Musicians are notorious for their lack of money management. From the classical composers like Mozart to the more recent hiphop figures such as DMX. To help minimize the impulsive spending, a budget is one way to know where your money goes. Below are five tips to help keep the budget truly reflective.
1) Plan ahead
Prepare your expenses and incomes in advance. The longer the term you can plan the better. A month in advance is okay but if you can stretch it to a three months or more, you're onto something.
You have to remember that you’re operating a music business so evidence of cash flow is crucial in order prove to possible investors that you’re serious about the finances of your music.
2) Categorize you budget
Categorize your budget so that you can keep it honest and specific. The more detail you can add in your budget the better.
For example: having an income section that just says music incomes isn’t a good enough. Expand this more to:
Mixing & Mastering
This will help you decide where you’re efforts are most rewarding and where you should be focusing your efforts.
3) Update regularly and honestly.
Get into the habit of updating your expenses and incomes daily. Take the extra step of adding it to your dairy or phone reminders so that you won’t “forget”.
Spending impulsively is one of those things that happen, account for the expense but adjust another expenses in order to keep the music finances intact.
4) Keep the music income for music expenses only
A very tempting thing to do once your music starts making money is to use the “extra income” for something that's not linked to music. If you're making money from music, use that money to make more money from music.
You can save up for a better microphone, a premium account, website hosting etc.
TIP: you're non-music income can help your music expenses but the music income only helps the music expenses.
5) Set smart, realistic goals
As a musician, setting goals is crucial. Setting smart attainable goals is the key to the goals. Saving up for a Neumann microphone may seem like a great idea but if it’s going to take you 10 years to get it done then this may not be a smart goal.
The underlining goal when it comes to budgeting is to make sure you're expenses don't exceed your income and to have some left over! In other words, save! If you haven't set up your goals yet, read here.
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