6 money mistakes made by musicians, and how to avoid them

People don’t like talking about money in the music industry. That’s understandable. Very few good people have ever gotten into music for the money, but that doesn’t mean it’s not ultimately to your creative benefit to get to grips with it, especially with the cost of living challenges we're currently facing in mind.

Music biographies are littered with stories of glittering talents who wound-up with nothing and were forced out of the industry, simply because they made some basic errors or didn’t know any better. 

The unscrupulous types that have often thrived in the music industry rely on that ignorance, but most of the time it’s actually ourselves who are our own worst enemies.

Whether we like it or not, money is our main means of exchange in both society and the music industry. Ignoring those principles is like tossing a gun safety manual over your shoulder ‘because I’m not into bullets’ then going for a stroll across a firing range.

As a music journalist, I’ve spent the last decade or so asking musicians to solve my problems and a few years back, I started to ask them questions about how they managed their money and generally ‘make it work’ in the music industry. To my surprise, most people were only too happy to share ideas and the things that had helped them.

I think money needs to be talked about more in relation to creative work. I think our silence only harms us, so recently I started a site, Creative Money, which aims to break the stigma around money conversations in creative careers. I want to share ideas and resources with people, and my hope is that in doing so we can all make creative work more inclusive and sustainable.

In this piece, I offer up a few of the lessons – from simple principles to painful money mistakes – I’ve picked up from musicians over the last 10 years. Of course, we won’t all have the ability to implement these ideas amid the pandemic, but maybe it will help you in the future.

1. Believing ‘creative people are bad with money’

The idea that being creative and financially capable are mutually exclusive concepts is a fallacy. Money is most definitely not the most important thing in life, but 10 years of interviewing pro musicians has taught me that, contrary to popular belief, most of them are pretty savvy when it comes to their cash.

Assuming otherwise, or worse, holding it up as some sort of ideal, is dangerous because it gives us an ‘out’ – an excuse for not learning how to handle our finances and this only makes it harder for us to survive in the industry. 

Our financial and creative lives are entirely intertwined and success on either front requires us to build momentum. We need to be smart about both elements and design our lives in a way that enables us to balance them in order to sustain ourselves across these ‘slog’ periods.

Then, once we do build up something valuable or get a break, knowing how to use it well can mean the difference between lasting creative freedom or a flash in the pan. KT Tunstall once described money to me as “freedom chips” and I think that’s a good way to think about it.

2. Taking on liabilities

This is the bit most people will skip but it is the most important principle to understand about money.

Assets are things that produce an income (perhaps a studio, a flat you rent out, intellectual property, stocks etc). Liabilities are things that are a drain on your finances (debts). If you think of money flowing like water, then assets are the tap and liabilities are holes in the container (liabilities). You are the container. Plug the holes. 

Not all of us can quickly acquire assets, but we can all try to reduce the amount we spend on liabilities. That means avoiding big, obvious things (like pricey car loans or credit card debt) wherever possible. It’s also about trying to spot the things that we might tell ourselves are assets but later become liabilities.

For instance, that 1957 Stratenbacker may look and sound like nothing else and you may even start to feel like it’s worth the hefty price tag. However, think forward… If the intonation goes awry every time it’s exposed to a humid club and you spend your tour days seeking out guitar shops and paying to hear the knowing chuckles of local luthiers… well, you’re in liability land.

The same goes for those beers you chuck on a credit card as you’re ’networking’. It is the music industry, there may well be booze involved, but don’t leave yourself paying interest on it. That’s just robbing future you – that’s how liabilities work. An easy choice now makes it much harder for you to do this down the line – and vice versa.

3. Buying new gear

While it makes sense to avoid leaky liabilities wherever you can, if that’s not possible, focus on minimising them instead. The same goes for any expenses and gear is a prime candidate here.

This means that instead of just buying something new, question what you need it for, why and how long, then see if you can get a similar result for less, or (even better) for free. 

For instance, imagine you’re heading into the studio and need richer pickings than your battered tour 'board. Instead of hitting the guitar shop, send the word out among musician friends that you’d like to borrow anything they can spare for a fortnight. You can usually amass a pretty diverse collection of new and inspiring toys to play with for a few weeks.

If you then find something you love and that’s truly essential to future performances, then fair enough, but at least you’ll know that before you buy it – and you’ll look for it second hand.

4. Leaving home

Yeah, I realise it’s not a good look to be hauling your half-stack back to your mum’s place after gigs. However, the more intent you are on making music your main career, the lower you’re going to need to keep your expenses – and rent is the single biggest ‘win’ on that front.

Of course, not everyone’s going to be happier sticking it out – for many musicians, escaping a heinous Homelife has long been one of the most appealing parts of the lifestyle – so if you’re suffering, then by all means get out of there. Similarly, if you’re paying a lot for a rehearsal space and you can amalgamate that in some clever alternative way with your accommodation, then it might make sense to take on some rent.

However, for those fortunate enough to have supportive parents who can handle you sticking around a bit longer, figure out a way to make it work. This means paying your own way, sticking to your own space and, despite the maddening frustrations of family life, acting as considerately as possible. Consider it preparation for life in a tour van.

5. They don’t think of their band as a business

If you’re a professional musician or aspiring to be one, your band is your business. It’s a little unromantic, but adopting this approach doesn’t mean that your creative endeavours are not genuine and worthwhile at the same time. 

One of the golden rules in the early years of a business is to never take money out when you can avoid it, instead you should reinvest that cash and help the thing grow further. The same goes for your band/music career and it applies at almost any scale, whether you’re playing for beer money, wedding gigs or touring internationally. 

Start a band account and direct any cash you earn from your music into that account. When you’re starting out, you’ll likely have a day job or part time work to pay your bills, so focus on using your music money to build up a savings buffer. That way when opportunities or issues do come along, you’ve got a bit of cash to handle them, whether it’s time in a studio, buying/hiring gear, paying for a PR or perhaps, as discussed below, getting professional advice.

If and when you start earning enough to support yourself from music, try to keep your ‘wage’ withdrawals to a low, regular amount and leave anything over that figure to build-up in your music account.

Managing a variable income is one of the biggest financial challenges of creative work. The key is keeping your bills low, trying to live on less than you earn and saving everything else.

6. Assuming professional advice is too expensive

Legal advice can seem hugely expensive and, well, it is. Lawyers make a lot of money because, rightly or wrongly, their services are deemed valuable. They can save you from a lot of pain and they demand high fees for that privilege.

It is especially important to seek independent advice before you agree to anything that might mean commitments regarding your finances, intellectual property (publishing/record contracts) or personal liability (big show/festival paperwork).

 Learn, for example, from Talking Heads. Their drummer Chris Frantz recently told me a story of how the group was once offered a production deal with a (since deceased) high-profile musician who had been friendly to them. They had minimal funds at this point and were excited by the opportunity, but decided to get the contract checked by a lawyer. It turned out the agreement would leave them with no ownership of the resulting recordings. That lawyer’s fee may have been the best investment they ever made.

 Think, too, about the financial commitments you’ll need to make to do jobs before signing the contract. For instance, if you’ve hired gear for a big gig and it gets cancelled, who foots the bill? The right professional can help you answer these questions and avoid mistakes that far exceed the cost of their services. 

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• Creative Money is not regulated by the Financial Conduct Authority (FCA) and Matt Parker is not a financial advisor and is therefore not authorised to offer financial advice. Always do your own research and seek independent financial advice when required.