Being an independent artist is a job not for the faint at heart. It’s one thing to get on stage, put on a show and go home. It’s an entirely different beast to manage budgeting, advertise your services, promote a product, distribute a product, handle design and packaging, interact with customers, and run a business from day to day. Successful independent musicians not only can get on stage and perform a memorable show, but they also run the back-end logistics as well. Independent artists who are earning a living have mastered the art of keeping overhead costs down, while generating revenue and maintaining healthy profits. With these basic finance tips for musicians, you should be able to establish a strong foundation for your music business.
Start Looking at Yourself as a Business
The first thing you’ll need to do is start looking at your operation as a business, and not a hobby. Once you start treating your operation like a business, you’ll make better financial decisions. You’ll say no to something that is too costly in favor of going with a more affordable option. Or maybe, you’ll see a big move as more of an investment than an unnecessary risk. For example, you might opt to use a group of volunteers as a street team to disseminate information about your upcoming show instead of hiring a PR agency. However, on the flip side, if you’re launching a new album, or rebranding yourself, you might go for the more expensive option and use a PR agency to give you that added boost. When you transition your perspective from hobbyist to business person, your decisions become more based on leveling up your business.
Separate Your Finances
Create a separate account for business transactions. Any earnings you receive from doing music should go into a seperate account. Any purchases you make for business related expenses should come from this account. Likewise, if applicable, you should take a salary from this account by paying yourself on a periodic basis. Depending on how your finances are set up, this could be week to week, biweekly, or monthly. There are so many reasons to keep your business earnings separate from your personal accounts. For starters, having separate finances for your business gives you a better perspective on how well you’re doing and what you can or cannot afford. It makes it easier to track your expenses and earnings. It also gives you a better way to track expenses for tax purposes.
Live Within Your Means
Some people treat budgeting like a nasty word. But as an independent musician, you really can’t afford not to have a budget. A budget keeps you on track. It helps you to be aware of your limitations. It provides accountability for achieving your financial goals. The first thing you must do in order to earn a living as a musician is to get in control of your finances. You need to be in a position where you are earning more than you’re spending. If you’re not in that position, then getting ahead of your finances is your number 1 priority.
The first step to freedom is being in control of your own finances. If you’re in debt, do whatever you need to do to get out of it. Cut your overhead expenses. And take on side hustles or build more streams of revenue until you can regain control of your finances. When pursuing your financial independence, it’s not about how much you make, but how little you spend. It’s pretty simple, although it might be harder to accomplish in reality. To get a handle on your finances, you need to have more money in than out. Take a look at this budgeting chart from GoBankingRates.com that illustrates how to set up a clean budget.
Month Ahead Budgeting
As an independent musician, your finances may not be consistent. There are no guarantees when you’re in business for yourself. One month can yield lots of revenue, but the next month can be cold. Also, earnings might be seasonal in the sense that you may tend to earn more money during the wedding season, or in the Summer, or during the holidays. Additionally, gigs get canceled and rescheduled all the time. This profession is one of the most unstable professions there can be. For that reason, it might be a good idea to establish a Month Ahead Budgeting System. This is where you spend money you earned last month, instead of money you are currently hoping to earn this month. For example, if you netted $3,500 last month after expenses, then that is how much you will spend this month. Nothing more. Each month’s earnings go toward the next month’s spending. This ensures that you are always spending money you have, instead of spending money you hope to receive. It also gives you a cushion and about a month’s lead time to figure out something in case you hit a dry spell.
How does this work?
Figure out what your expenses are per month. You’ll have to save up enough money to cover one month’s worth of expenses. Once you have done that, you can start saving current monthly earnings for spending the next month. This puts you exactly 1 month ahead in your finances. You’ll no longer be living check to check. So if a venue cancels a gig, you won’t have to worry about buying your groceries that week, because you’ll already have the money to pay for it. Also, you’ll have a month to figure out how you’re going to handle the lost income.
