These are a few key aspects of financial planning, many of which apply to everyone, not just musicians, that can really help you to save money and be prepared for the future. These tried and true methods truly do work, and they generally only require being organized, so it is worth it to invest your time into them!
1. Keep tracking of all your earning and spending. Make an excel sheet if you don’t want to buy and learn an application such as Quicken, and for each month of the year, make a new spreadsheet with a list of everything you have spent on food, clothing, phone and cable bills, etc. As a separate section, include any business expenses you might have. Lastly, include all of your income, and split it up by type of job. It is especially important to track your earnings per month because especially for singers who work at weddings or other seasonal events, some months your income may be much higher.
2. Make sure you know what counts as a business expense! It is possible to write off all of your business expenses as deductions on your taxes; in other words, you will not be taken on the income that you spent to make that income. Any items related to music, including scores, music books and journals, CDs, and recording equipment are all spending that is going towards your career. Additionally, any travel or meal costs while you are traveling to a performance or even an audition can be deducted. Lastly, lessons, coachings, agent fees, and music classes can also be written off. The list really goes on and on, and especially if you rely heavily on your income from paid gigs and small jobs instead of a long-term position, they can really go a long way in helping you save money.
3. Start to save early! If you are able to, save a little bit every week. Assuming you are following part 1 and keeping track of your spending, it should be easy to tell if you are able to save, and approximately how much. Being a singer in particular relies on a lot of factors out of our control, for example, being healthy enough to sing and perform, and if anything were ever to happen to you, having a savings that can last you 3 to 6 months can give you enough time to recover and figure out your next steps. You can figure out what 3 to 6 months of spending is from your organized excel sheets! Even saving a few dollars a day can quickly add up to $1,000 or more per year, which you will appreciate later.
4. Get help if you need it. Taxes are one of the most complicated and yet least taught aspects of life that everyone must complete, and doing your taxes correctly and thoroughly can save you thousands of dollars. Having an accountant at least look through your taxes after you have completed them, specifically one that works with musicians is best, can even be a big help to see if you have missed any possible savings opportunities.
5. It is always better to tell the truth on taxes than to hide some income you made to appear like you have less, especially because lying can end with a lot of fees to pay later if they catch you. It is definitely not worth the small savings for the worrying you do about them catching your errors.
While of course all of this advice can help you, budgeting is by far the most important aspect of your own finance management. If you can see that one less coffee a day could mean you can afford to take a vacation at the end of every few months, or that you are pouring more money than you have into clothes, you can change the way that you go about life in order to help yourself for the future.