How To Take Charge Of Your Finances As A Musician


Kudos for choosing to make a life from your passion! What that means is that instead of going to work every day and cranking out spread sheets and memos, you get to create something meaningful that you share with the world.

On the other hand, making a life from music means that you do not have a lot of job security and that it is up to you to create the opportunities to perform and share your art. So how do you make a living as a musician?

The good news is that with some basic knowledge of finances and how to plan, it is entirely possible to make a living from your art.

Here are some basic pointers in order to get started and become financially literate.

1. Articulate Your Challenges

The first step is to explore your attitude towards your finances to zero in on your greatest challenges, as well as to give yourself some credit (no pun intended!) for the things you do well.

Many musicians I know tell me that their biggest concerns around finances include:

  • Fear of not having enough money
  • Spending too much money
  • Worrying about how to earn enough money to support their life style
  • Credit card debt
  • Not knowing how to budget
  • Inability to save for emergencies and retirement
  • A general feeling of “I’m not good at this”.

Or perhaps you, like other musicians I know, need more information about how to save for retirement, invest, taxes and the implications of being self-employed and how to get funding for projects.

To help you identify your fears and challenges, take the financial freedom quiz [on Astrid’s website, Ed.]. This will prepare you to identify the areas that you need to work on. You are now on your way to becoming financially literate!

2. Gain Basic Financial Literacy

A good overall reference for acquiring financial literacy is the 360financialliteracy website, a free service of the nation’s certified public accountants which provides basic information on how to handle your finances through all stages of your life. It includes an examination of the typical issues that you face when you are a student, an employed person, starting a business retiring, or experiencing a financial crisis. It also provides tax and budget calculators so that you can begin to put together your financial information in a coherent way.

3. Think Expansively about Revenue Streams

Musicians tend to focus on performance gigs and teaching as the only ways to derive income from their art. In fact, there are many different ways to earn money as a musician. The Future of Music Coalition—a national nonprofit organization that engages in education, advocacy and research to “ensure a diverse musical culture where artists flourish, are compensated fairly for their work, and where fans can find the music they want—has published a list of 40 revenue sources that musicians can draw on.

Thus, rather than clamoring for a slice of the existing pie, performers and composers can expand the terrain and create something that does not exist, especially in the current climate in which we live.

So think expansively and creatively about how to earn money as a musician and come up with your own list of 40 revenue sources. For example, while house concerts “usually” involve piano or string ensembles, an entrepreneurial musician might find a way to do house concerts with non-traditional instruments. If you develop good relationships with others, they may be intrigued enough to hire you and listen to something new.

4. Plan on Multiple Revenue Streams

The reality for musicians is that few rely on one source of employment and the majority of musicians juggle multiple roles. A 2012 survey of professional musicians conducted by the Future of Music Coalition found that over half of the survey respondents derived revenues from 3 or more roles . Many musicians work as self-employed freelancers in a variety of jobs. In fact, according to a study from the National Endowment for the Arts, 44% of professional musicians in the U.S. are self-employed.

Therefore, musicians need to plant a lot of seeds in a lot of different musical “fields” and diversify their sources of work and revenues so that, in the words of Josh Quillen, a member of the successful percussion quartet So Percussion, you are “too small to fail.”


5. Budget Wisely

Budgeting is a matter of projecting your income based on past experience and best estimates, together with carefully tracking your expenses. Budgeting is a dynamic short-term process whereby you frequently examine your income and expenses. And those expenses need to include savings and taxes (see below)!

Be sure that your income exceeds your expenses. The Savvy Musician blog has an excellent budget template for musicians to help you get started.

6. Avoid Debt

One of the benefits of doing a budget is seeing how much you spend versus how much you earn. The goal, of course, is to spend less than you earn. So how is that so many people wind up with credit card debt and get themselves into financial hot water?

Musicians live on lean budgets so excessive spending can quickly add up to disaster. One basic thing is to pay attention to “emotional spending.”. If you had a bad day and then “reward” yourself with the new iPad, how helpful is this to your overall happiness? And what are the consequences? Going into debt is not worth it!

To help you avoid unnecessary debt, pay attention to your needs —the expenses that are essential to your life like rent, internet, cellphone, food, professional expenses—versus your wants —the optional, fluctuating expenses like eating out, entertainment, optional travel, clothing, electronics—that can eat into your budget and cause a lot of problems if left unmanaged. If you find yourself lusting after that iPad when you are having a bad day, you may be a victim of “emotional spending.” The consequences of spending more than you earn are pretty dire. If you finance your purchases via credit card, you will end up with exorbitant late fees and interest, with the result that the item lands costing you much more than the original purchase. If this is speaking to you, go back and total up the amount of late fees and interest that you have paid on your credit cards. Subtract the original amount of your purchase from the total that you have paid. What’s the remainder? How long does it take you to earn that money?

To identify your issues when it comes to debt and spending, take the next part of the Financial Freedom Quiz. And if you are having a bad day and crave that new iPad but can’t afford it? Find other outlets for that emotional spending!


7. Save now

Since so many musicians are self-employed and have income that fluctuates, it is imperative that they start saving now! While many musicians wonder how to do this, another great resource from the world of accounting called Feed The Pig offers practical tips on how to start saving. If you start saving small amounts now, those savings can accumulate very nicely over your lifetime thanks to the concept of “compounded interest.” And even though interest rates are low right now, it still makes sense to start saving early.

8. Tax Considerations for Musicians

Musicians with their multiple revenue steams need to be aware of the tax implications of how they earn money.

Let’s start with having a job where you earn a salary. Your employer will pay half of your employment taxes and will withhold your income taxes. At the end of the year, you will either get a refund or pay the difference between what you owe and what was withheld.

If you are self-employed, you are responsible for paying your own taxes. The good news about being self-employed is that you also get to deduct your career-related expenses. Be sure to keep good records on everything that you spend. Organize this into a spreadsheet and keep the back-up receipts that document your expenses. It might even make sense for you to hire an accountant who can advise you on what is deductible. People who do their own taxes often miss opportunities for taking deductions so the money you spend on hiring an accountant can reap huge benefits.

So be aware of your fears and your skill gaps and begin by learning the basics. Next time, we will take a look at how to organize your financial information into a manageable financial plan so that you can stay on top of your finances!