Molchanova 1

Viktoriya Molchanova

Professor Lindsey Crane

Finance for the Arts

29 June 2018

Personal Reflection

This summer course reasserted my good relationship with money. My high school

colleagues always criticized me because I decided to save a lot of money and not get student

loans. They thought that I sacrificed my “dream” college for a state university and sacrificed my

social life to stay at home and live with parents. But in reality, I did not have a “dream” college

and did not want a social life full of drunk parties. I realized that my parents sacrificed so much

for raising me while I would waste their money on loans (in Russia usually parents pay off

college because it is way cheaper there). I am glad that after taking this course, I can calmly say

to myself that I was doing the right thing by not taking out huge loans which would mean more

money than I could repay.

I learned a lot from this course, “Arts & Numbers” book, the podcasts, and articles. When

I took Fundamentals of Arts Management, I was very confused what assets, liability,

unrestricted, restricted, permanently assets, revenue, and expenses meant in form 990. Now I

know that there are different forms of 990s that are categorized by different margins of revenue

(990N, 990EZ, and 990). I knew about the unrelated business income but I did not know that it

also requires a form 990-T if the income exceeds a thousand dollars or more. I was not aware

that there is a type of unearned income called deferred revenue such as ticket sales for a

performing arts organization. I now know that the accrual method is better to use for nonprofits

because it helps with keeping track of contributions. I learned the difference between cost and
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fair value. Before this course, I did not know about audits and auditors because I thought that big

organizations “magically” made all the financial stuff happen without the need of professionals. I

know what statement of financial position, activities, cash flow, and functional expenses means.

I never knew that property and equipment could undergo depreciation in accounting. I learned

about the transaction flow although I am still confused which way to credit and debit accounts.

Also, the financial ratios are really good for organizations but there are a lot of them and that is a

little overwhelming. Through these ratios, it is better to hold onto money as long as possible and

have a good amount of time to pay off the loans. I think reconciliations are definitely a really

good way to keep up with records between an organization or person and a bank. The lesson on

loans payable in unit six clarified my confusion about compound interest. I heard about

compound interest in economics class but never quite understood it. I learned about liquidity

(how quickly assets can be converted into cash) and its importance when assessing the financial

position of the organization. This course taught me that having a personal emergency fund up to

six months of expenses is very practical in terms of budgeting for contingencies. I would have

been among those people surveyed that only have up to two weeks worth of expenses if not for

this course. It is very important to make a “what if?” analysis to asses risk and possibly change

the parameters of the budget. I love the idea of budget variances because when creating a budget,

it is important to keep a record of what happened in reality. In nonprofits, contributions and

volunteers are very important because that is how the community and public interact with the

organization to help and support its mission. On the other hand, employees and employers must

get paid through payroll and there are forms for salaries and taxes that must be filled out. If there

are any shortfalls, the organization must have cash reserves to cover short-term expenses such as

salaries.
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As an artist, I had no clear financial flan before taking this course. I thought that I would

get my music degree, I would get a job at an orchestra, and that I would barely sustain myself.

My future financial goal is to get a decent salary after college and my personal financial goal is

to manage my money by myself without the help of my parents. The book encouraged me to take

a job that is not related to my career because it helps bridge sources of income. I am now aware

that there are three types of income for an artist: production assistance work, supporting role, and

starring role. Since music is my career, I will not donate my time and energy for free because I

must show others that there is monetary value in my work. I know the importance of being aware

of contracts so if there is an issue I can walk away from the situation. I learned what sunk costs

and walk-away costs are because that will help me better negotiate a price for my service in the

future. If I get paid in cash, I know that there are various methods to handle cash flow. I like the

idea of the envelope method a lot because it teaches the tangibility of cash and how it must be

handled with expenses. When I will feel comfortable with the envelope method, I will try the

modified method so my fixed expenses for the month can be paid automatically and

electronically. I am glad that I learned a little about taxes and how they must be handled. I will

be very careful when taking out a loan because I need to be sure that I can pay it back in a timely

manner so no additional interest will accumulate. If I ever want to start a business, I know that a

business plan is very important and that there are many legal steps a business must take with the

government before establishing itself as a working entity.

It is better to be a financially aware person than completely ignore finances because of

the complex numbers. This course taught me a lot and more that I did not know. Definitely, the

best advice that I got from this class is that financial information must be recorded and updated

regularly when creating a budget with variances and filling out taxes for the government.