total investment portfolio if you are going to do this at all. For every article you read about how someone who purchased Apple, Amazon, Netflix or Tesla stock at IPO price there are dozens more examples of people who have lost significant money on individual stocks. In hindsight it is easy to say if you had bought a few shares of such and such stock 20 years ago I would be a multi-millionaire right now, etc… Those articles get a lot of social media shares. In reality, owning individual stocks requires strategy and discipline. No one knows what the future holds. It’s all about educated risks. It’s really not for the faint of heart. It can be extremely lucrative too for some people. I own shares in a number of companies but I would consider myself more of a mutual fund investor than a stock picker. If you do buy your own stocks then long-term investing is the way to go in my opinion as long as you have an exit strategy. Day trading is not my cup of tea. I’ve tried it and it’s not for me.

When I originally wrote this article in 2017, blog commenter Mark, suggested a dividends reinvestment program. What that means is that certain company stocks pay shareholders a quarterly dividend. Dividends are usually paid by highly-profitable companies. Growth-companies that hemorrhage money by the billions like Netflix ($NFLX), Amazon ($AMZN) and Tesla ($TSLA) generally do not pay dividends because they choose to reinvest any net profits back into growing the business. Whereas companies like Apple that make more than they can possibly ever spend tend to pay dividends. As of today's share price, Apple's ($AAPL) dividend is 0.65%. You're certainly not going to get rich overnight if you just bought your Apple stock today but if you had purchased the stock 10+ years ago and held onto it then those reinvested dividends would have compounded along with the increase in share price, dividend increases and stock splits. Other companies pay a much higher dividend but the tradeoff there is that the share prices never really go anywhere. Some people's entire retirement strategy or income is based around dividends which in some ways protect you from the volatility of share prices. The only thing to watch out for is if a company's profit margin starts to suffer then they could cut or halt the dividend program entirely. One thing to consider with dividends is that they are considered to be taxable income if you have a brokerage account. You might consider investing in dividend stocks within an IRA account so you can compound tax-free until withdrawing after retirement-eligible age and save the growth-stocks for brokerage accounts which are only taxable if you have any capital gains after selling the shares. One caveat to this is if you plan to retire before 59.5 years of age then putting the bulk of your investments in IRA's and ROTH IRA's is probably not a good idea since you'll be subject to early withdrawal penalties on top of the standard capital gain taxes.

Real estate is another investment category that has worked well for many people. I’m not sure about right now because the housing market seems over-priced in many metro areas but if the right opportunity or time comes along then investing in real estate might make sense. Depending on where you live, putting in a downpayment is really not as hard as you might think if you have worked for a while and have any sort of savings. Debt is a killer for many people though so I can understand why home ownership might not be in the cards. I was able to purchase my first home after the housing market crashed during the Great Recession. Also to clarify, I consider investing to mean that you plan to sell at some point. Buying a home to live in for the rest of your life is not really an investment in my opinion unless you consider your kids inheritance to be investing. I digress here but have you ever been told by a wedding photographer that your wedding photos are an investment? Wedding photos are not an investment. It's a luxury and a sentimental expense. Photographers call it an investment as part of their sales strategy. Anyway, real estate is another way that you can become a millionaire on middle-class income. I have an uncle that made quite a bit of wealth on Vancouver real estate while earning his living as a postal worker in Canada.

Among the first things I look at every morning are my Apple News app and my stock market app. Personal finance is important. I’m not on 500px or Flickr the first thing in the morning. I care more about keeping a roof over my family’s head while also affording my next adventure rather than worrying about someone else’s fabulous lifestyle. If people spent a fraction of the time on financial literacy as they did on social media and photography sites then they would be much better off. Notice that none of the personal finance ideas that I’ve written about had anything to do with expensive camera gear? Going into debt to pay for photography is crazy in my opinion. Not having a retirement plan is also crazy in my opinion. However, with careful planning it is possible to enjoy life in a fiscally-responsible manner.

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