First of all, it’s okay to budget as a musician. Even though it may seem constraining and not very rock’n’roll, it’s something everybody needs to do. Especially when you have a goal to reach and standards you hold yourself to. Having a solid budget and adhering to it actually frees up more time to focus on your music as it makes decisions easier.
Let’s face it, we all want the same thing. Jay-Z probably said it best when he wrote “Financial freedom my only hope”. And if he managed it, maybe you can too.
But the first step towards financial freedom as a musician is to create a budget and stick to it.
Only by doing this will you take away the stress of not being able to make ends meet, giving yourself the chance to pursue your dream. And furthermore, a good budget plan can actually help to increase your income as a musician.
So with that being said, here are some useful budgeting tips for musicians, as well as some advice on how to make more money by adopting a more strategic approach to budgeting.
By implementing these tips, you’ll be able to manage your finances better and enjoy a more rewarding career in music.
1. Creating a detailed budget as a musician
The first step in creating a detailed budget is to know how much money is coming in and how much is going out. So keep track of your income and expenses and maintain a detailed record. Make a note of everything, even the little things, as this will help you to get a complete view of where your money is coming from and where it’s going.
If you have several sources of income, make a note of them all and do the same with your expenses. Keeping track of your expenses in particular will help you cut unnecessary costs, such as subscriptions you no longer use or even that daily morning coffee that actually adds up to quite a lot over the course of the month. Many banking apps have a tool to help you do this.
Now, the best way to keep your budget under control is to review it regularly, for example every month, and adjust it as your situation changes and as your career develops. Monitoring your actual income and expenditure against your budget will help you improve the accuracy of it going forward.
Creating a budget is all about planning for the future, so it’s also a good time to write down all your short and long-term financial goals.They might be personal goals: maybe you have debts you’d like to pay off, or you’d like to start saving for your retirement. But they can also be professional goals: a new course or certification could help your career, or you’ve had your eye on some new equipment that could really make the recording process easier, or maybe you need professional photos to promote your music.
Whatever your goals, big or small, they will serve as a guide and motivate you to stick to your budget. It’s easier to save when you know why and have a clear idea of what you’re saving the money for.
If you’re really struggling to create a budget and stick to it, you might consider using a budgeting app. There are lots of them out there, like YNAB or PocketGuard, and they make it easy to keep track of your finances.
2. Separating personal and business finances and investing where it matters
Being a musician can get messy when it comes to finances. As with any entrepreneur, the line is a little blurred, but keeping your personal finances separate from your business finances is crucial to maintaining clarity and stability.
The first thing to do is set up separate accounts, one for your personal finances and one for your business finances. Make sure you have savings accounts and credit cards for both. This is where the tracking mentioned earlier is important: keep thorough records of all income and expenses related to your music career and, if possible, pay yourself a salary from your business account to cover your personal expenses.
When examining your personal expenses, it’s important to distinguish between essential and non-essential expenses. Prioritise essential expenses such as rent, utilities and food to ensure you can cover your basic needs and eliminate unnecessary spending. It may mean that you adhere to a less expensive lifestyle for a while, but if it gives you the opportunity to pursue your dream, it sounds like a good deal.
Now let’s look at how to invest strategically in your music career.
As much as possible, invest in your career and prioritise spending that will have a positive impact on your music, such as good quality equipment or hiring a studio to get quality recordings, which are essential to building a professional music portfolio.
It can also mean investing in courses to develop your musical skills or investing in high-yield opportunities that can help you progress in your career, such as live shows which can play a huge role in helping you gain exposure as a musician.
One thing you shouldn’t skimp on is marketing. Having a strong online presence is one of the most important things to invest in, so allocate some of your budget to designing a professional website or getting high-quality photos.
When evaluating these investment opportunities, stay realistic or ever slightly cautious as to how much they will cost and the incremental income they will generate.
