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How to manage your finances as a freelance musician

“I’m on my way, I’m making it,” sang Peter Gabriel. “So much larger than life.”

Whether you aspire to the “big time” (as in Gabriel’s song), or you just want to make some money as a freelance music (or any artist), personal finance is a big part of the equation. After all, the stereotype of the starving artist didn’t come about by accident.

But maybe you don’t want to starve. Maybe you want the bigger car, the bigger house, and the bigger bank account. There’s a way to do it, and all it takes is a shift in perspective.

Your art is your business – treat it that way

Everyone who has something to offer to society is, in some way shape or form, running a business. If your skill is math, you can sell your services as an accountant. If your skill is extracting oil from the ground, you can sell oil for a profit.

As a freelance musician, your skill is playing music or singing and you can sell it as entertainment. Despite a culture that wants you to believe your art is either priceless or worthless, your art is a product like any other that you can sell. Once you adopt the mindset that your art is a business, you can make decisions that will lead to growth. 

The rules are up to you. You can choose to view your art or music as a side hustle and try to make some money from it on nights and weekends. Alternatively, you can go full-time and try to earn a living full time freelance musician. You can even outsource the parts you don’t like. Many renaissance artists, including Leonardo da Vinci, hired others to take on work they deemed uninteresting or unimportant. Your art is a product – how it comes about is up to you.

Every business needs a plan, even freelance musicians

You don’t need to make a 100-page binder, but you should have at least an informal plan about how you’re going to run your business. 

Half of your plan needs to be about how you want to make money. Think through who your potential customers are. Brainstorm ways to market your services to them. Decide on what you will and won’t do. 

The second half of your plan needs to be about dollars and cents. How much can you earn from the end product? What is the cost to create it – in terms of money and your own time? How many sales can you make in a month? A year? What do you expect your profit margins to be? Is it enough to justify the work? What can you do differently to reduce your sweat-to-bread ratio?

Take some time to iterate on your plan and decide on a direction that will help you reach your goals. You might find that your current way of doing things pays you less than minimum wage – or you may even be losing money on your art. You might come up with new ideas for how to make money doing what you love. Writing out your plan can help you separate your perception from reality and make smarter decisions about how you invest your resources.

As with all businesses, this is an ongoing process of trial and error. Don’t get stuck trying to get it perfect or know everything before you start. Form a hypothesis and find a way to test it. If things don’t work, be ready to try something else. When you find a product-market fit, you’ll know it.

Read: The best business savings accounts

Pay yourself

Even as a sole proprietorship, as a freelance musician your art should be treated as a business that’s a separate entity from you. The money you make in your business belongs to the business. If you need money to eat and clothe yourself and buy berets (for painters) and beers (for drummers) and ibuprofen (for personal finance writers), you have to pay yourself.

Again, the rules are up to you. You can choose to give yourself a regular salary on a biweekly basis. Or, you could pay yourself a dividend or bonus at the end of the year. Hey, you could even pay yourself a commission on sales or a percentage of profits. The important part is to make a rule that works for the business and for you as an individual. If you want to earn $50,000 a year, you need to find a way to have your art or music accommodate a $4,200 monthly payroll expense and have money left over to reinvest in the business.

This needn’t be formalized in any way, but it might be easier if you keep your banking for business and personal separate. Some artists and performers prefer to incorporate, in which case you’ll need to follow more stringent rules about how you move and track your money.

Plan for ups and downs – and outright failure

Self-employment is rarely an easy road. There are hills and valleys, and the occasional pit of despair. The ups and downs are guaranteed to be financial, as well as emotional. As the cigar-smoking capitalist you now find yourself to be, you need to be prepared for the reality that it won’t go smoothly.

For the hills and valleys, assume you will have busy seasons and quiet seasons. Assume you will have clients who won’t pay on time (or at all). Assume there will be more lean months than fat months. Remain optimistic in your heart, and pessimistic in your head. Pay yourself as if every month is the same as your worst month. Manage your personal finances so that you can keep yourself afloat if your employer (read: you) can’t pay you on time. 

And, have a backup plan for if it all falls apart. The reality is most businesses fail, and there’s nothing wrong with going back to your old barista job for a while as you figure out what to do next.

The bottom line

As you step out and market your art, you’ll quickly learn about what works and what doesn’t. Over time, you’ll be able to raise your rates. One day, you’ll be able to turn down a gig you don’t want to do – and it will be one of the best feelings in your life. 

Until then, adopt the right mindset and get ready to work harder than you’ve ever worked before.