6 Money Management Tips For Musicians
Updated: Mar 23
Today's topic is a sensitive but interesting one as it is an essential skill independent musicians should possess.
Many musicians make many mistakes with money in their careers. From impulse buys, to terrible budgeting, to poor management; before long they're deep in debt and having to give up their art. Today we'll be looking at Money Management tips to ensure you keep doing what you love.
Look at your music as a business
As an independent artist, you are already a business owner. To be an effective entrepreneur you should view your art as a business. Setting up a separate bank account for your music business earnings is a good way to draw that line between hobby and business. Money earned should be put into your music, where it belongs especially at the first stage of your career.
“Where did all my money go?” is a question many of us have asked ourselves. A budget is basically a financial plan for a defined period, based on estimation of past earning and spending. It is known to greatly enhance the success of any financial undertaking. The idea is that you should gain more than what you spend. New artists don't always get what they put in immediately they drop a track considering how little is made from streaming - Spotify pays about $0.003 to $0.005 per stream and Apple Music between $0.007 and $0.01. So if you spent $3000 on releasing a song, you would need about 1,000,000 streams to break even. This is not to discourage you from creating music, which brings us to our next point.
Diversify your income streams
If you haven't started earning enough as a musician, having an alternative source of income could help fund your music. Do what you have to do to make a living. There are so many ways you can earn money as a musician apart from royalties and performance fees. You should think creatively about other ways you can earn money as a musician.
One of the benefits of making a budget is seeing how much you spend against how much you earn. Excessive spending could quickly add up to disaster. Be proactive about managing your money. Try not to borrow to make music unless you are in a record contract. Always remember that going into debt can be tough to recover from because of the unpredictability of music income.
Start Saving (The 50/30/20% budget rule)
How do you divide up the money you earn to avoid splurging? A simple budget rule, the 50/30/20% budget rule advices to divide income and allocate it thus: 50% on needs, 30% on wants, and 20% to savings. Having some savings could come in handy when tough times arise. You should also be able to distinguish between needs and wants depending on your income. It's advisable to get a job while you build yourself and your fanbase as you may have to fund yourself at the beginning of your career.
Reinvest in yourself
Reinvesting in yourself by improving your skill, levelling up your gear and getting better marketing could open up more opportunities for you. Spend wisely from your 50%. The only constant thing is change so improve yourself daily. Also work on building your fanbase as a bigger audience could translate to more streams, sales and overall income.
Discipline and determination are key ingredients to money management. If you are to make your craft a successful career you need to prepare for it - musically and financially. The road to financial independence begins with one step, take that step today!