The Independent Musician’s Guide to Not Going Broke

Step #3: Create a Budget That Doesn’t Crush Your Soul

If you want to be the rare kind of musician, producer or any other type of creative professional who’s not going to go broke, then you need to create a budget. There is no way around this.

I know it’s not sexy, it’s not fun, it’s neither punk rock nor rock n’ roll. But it is central to leading a life where you don’t have to run and dive into a desk job when you turn 35, or keep working as a bartender or barista until you’re 73.

Here’s the good news: It’s not as hard as you think. And once you do it, it doesn’t feel that stifling at all. If anything, it feels oddly freeing.

For what may be the first time in your life, you can think about calling a cab without wondering whether or not you can afford it. You’ll know.

You can go out to a nice dinner or a great concert, or buy friends a round of drinks without feeling guilty or uncertain later on. If those things are important to you, put them in your budget. Then, you can spend extravagantly on the things you care about.

The flipside to this is that you have to cut mercilessly, ruthlessly, on the things you don’t really care about.

Maybe you like cooking and don’t care about eating out. Maybe you love buying records and don’t care very much about clothes. Maybe you like having some money for concerts but you could care less about going to the movies. Maybe you love to collect vintage T-shirts, but you really don’t care less about more than one guitar, or vice versa. All that is fine. Your budget is yours to make.

Personally, I don’t care about taking cabs. I budget $0 for them each month and I never take them. I don’t care about the convenience of taking the subway either. I like to bike almost everywhere anyway, and so I budget a lot less than most city dwellers do for public transport. I don’t like to drive so I can spend more on an apartment. I don’t really care about eating out more than a couple times a month and going to the movies more than a few times a year. I budget accordingly.

This means that when it comes to the things I do care about, I can ratchet up what I spend and buy things guilt-free.

I do like having good coffee and tea and mind-blowingly good groceries in the house. I do like records and books and having a powerful laptop and great audio tools that are fun to use. I like working in good studios instead of lousy ones and with the great people instead of the cheapest ones. I like getting The New Yorker every week and giving good tips whenever I do go out.

I can afford to do those things without even thinking about it because I recognize that I can’t afford to do everything. And that’s huge. When you budget that way, you don’t feel like you’re missing anything at all.

How To Budget

It may sound counter-intuitive, so I’ll repeat it one time: One of the main reasons that creating a budget is such a great idea is that it lets you think about your budget less. It’s already decided.

But to draft your first monthly budget, you’re going to need a place to start. I recommend tracking your spending for a couple of months. You could do this the hard way – with paper and pencil, or you could let a free app do it for you, instantly and without thinking about it for even a second. (Guess which method I prefer.)

I use Mint.com, which is made by the same company that developed QuickBooks and Quicken. It’s free, it’s secure, and it helps you create and track budgets, investments and goals. If I don’t know how much I have left in my budget for a particular category, I can check it on the go from their free mobile app.

Once you type in your bank account information you can track your past and current spending to see exactly where you’re money has been going, broken down by category. (Yes it’s safe to enter your bank account information. They use bank-style encryption, and no one can actually move money around using the service, not even you.)

Seeing where you have been spending your money is a great place to start when you’re trying to figure out where you should be spending it.

First, start with a realistic appraisal of what you have been spending on average category by category. Then, make a budget that reflects this spending, but with a slight slant toward where you want that spending to end up. Mint makes this easy.

Focus on cutting the things you don’t care about too much, and preserving (or even increasing) what you spend on the things you do care about.

But don’t get too ambitious. Just like with beginning to exercise or learning an instrument, you can’t jump in and expect to get where you want to go overnight.

When you’re trying to change your spending, set small, achievable goals, and keep heading in the right direction, bit by bit. Better that you get there eventually than burn out all your willpower at once and get nowhere at all.

And remember, your budget is your own. No one has to see it. And no one can judge its effectiveness except for you.

With that said, here’s the part I can’t stress enough: A portion of the money you make should go immediately into long-term investments and paying down debts before you budget for anything else.

Yes, this includes groceries and rent.

If your reaction to this is: “I can’t do that! I already spend every penny I make. If I saved 10% or whatever, I’d have to make significant changes to what I do in my life.”

