As a musician, managing your finances may not always be your top priority, but it’s essential to think about your financial future. Don’t let 2025 be a year of repeating the same mistakes or standing still with your finances. Make a change now to see real progress. Here are some practical steps to help you get started.
Disclaimer: We’re not certified accountants or financial advisors. This is simply a helpful guide to get you thinking about your financial future, but you should consult a professional for personalized advice.
1. Understand Your Income Streams
Where is your money coming from? Maybe it's live performances, royalties, session work, teaching, merchandise, streaming revenue, or even income from outside the music industry. It's essential to get a clear picture of your income streams so you can track them, create a realistic budget, and evaluate over time what’s working and what isn’t.
Action Step:
Track Your Income: Use a simple spreadsheet or budgeting app to track your income over time. This will help you identify trends, estimate your monthly earnings, and set realistic savings goals.
Budget for Fluctuations: Knowing that your income may vary month-to-month, set aside money in high-earning months to cover leaner periods. Treat every paycheck as a portion of your total yearly income, not just a monthly figure.
2. GET A JOB!
Unless you have financial support from someone else, it's best to prepare for the "What Ifs." You don’t want to rack up debt or damage your credit, as that can derail your financial future. It’s easy to get caught up in the excitement of your music career, but it’s just as important to prepare for the unexpected. Many musicians are advised to focus solely on their music, but the reality is that relying entirely on music income can be risky and often disappointing—especially early in your career. Without consistent revenue from royalties, gigs, streaming, advances, etc., financial instability can make it difficult to sustain your music career and lifestyle long-term. Whether it’s a part-time job or freelance work, this backup income not only helps cover your day-to-day expenses but also enables you to save for the future and invest in your music. It can help cover essential costs like gear, recording, or touring, while providing a cushion for everyday living. Living within your means is key—only buy what you can afford, and avoid relying on credit cards to fill the gaps in your income.
3. Separate Your Business and Personal Finances
Many musicians fall into the trap of mixing their business income with their personal finances. However, it’s important to separate the two to help manage taxes, track profits, and understand your personal spending habits.
Action Step:
Open a Separate Business Account: Set up a separate checking account for your music-related income and expenses. This will help you maintain clarity on business finances, especially during tax season.
Consult a Financial Professional: Work with an accountant or financial advisor who understands the music industry. They can help you set up proper tax structures, write-offs, and advise on other business-related financial matters.
4. Build an Emergency Fund
Having an emergency fund or savings account is crucial for musicians with inconsistent income. It provides a financial cushion, helping you avoid relying on credit cards during slow periods or unexpected expenses.
Action Step:
Set a Target: Aim to save at least three to six months’ worth of living expenses in an easily accessible savings account. This fund should be used only in emergencies, such as unexpected medical expenses or periods with no gigs.
Automate Savings: Set up automatic transfers from your checking account into a savings account. Even if you can only save a small amount each month, consistency is key.
5. Start Contributing to Retirement Savings Early
THIS IS SOMETHING WE BELIEVE ARTISTS NEED!It’s never too late to start saving for retirement! While it may seem far off, especially if you’re a young musician, getting an early start can make a significant impact, thanks to compound interest. Unfortunately, many musicians lack access to traditional employer-sponsored retirement plans, making it crucial to explore alternative options.
Action Step:
Talk to a Financial Advisor to determine what’s best for you. Ask about opening an IRA (Individual Retirement Account): If you don’t have access to a 401(k) or pension plan, an IRA can offer tax advantages and is available at most banks or investment firms. Some options require very little to get started!
Consider a Solo 401(k): If you’re self-employed, a Solo 401(k) can allow for higher contribution limits than a traditional IRA, giving you more flexibility in saving.
Automate Your Contributions: Just like with your emergency fund, automate your retirement savings. Even small, consistent contributions can grow significantly over time.
6. Avoid Living Off Credit Cards
Credit cards can be tempting, especially when your income isn’t steady. However, relying on credit to cover living expenses or non-essential purchases can quickly lead to high-interest debt that’s difficult to pay off.
Action Step:
Live Within Your Means: Focus on living within your current means rather than using credit cards for things you can’t afford. Say “no” if you can’t afford to go out with friends or spend on unnecessary items! Stick to a budget that accounts for your income fluctuations.
Pay Off Balances in Full: If you must use credit cards, always pay off the balance in full each month to avoid interest charges.
Create a Debt Payoff Plan: If you have existing credit card debt, prioritize paying it down. Consider using the debt avalanche method (paying off the highest-interest debts first) or the debt snowball method (paying off the smallest balances first to gain momentum).
7. Credit Card Balance Transfers
As stated above, credit cards can lead to high-interest debt, which can snowball. Managing credit card debt responsibly is essential. What is a A balance transfer? It is when you move existing debt from one credit card (or another line of credit) to a new credit card, usually to take advantage of a lower interest rate or promotional offer.
Action Step:
Consider a Balance Transfer: Balance transfers can be a great tool, but they require discipline to ensure they don’t turn into a long-term crutch. If you’re carrying significant credit card debt, a balance transfer can help you save money on interest. Many credit cards offer a 0% APR introductory period (usually 12 to 18 months), allowing you to pay down your debt without accruing interest. Most charge balance transfer fees, typically ranging from 3% to 5% of the transferred amount. Try to get the lowest fee. Also, verify whether the card charges an annual fee—if it does, it’s best to avoid it and find another card.
How to Use It Effectively: If you’re moving debt from one card to another, create a plan to pay off the transferred amount before the 0% interest period ends. Otherwise, you may be hit with high-interest rates once the promo period expires.
Be Mindful of New Debt: Avoid the temptation to rack up more charges on the original or new credit card during the 0% APR period. Focus solely on paying down the existing balance.
8. Invest in Your Health
It’s easy to overlook healthcare, especially if you don’t have traditional employer-sponsored health insurance. However, maintaining your physical and mental health is vital for both your career and financial well-being.
Action Step:
Look for Affordable Healthcare: If you’re self-employed, consider looking into health insurance options through the marketplace or via a musicians' union.
Set Aside Health Savings: If you have a high-deductible plan, set up a Health Savings Account (HSA) to save for medical expenses tax-free.
9. Prepare for Taxes
Musicians, like any self-employed individual, are responsible for managing their taxes. Understanding your tax obligations and preparing ahead of time can prevent the last-minute scramble to pay.
Action Step:
Track Expenses: Keep detailed records of all business-related expenses, including travel, equipment, and studio time. These can be deducted from your income come tax time.
Set Aside Tax Money: Set aside a percentage (typically around 25-30%) of your income throughout the year for taxes. This way, you won’t be caught off guard during tax season.
Quarterly Estimated Payments: If your income is substantial enough, you may be required to make quarterly estimated tax payments. Consult with an accountant to ensure you stay compliant.
10. Create a Long-Term Financial Plan
A financial plan helps you think beyond day-to-day expenses and can give you a roadmap for your future. Whether you're saving for a home, starting a family, or planning for retirement, having a plan in place ensures that your goals align with your finances.
Action Step:
Set Financial Goals: Outline both short-term and long-term financial goals, such as paying off debt, saving for a home, or investing in your music career. Break these goals down into manageable steps.
Review Regularly: Revisit your financial plan at least once a year to assess your progress and make adjustments as needed.