by Larissa Lam
This is the first in hopefully many articles on money management for musicians. The focus is often on how we can make more money by booking more gigs, selling more CDs, working odd jobs, etc. However, one thing I have learned is that reducing expenses and planning your budget is just as important as increasing income. My goal is to give you simple tips in each article that will hopefully free up more time and money and reduce future headaches so you can be the artist that you’ve always wanted to be.
As the former Chief Financial Officer of NSOUL Records, Inc., a nationally and internationally distributed indie label, I had the dubious duties of reducing some massive debt and trying to keep money in the bank to pay artists, employees and irate bill collectors. I can happily say that after the first six months with the label, I was able to increase cash flow and put together a plan that got everyone paid.
I have the unique perspective of also being an artist so I understand that most artists just want to be artists and do not like dealing with the business side of things. However, the reality is that we are in the MUSIC BUSINESS. There needs to be an equal emphasis on the BUSINESS as there is on the music.
II. Article #1 – The Wisdom of Watching Your Money
You may say “Well, duh!” to some of the tips I’m about to give but you would be amazed how many people need to be reminded of what seem like basic principles. If you’re already putting these tips to practice, kudos to you. For the rest of you, listen up!
I now realize it was a blessing being raised by my very frugal-minded Chinese mother. For this first article, I will put forth some of my mother’s wisdom that has led to my financial stability. I will follow up in subsequent articles with expanded helpful tips for each morsel of wisdom.
Don’t Spend More Money Than You Have!
My mother never spends more than she has in the bank. Growing up, a bounced check was unheard of in my house and we rarely had short-term or long-term credit card debt. (More on credit cards in the next article.)
WISDOM #2 Know How Much Money You Have!
My mother is almost obsessive with knowing her bank account balances, especially before she has to pay a bill. Again, I realize this may sound very obvious, but honestly, how many of you balance your checkbook every month like you should? OK, I see not everyone is raising his or her hand. If you don’t know how much money you have in the bank you can’t make good decisions on how much money you can spend.
WISDOM #3 Save Money by Being Responsible.
In an industry full of flakes, it literally pays to be responsible. An example of this is paying your bills on time. My mother rarely misses a due date on a bill. Those pesky late fees plus interest can quickly add up. For example, a $35 late fee every month adds up to be $420 every year!
WISDOM #4 If You Don’t Need It, Don’t Spend It.
Every time I went shopping with my mother, I would hear that statement. That doesn’t mean you have to always go with the bare minimum. There are just many things that would be nice to have but are not necessary. For instance, an 8-page CD booklet for your indie album would be nice but is not necessary. The numbers speak for themselves, why spend an extra 30 cents a CD when 4-pages will do? That’s a savings of at least $300 for 1,000 CDs just on the print costs alone.
I hope these four “wisdoms” have been enlightening or at the least, I hope they have been good reminders about smart money management. There will be many more wisdoms and tips to share. Be sure to catch the next article, in which I will tackle “The Evils of Credit Cards and IOUs.”