By Mike Romero
As a musician, it’s important to not only focus on creating and performing great music, but also on managing your finances. After all, you can’t create if you’re constantly worrying about how you’re going to pay the bills. But let’s face it, financial management isn’t exactly the most exciting topic. It can be intimidating, especially for those who are self-employed and don’t have the same financial protections as traditional 9-to-5 employees.
But fear not, fellow musicians! Managing your finances doesn’t have to be a daunting task. With a little bit of planning and organization, you can take control of your financial future and set yourself up for success.
Set Up A Budget
First and foremost, it’s essential to have a budget in place. This means taking a close look at your income and expenses and creating a plan for how you’re going to allocate your money. This can help you identify areas where you may be overspending and make adjustments accordingly. It’s also a good idea to set aside money for taxes, as self-employed musicians are responsible for paying taxes on earned revenue. Make sure you visit a CPA and a tax prep company before April every year. They can help save you a lot of money in the long run.
Plan for Retirement
Another important aspect of financial management for musicians is retirement planning. It can be easy to put off thinking about retirement when you’re young and focused on your career, but it’s important to start saving for the future as early as possible. This means setting aside a portion of your income for retirement savings, whether it’s through a traditional 401(k) or a self-employed retirement plan like an SEP IRA.
If you’re self-employed, it’s also crucial to consider getting health insurance. While it can be tempting to forgo insurance in order to save money, it’s important to protect yourself in case of unexpected medical expenses. There are a variety of options available for self-employed individuals, including marketplace plans and short-term health insurance.
Use Debt to Fuel Growth
It’s also important to not be afraid of business debt. While it’s important to be smart with your finances and avoid unnecessary debt, sometimes taking on debt is necessary in order to grow your business. This could mean taking out a loan to buy new equipment or hire additional staff. The key is to be strategic about the debt you take on and make sure you have a solid plan in place for paying it back.
Most musicians never even apply for a business credit card to make it easier to buy merch – even when they know all the financials and know for sure they’ll make their money back. Many of these same musicians had no problem taking out thousands of dollars in student debt for a music degree with no guaranteed return. Let that sink in.
In addition to all of this, it’s important to be organized and keep track of your financial records. This means keeping receipts and invoices, as well as maintaining a record of your income and expenses. This can help you stay on top of your finances and ensure that you’re making the most of your money.
So, there you have it – a few tips for managing your finances as a musician. It may not be the most exciting topic, but it’s an essential part of building a successful career in the music industry. By taking control of your finances and planning for the future, you can set yourself up for financial success and focus on what you do best – creating great music.
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