Musicians might be professionals when it comes to music but the same cannot be said when it comes to their financial planning. Some may be earning decent amount while others made it big but whatever their income is, a musician needs to know how to find a reputable financial advisor that will handle their finances to make sure that they have enough money to sustain them when they retire.
Having an emergency fund is necessary. It can be in the form of cash or an asset that can be easily transformed into cash which can be used in times when unexpected expenses occur. Some situations where an emergency fund might be needed include the loss of a job, repair of home or car, medical expenses and replacing old musical instruments. There are various ways to keep an emergency fund such as a safe, checking account or cash value in your insurance coverage. Don’t depend on the fact that you can borrow money because this is not a guarantee.
Being a musician means you have to pay your taxes. This means that you have to keep a record of all your income including W-2 income, 1099 income, royalty income and unreported income.
You own a business as a musician which means you can take advantage of deducting your expenses. This is why you have to keep a record of them. Your taxable income can be reduced if you take into consideration the business expenses such as music equipment, hotel bills, lessons, legal expenses, strings, sheet music and meals while on the road.
Aside from the income tax, you also need to pay a self-employment tax especially if you earn more than $400. As a musician, you are your own boss and you are exempted only if you are under a corporation that pays you an income.
Aside from taxes, a financial advisor will be able to handle your insurance together with your retirement. A musician’s insurance includes health insurance, disability insurance, car, home and renter’s insurance and life insurance. As you plan for your retirement, a musician should know how to find a reputable financial advisor that will help in managing their finances which will last until they do.