Well, yeah. That’s kind of the whole point.

Do you hear that sound?

That’s the sound of thousands of people clicking over to TMZ simultaneously in a futile effort to numb the pain.

Don’t do it. Stick with me.

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  • mandalaeyes

    All really good advice–I’m excited to play around with Mint–except that I think if you’ve accumulated ultra-high-interest debt (like on a credit card) that needs to be the #1 priority above all other things, even above starting a retirement account. If you don’t pay off your credit card debt at something like 18% interest, but you’re saving money in an index fund or IRA at 8%, you’ll be losing more money in interest to the credit companies than you’ll be gaining from the investments during that time. So it’s actually a better “investment” to get rid of that debt ASAP. Now a car loan at 4% would be a different story because you could be earning more interest on an investment than you would be losing on the loan. But you get the point.

  • TrustMeI’mAScientist

    Technically true mandala! But I put investing first anyway, for two very specific reasons:

    1 ) It’s a longer road, and the sooner you start the better. And:

    2 ) For a lot of people, there’s a real psychological advantage to seeing your money grow. It can be hard to keep at this when you’re faced with all of the pain and none of the reward.

    I find that when folks start by investing *and* paying down debt, they’re much more likely to keep at it than if they’re just paying down debt alone.

    (Plus: You may have the option of moving any high-interest credit card debt to a lower or zero interest rate account for a while — or at least consolidating all your debt at a slightly better rate.)

    Thanks for weighing in,

    Justin

  • mandalaeyes

    Ah, I thought you might have considered the psychological advantage. Very valid points Justin. Thanks for your response!

  • headphonomenon

    I am grateful to my father for explaining things almost exactly the same ways very early on. I see now that that was his way of supporting my decision to have a ‘creative’ career – which was otherwise foreign to him.

    All recording arts students should be required to pass a test on this info before getting their certificates/diplomas. It is amazing how few people have been really confronted with info like this. Good job!

  • ladyocti

    Thanks for the article. When you get going the way you described things really do work! And I like what you said about “your path taking you to the places you always wanted to visit.” That’s pretty much it…..

  • Rabbi Goddard

    Great article. I’m glad I thought to do most of this stuff well before I read this post. This did however motivate me to set up a roth IRA. Thanks justin

  • Joel Douek

    Great article!

  • Lindsey Walker

    I made it to the end! I didn’t even abandon this article for TMZ!

    But honestly, thank you Justin for a great ‘kick-in-the-pants’ article. I think it’s time for me to take this whole ‘money thing’ seriously and now I feel a lot more prepared. Thanks again!

  • Tim

    Fantastic article. I have heard excellent things about Mint.com, but have been too happy with my current budgeting system to move over. I recommend You Need A Budget as a great option for managing finances. For musicians and freelancers who do not always have predictable income streams, the YNAB system is helpful because it prevents you from spending money you don’t have.

  • Regan Music

    Thanks, Person. Very insightful, I upped my savings from 3% to 8% today, because when looking over it, I can easily do that, and I can’t seriously give a reason why I can’t do that. So, sounds great. Thanks for pointing me to those calculators too, they’re great!

  • Roland

    Great article very helpful. I follow Ramit Sethi and have read his book, but the truth is Ramit did not build his wealth by following his own book. He did it by creating his online businesses. The book that needs to be addressed here is Rich Dad Poor Dad by Robert Kiyosaki. Musicians need to learn how to invest in businesses that can create “passive income” not “earned income”. Don’t know the difference? Read Kiyosakis book.

    I want to be able to turn down a gig and not worry about my financial situation, because passive income is coming in every month and covers my basic needs and then some. This article is great for showing how to manage finances but creating wealth I don’t believe this article does justice. I want to create wealth like the 1% not the 99%.

    The 1% invest in their education, businesses and the stock market. But they don’t invest in the stock market like this article shows (the 99%) they invest like the 1% but that’s another lesson. Just watch Shark Tank, and the The Profit. These billionaires invest in businesses to build passive income not earned income.

    Musicians need to learn how to create passive income this is how the 1% think. And if the 1% succeed in that manner then count me in.

  • nice