4 Personal Finance Tips for Musicians (Who Haven’t Made it, Yet)

When focusing on a burgeoning career and promoting one’s talent within the often unforgiving music business, managing one’s personal finances can be simultaneously critical and the last thing on one’s mind. While the persona of the starving artist surviving on extremely limited funds has a romantic appeal, living it is a far different matter. What follows are four tips that can make the difference between financial discomfort and true financial disaster:

Build Savings – The single hardest thing to do when one is struggling with money is to save. If, however, you can discipline yourself to save five to ten percent of your income, it can really add up over time. Because you are saving a percentage, the numbers do not seem very large; many people take the attitude that unless they can save a “meaningful” amount, it is not worth it. If you approach it thinking that since it is such a small number, cutting it out of your costs should be relatively painless. This money should be set aside in a segregated account and not touched unless really necessary. If or when the time comes to buy studio time, or some other potentially career-changing item, you will have the funds available.

Set Concrete Financial Goals – It is easy to remain focused on the big picture goal of succeeding, but breaking success into realistic and attainable goals makes meeting the larger goals easier. This is particularly challenging in a business that is often anemic until a windfall change creates significant wealth quickly. Developing the habit of targeting smaller goals remains important even after the money starts to flow. Some examples of smaller goals include controlling or reducing costs of touring, limiting unnecessary expenditures or eliminating waste. Each of these should be recorded, tracked and considered.

Set Limits – Another significant obstacle to reaching long term financial success is approaching one’s career with unrealistic expectations. While every performer is in the game with the hopes of true success, this is unlikely to be achievable by everyone. In order to protect oneself over the course of one’s career, it is important to set limits. This practice is not unlike setting goals, but it serves as a safety mechanism if those goals are not being reached. While nobody likes to accept that a dream is not coming true, setting both time limits and earning limits can protect you from getting into trouble, or from over-investing. If these limits are triggered, they may suggest that it is prudent to at least augment one’s income in other ways.

Keep Good Records – A mistake that is easy to make, and even easier to avoid, is finding oneself in a situation where a lack of comprehensive records creates a problem. This may be as simple as a contract dispute with a venue or a label, or may be more personal in a situation like a tax audit. In either of these situations, having a well-maintained written records will prevent confusion – in the contract situation, it is difficult to argue with a written contract (even if court becomes necessary).This is even more important with the IRS, which is far easier to manage when you have the records needed to document everything; so much of a musician’s life is technically a business expense, that having written records can play a significant role in avoiding penalties.

This article was contributed by Andy, co-founder of Credit Card Compare.