Money is a stressor for many artists.
Some musicians would rather just make the music and let the money sort itself out.
Unfortunately, that’s not how it works.
In many cases, you, the musician, are the CEO, the accountant, and the artist in your one-person small business.
And I know the phrase “music budget” can cause many musicians’ blood to start pumping from anxiety. Even mine.
So here are three music budget pitfalls you’ve got to avoid.
Updated Februrary 1, 2020
Spending Too Much Money
First things first, you’ve got to save as much money as possible, especially if you have a day job, you’re a student, a parent, or just have other daily responsibilities.
I’m a huge fan of not spending a lot of money on stuff (mainly because I don’t have a ton of money). Thrifting and saving are my go-to’s.
For example, if you’ve ever looked into how much a professionally done music video costs, you’ve probably opted for a smartphone-shot, friend-directed music video. Or maybe that’s just me.
And when it comes to saving money on online purchases, one service I love is Honey. It’s an extension for your browser that scours the internet for coupons when you’re about to buy something online.
One time, I ordered materials to make my own merch. Good ol’ Honey found me a 10% off coupon automatically.
Oh yeah, and it’s completely free to use.
Another way to save is to look for musical instruments and recording equipment at thrift stores.
I bought two of my microphones (an ElectroVoice N/D 257 and a Realistic 1070c) at a thrift store and they work great.
Basically, your budget-keeping will be so much more enjoyable if you’re frugal.
Get your FREE music budget template
Mixing Music Income With Personal Income
Keep your music money separate from your personal money.
I can’t overstate the importance of separating your personal finances from your music-related finances.
If you don’t, things can get messy.
Here’s what can happen if you don’t keep your finances separated:
- Taxes will be more confusing
- Personal money and music money can accidentally get mixed up
- It can be easier to lose the mentality that music is not that important
- It can just get really confusing
So here’s what I do: I have a free checking account specifically for my music income and expenses. I use Simple Bank for this.
It was actually voted one of the best budgeting apps by the ever-reliable Wirecutter (they do some serious testing on the products and services they review).
Simple has this feature called Goals that lets you divvy up your money into different categories all within a single checking account.
So, for example, whenever I make money from music, I move some to the Website Cost Goal, some to the Musical Gear Goal, and some to the Taxes Goal.
Speaking of taxes…
Ignoring Uncle Sam
What a weird concept it is that our uncle comes and takes part of our paycheck. Like, uncles usually give money to their nieces and nephews.
But Uncle Sam is not very avuncular.
Depending on your age, filing status, and how much you made in a year, you may have to pay taxes on your music income.
Usually, you’ll have to make at least several hundred dollars, but you should contact your local tax consultant to make sure.
Either way, it’s probably better to set aside money for taxes, just to get in the habit. I’ve heard you should save 20-30% for taxes.
And, hey, if you don’t end up needing to report your music income, you’ll have more money than you expected.
TurboTax actually has a really helpful article called “The Musician’s Guide to Taxes: Top Tax Deductions” that I’d recommend reading.
Not Having An Emergency Fund
You never know when life will smack you across the face. That’s why you’ve got to be ready with the ice pack.
I’m talking, of course, about having an emergency fund.
My laptop recently hit the concrete from about five feet up. The corner of it shattered. I thought I wouldn’t have a way to record music.
Fortunately, the computer still works. I just can’t close it.
Situations like these get you thinking about an emergency fund. What if your recording equipment breaks completely? Or your instrument?
Will you have any money set aside for unforeseen problems?
In the free music budget template I made (download below), I suggest starting with 6% divvied out to the emergency fund. But the more the better.
Not Re-Investing In Your Music Career
Ask any business owner and they’ll tell you that you have to re-invest in your business.
And, as a DIY musician, you’re running a small business — you.
So set aside at least 50% of the money you make from music back into your music, as opposed to giving yourself a paycheck.
This could be you saving money for new gear, paying for website costs, or buying Facebook ads to promote your music.
If you don’t reinvest, your music career will not grow.
Any other budgeting tips you’d add? Leave them in the comments so the rest of us can check ’em out.
3 Replies to “How To Avoid These Music Budget Pitfalls”