Yes, the term is “starving artist.” It’s been said so many times that it’s even annoying to type it. Sure it’s a stereotype and even a tradition or badge of honor but what’s really going on with artists and money? The truth is that developing and expressing artistic skills takes an enormous amount of time – time that could otherwise be spent making money. If you’ve chosen to walk this path, you know what it’s like to sacrifice creature comforts and conveniences for cerebral rewards. Inevitably though, we hope to profit financially from our efforts and skills. Chances are though that your artwork will not make you a ton of money in a short amount of time. It is always artwork in progress. In the meantime, how do we set ourselves up to make the most out of our pennies, maximize our artistic time, and step out of that lame old cliché?
So as artists, we’ve developed a specific skill set in which we essentially translate our intangible thoughts and emotions into tangible experiences. The result is called intellectual property. You’ve now used your brain and appendages to create property. How cool is that? The financial analogy is that you’ve bought some shares of stock or a parcel of land. These are called assets. Your songs are assets that can potentially make you money for the rest of your life. Of course, as the value of stocks and land can vary greatly, so can your songs. One may not gain any traction but another might be a hit. So keep adding to that portfolio so it can begin to serve you!
There is plenty of information in books and on the web about how your music can make you money and we will reference a few here but our primary focus is how these are handled. First and foremost, it is imperative that you sign up for and register your songs with a performance rights organization (PRO) both as a writer and a publisher. More information can be found here. One little-known benefit of this is that you can begin collecting royalties for your live performances whether they be at a local coffee shop, boardwalk, or major concert hall. At first, these payments will not be much but the goal is to get into the consistency of claiming your due payments. Also, PROs are mainly in place to collect royalties for the use of your music in TV, Film, Radio, and Internet streaming services.
So now that you’ve set yourself up to begin collecting residuals on your intellectual property, let’s discuss how to handle the money that you are making now. Whether it be from CD sales, gigs, session work, or even your job at that coffee shop, your money is there to maximize your time to actually be an artist right? Yet so often, we find ourselves extended to the limit and living paycheck to paycheck. So, pose this question to yourself: How much of what you make do you actually keep for yourself? Huh? Seriously. You pay rent, utility bills, car expenses, and groceries. Why not pay yourself? In the classic book The Richest Man in Babylon, George S. Clason, emphasizes the idea that “a portion of all you earn is yours to keep.” We are encouraged to place 10% of our income into savings BEFORE we pay our expenses. To many people, this seems like a near impossibility but I will tell you that this process has helped take me from broke to financially stable in a matter of four months.
Now, of course, there are other factors at play but the point of the 10% idea is to change your financial perspective and habits. Committing to this caused me to shift my spending and cease unnecessary expenses such as that afternoon coffee or snack from the corner market. In addition, I saw my bank account balance continue to grow. I was so used to always seeing money leave my account and now there was this new energy. I wanted to work harder and smarter to see that account grow faster.
Another result of this concept is taking into consideration the difference between an asset and a liability in our daily routines. Robert Kiyosaki outlines this concept in his book Rich Dad, Poor Dad. As your music can be a great asset in your financial life, what are the liabilities working against you? Are you paying more in rent than you really need to or over-spending on car payments, video games, the latest iPhone, etc.? Certainly, some of these things can be useful tools for your career but I implore you to be mindful of your liability spending. Trim the fat. It will clear your mind and your time.
For illegitimate pleasure, we pay the price afterward. For legitimate pleasure, we pay the price beforehand. – Ravi Zacharias
Suggestions for the budget musician:
Look at your finances every day. Even if it is painful. Knowing your current status will reduce anxiety and spur momentum.
Get a grasp on your credit score. Credit Karma is a great, free resource for this!
It’s never too early to start investing. You can invest in small amounts with Acorns!
Sites such as Audiam and Sound Exchange are fantastic for collecting additional royalties.
Continue to educate yourself on finance. Learning more will breed positive momentum.