3. Planning for irregular income streams and emergencies when creating a budget as a musician
Being a musician means experiencing irregular income streams, which is why it’s so important to keep track of your finances to better manage these changes, as well as to plan for emergencies.
The first thing to do is to analyze your past income to identify peak and off-peak periods, when less money is coming in.
This will help you estimate your average monthly income and when you revise your budget, always take the slower months into account. Make sure your budget gives priority to essential expenses and, if you can, create a reserve to even out any financial dips during the slower months.
Another thing to do is set up an emergency fund with three to six months’ living expenses to cover any unexpected costs. This can eliminate a huge amount of stress and will allow you to create your music with complete peace of mind.
4. Incorporating several sources of income into your budget as a musician
There are so many ways to make more money and incorporating several sources of income into your budget as a musician is a smart approach to creating financial stability.
So don’t limit yourself. The ways of earning money as a musician are endless. You can give more performances and concerts. Or you can offer music lessons in person or online. There are many education platforms that connect people who want to learn with teachers who want to share the knowledge they’ve gained, such as Preply. Session work is also a great way to earn extra money and network at the same time. You can also write and compose for other people or license your music for film and television. And don’t forget the royalties and the income you can make from online streaming platforms. Another great idea is to monetise any content you have online, through platforms such as Patreon or Bandcamp.
Use your entrepreneurial spirit to identify profitable business opportunities as a musician. See what makes you the most money and focus on developing those areas. It’s all about making strategic decisions and being proactive in seeking out new opportunities to increase your income.
There are many possibilities, and diversifying your income can be an excellent way of having peace of mind, because it means that you’re not putting all your eggs in one basket and that if one source of income stops, you still have others to make money from.
5. Planning for taxes and saving for retirement as a musician
Tax planning and saving for retirement are crucial, especially for a musician who may experience variable income streams and ups and downs in his or her career. But they can be really daunting subjects to understand.
Keeping separate bank accounts for personal and business finances makes things easier, as it ensures that you can keep a clear record of business-related expenses. It’s also important to keep detailed records of all income and expenses to support your tax declarations. This includes contracts, invoices and receipts.
If you find this too complex, it may be a good idea to work with a tax professional who can guide you through the process. They’ll make sure you comply with tax legislation and can also tell you about the tax deductions available to musicians, such as expenses related to instrument maintenance, travel to performances or even music lessons.
And while it may seem a long way off, it’s important to start planning for retirement, so set aside some of your income and consider putting it into a retirement account, and trust in the power of compound interest to increase your savings over time.
6. Negotiating performance fees and expenses as a musician
Negotiating fees and expenses is a key business skill for musicians. Whether you are a long-standing artist or a newcomer to the sector, it is perfectly reasonable to ask for fair compensation.
Now, negotiation is all about good communication and being clear about your expectations while listening to those of the other person.
The aim is to work together to find a win-win agreement.
To make your expectations clear, you need to have a baseline and know what the typical performance fees are for your genre and location.There are a few things to consider, such as travel costs and accommodation, as well as your own experience and reputation. Your budget will help you to identify and evaluate these costs and will serve as a good basis for negotiations. Musicians with a large fan base can charge higher fees and as you grow as a musician and your career develops, so can you.
Be prepared to negotiate, but also to leave if there is no way of finding a solution that suits both parties.
7. Working with fellow musicians and crowdfunding
Teaming up with fellow musicians and using crowdfunding can be effective tools to relieve some of the financial stress and even finance your music career.
A good way of sharing costs and resources is to collaborate with other musicians. However, it is important to be transparent about the financial arrangements and, if the collaboration involves earnings, to define clearly how these will be shared between you.
Another excellent thing to consider, especially if you have a specific project that is likely to attract public support, is to put in place a well thought-out crowdfunding strategy. This way you can not only fund your projects, but also engage and develop your fan base.
For best results, engage with your audience through social media and other platforms to create awareness and encourage supporters to share your campaign.