This method only works if you are currently living within your means. If you’re not earning enough to cover your expenses, you’ll still be behind. That’s why it’s so important to live within your means. If you’re having trouble earning enough to cover your monthly expenses, try my income boosting tool to help you visualize your assets and set up your months for profit. My income boosting tool is a spreadsheet you can customize for yourself to map out your months by revenue projections. This gives you a snapshot of what you’ll be earning by month. It also will let you know if you need to do something to supplement your earnings by month. I use this spreadsheet myself to project my earnings by month. It is extremely helpful. There are many ways you can supplement your income whether it’s music-related or not. If you have to pick up a part-time job to fill in the gaps, there’s nothing wrong with that. It all depends on what you want and what your personal goals are.
Use Travel Reward Cards
I mentioned getting out of debt earlier in this post, so this section may come as a surprise. While I don’t recommend over indulging in the credit card game, there are significant benefits you can take advantage of when it comes to reward credit cards. For example, you can get free flights, free hotel stays, and free money just by spending the same amount you would regularly spend. There are credit card companies that offer cash rewards and travel points just for using their product. You can use these credit cards to pay for your regular monthly expenses, and in exchange get free hotel stays and flights. As long as you can keep track of your expenses and pay off the cards before interest fees apply, you’re golden! My hubs and I booked an entire vacation with free flights and hotel stays which totaled over $2,000 for less than $30. If you can pay off your cards on time, it’s worth it! This works especially well for independent musicians, because if you tour or do any amount of travelling, your points will add up very quickly. It’s money you’re going to be spending anyway, but if you do it with a rewards credit card, you’ll get free money for it. If this sounds like something you can do, sign up for a Chase Biz Ink Card here. At the time of this writing, Chase is offering an 80,000 point sign-on bonus. That’s a massive amount of points that can land you in a cozy beach hotel for a week for free! Keep in mind, you’ll get the points after spending $5k in your first three months. If you don’t want to use the points for vacations, you can always use them for hotel stays while you’re on tour. There are other cards that offer cash back rewards as well, if traveling is not your thing. The possibilities are endless.
Plan for profit on your next tour with the Tour Budgeting Spreadsheet.
Download the free Tour Budgeting Spreadsheet today.
Keep Track of Expenses
Doing taxes is no joke especially for independent musicians! Don’t wait until tax time to get your receipts and expenses in order. Keep track of your expenses throughout the year. Use quickbooks or an excel spreadsheet to track and organize your expenses by category. For expenses, you’ll need to log each expense under separate categories. A couple years ago I took a snapshot of expense categories from TurboTax (I recommend using TurboTax by the way) and I’ve included it below so you can get an idea of how to categorize your expenses. These categories may have changed by now, but at least it gives you a place to start from.
Also, take pictures of your receipts and save them on a drive. That way you’ll have proof of your expenses. Spend some time after every tour or at least once a week logging all expenses, earnings, receipts, and mileage driven in your car. Note: You can only claim mileage if you are driving outside of your city. If you’re touring in your car, that is a big tax expense you can claim. It goes a really long way.
Get the Gigs You Need
Determine how much you’re worth and go for gigs that compensate according to your worth. Don’t waste time with too many gigs that don’t pay. You’re doing music for a living now, so you can not afford to take on free gigs or low-compensation gigs unless you’re making an investment. Be intentional about the gigs you go after. Use my income boosting tool to better manage your revenues by month and make things happen. Use your creativity to think of ways to earn money with your skill set. I have tons of resources on this blog to help you get the gigs you need and keep them on your calendar. See the list below.
+How to Book Paid Gigs
+How to Turn a Profit on your Music Tour
+How to Keep Your Gigging Calendar Full
+8 Ways to Sell More Merchandise at Shows
+How to Make Money as a Musician Without Touring
+Use these Tricks to Book Follow-up Gigs at Every Show
+8 Steps to Become a Successful Singer-Songwriter
+7 Tax Questions Every Musician Should Answer
Ultimately, earning a living from music takes a lot of hard work and planning, but it can be done! Even if you’re only earning a partial living or enough to buy groceries for the month, your music is contributing to your living expenses. Once you start earning money, it’s a matter of taking the necessary steps to scale your business up. Whether scaling up your business means adding on another musician or adding advertising efforts to get more exposure it’s up to you to decide how you’re going to do it. Either way, using these basic financial tips for musicians will set you up for a huge success.
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