“Income is a very strange thing; I can't quite understand the secret. Income - if it exists, it's gone right away!”
Winnie-the-Pooh sang about honey in his songs, of course. But with income from affiliate marketing campaigns, just like the bear with his honey, it’s not always clear where it has gone.
Therefore, in this article, we'll talk about the expenses of an affiliate marketer trader and financial management.
Who is paying?
The article will discuss solo affiliates or small teams.
Because if you are employed, everything is simple: the employer pays for everything necessary for work—trackers, spy services, and so on—pays your salary, a percentage of the profit, taxes, and even office coffee.
If you have a large team of media buyers, you likely have an accountant, a set budget, and established reporting.
But let's move directly to finance.
Unavoidable expenses
Fixed expenses are those that recur month after month. They are predictable and forecastable. For example, expenses for food or electricity bills. Whether you are watching Netflix or constantly splashing water, the need for food will be present in both cases.
In advertisements for courses on affiliate marketing or other remote jobs, it is often said: "All you need is the internet, and you will become a millionaire without worries and hassles."
However, when you start launching campaigns and get a closer look at affiliate marketing, you realize that "without worries and hassles" also includes expenses for a tracker, spy service, hosting, and much more. With a million subscriptions at $69.99 per year, and adding them all to an Excel spreadsheet, it becomes clear that this is a significant part of your budget.
Something fleeting
If fixed expenses can be calculated, dealing with non-fixed things is a bit more complicated.
Payment to freelancers, whether a designer, copywriter, or translator (although nowadays small tasks like translation or image creation are successfully handled by artificial intelligence).
When planning a budget, it's worth allocating some amount for additional expenses. It's great if they're not needed, but it's better to have money set aside, just in case.
Commissions
Commissions exist, have existed and will always exist. In an effort to reduce commission costs, you can start working with an unverified affiliate network that offers excellent conditions, but is unknown to anyone on the market. More often than not, such savings can lead to losses in the long term.
Therefore, choose proven affiliate networks. You can read more about how to choose the right one here.
Taxes
We will not go into debates about the advisability or pointlessness of paying taxes.
Fact: Taxes are an expense no matter where you live. So just take them into account when planning your budget and calculating your “net” profit.
In the image above you can see taxes as a percentage in G20 countries. You can learn more about tax rates in different countries on the Trading Economics website.
Accounting
Even if you choose to enlist an accountant who will compile an annual report for you and help you with documents for the tax office, you will still have to keep financial records throughout the year: note what you paid for, to whom, and how much you earned.
Fortunately, the Internet is full of paid and free financial accounting programs. For example, Excel, Zip Books, Wave or Good budget.
Some people like to fill out such reports weekly, while others like to fill them out once a month. Everyone develops their own working strategy. Find your approach. Make it a routine and don't slack so you know exactly where your money is going.
Back to the same old
Don't put all your eggs in one basket. No matter what could happen. Your country could be sanctioned, a bank could go bankrupt, an affiliate network could freeze withdrawals, or you could make a mistake and lose more than planned.
There are many different ways to lose money. Therefore, it is important to diversify not only your investment portfolios, but also your business finances. This will help you avoid a situation where you have money but it is frozen or disappeared due to an error and your business becomes non-functional.
Conclusion
Finance and financial management are not like affiliate marketing, where studying a few books is unlikely to be of much help. When it comes to finances, it's truly beneficial to take the old-school approach of dedicating time to reading, taking notes, and also consulting a financial specialist for advice and assistance.
Strategy is necessary not only in affiliate marketing; planning your budget also plays an important role, and here size doesn't matter.
