Finding the Funds: Budgeting for Music
The music industry is a business. It can still be a passion, love, or art. But in order for anything to exist, including yourself, it needs to be supported by money. If you have a business, you want to be able to make a profit. You want to be able to do what you love full time. Just love and passion alone doesn’t pay the bills and move your career forward. ”I am a student I have no money!” That is the number one thing I hear from producers just coming up, but there are endless other excuses. Guess what? We started The Drunken Coconut while we were in university, Full-time. We started our business from $50 and built it to a six-figure company in a year. No excuses. This article will show you how to make sacrifices and find the funds you need to support yourself and your career. Recently, I’ve come by a new motto that I love from a business contact who makes six figures PER month himself, and it goes like this: “Where attention goes, success follows.” Focus every resource that you have, time and money, on the one thing you want to make work, and it will.
Budget the rest of your life first
To start, expect to be funding your music with your personal revenue. Your music won’t be able to fund itself, much less your life, in the very beginning stages. First, you want to map out all of your revenue that is coming in from all current sources. Sort these by music revenue, and personal revenue.
Music revenue will include anything that you make that has to do with music: DJing, ghost production, sample pack sales, monetization, etc. These are likely going to be revenue sources that aren’t guaranteed. This means that the amount that you get monthly won’t always be the same. Project work is never guaranteed to happen again, and things like monetization can fluctuate with how many streams or downloads (if you use the husk) come in that month. For these types of revenue sources, it is best to estimate and update on a regular basis. Take a look at the last 3-6 months of revenue and figure out what you usually make from a certain source. Use that for your budget.
Your personal revenue is mostly going to come from your full time, part-time, or contract work day job, which may or may not be in the music industry. This is guaranteed revenue to a certain extent, because you know how many hours you work and how much you’re paid per hour, and you have a contract that you will receive that money. Of course, hours can get cut, there can be sick days, but we’re again looking for the usual amount you earn from these jobs. You may also have some revenue sources on the side such as teaching lessons in something, pet sitting, or Uber driving. Again, for these fluctuating sources, you’ll have to do some estimating on how much you expect from them monthly.
Add up all of the music revenue, and all of your personal revenue. Separate the guaranteed revenue from the side revenue. You never ever want to reply on that fluctuating side revenue. Just because you did well with streaming last month, don’t assume it will be the same this month. Just because you had a quick payout last month from a monetization source, don’t assume it will come on time the next month. Don’t be that artist that begs people for more side work because you overestimated what you’d be making that month based on last month.
Cut down current spending
Next, go over your bank statements and track where your cash currently goes. Separate your current spending into things you absolutely need to be paying for, and things you choose to pay for. Be careful with things like eating out. It may seem like it is fulfilling a basic need, but there are cheaper ways to do this. A person can spend over $1000 a month eating outside of the home, and only a few hundred dollars in groceries for the month.
When you see all of the extra personal expenses, you get a sense of how much money you actually have above basic necessities. This is where you can choose to make sacrifices for your music. If you’re spending $100 per weekend in entertainment, maybe do something that doesn’t cost money for fun. Go out once a month instead, and save $300-$400 for your music per month.
Basic needs will usually always cost the same. You can’t really change rent or car payments. What you can do is small things like cutting down on gas, buying cheaper groceries on sale, and using hydro off peak times. Although, for the most part, those aren’t things you can sacrifice for the good of your music. You still need to take care of yourself above all else.
NOTE: make sure you’re still putting away a bit of personal savings. You may feel like you have to go all into your music and spend every last dime, but make sure you don’t put yourself into a dangerous position. Going bankrupt can set you back years as you try to catch up, and then you wont be able to support your music at all.
Come up with a music budget
So now that you’ve looked at your spending and what you can cut down on, you’ve probably figured out a set amount that you have free to spend on music. Some people like to open up a second bank account to keep this extra “music money” in. You can also set it up so that all of your royalties and music revenue comes into this account to make it easier to track for tax purposes. All of a sudden, you will have a ton of extra funds set aside that previously may have ‘disappeared’ to various things.
Use the budget
Now that you have money put aside, how should you split that up? Start by taking a second to brainstorm all the possible things you would have to spend money on in the music business. This will depend on what you want to do. It doesn’t matter whether you want to be a producer, a vocalist, band member, soloist, manager, label owner, or score films/TV. They all require a different set of expenses. Some examples of music expenses are marketing, travel, equipment, sample packs, software, studio rentals, graphic design, management, distribution, website subscriptions, and more. What you need to spend your budget on is something you’ll have to research and figure out for yourself, or use our group Music Industry Insiders on Facebook to network and find out!
Figure out what you need and don’t worry if you don’t have enough to cover all of the expenses yet. You at least know what you have to save up for and can focus on splitting up what you do have for the most important expenses for now. How should you split it up? That depends on what your plan is for your music. What you have to spend your money on depends where you are currently, and where you need to get to next. This would require a completely separate article on goal setting and industry tiers, which will come in the future.
To wrap up, remember to visit our Facebook page Music Industry Insiders where you can network with other professionals and artists with similar goals, and learn more about making your music into a viable career. Also, feel free to reach out to us about this article or for any consulting services on anything to do with business or the music industry.