Let’s start off the New Year with a topic that sends shivers down the spires of many musicians: your finances.
What’s the first thing that you think of when you think “money”?
“I don’t want to think about it.”
“I don’t know where to begin.”
Your attitude about money says a lot about how you make, spend and save your money. By using a combination of the positive mindset of an entrepreneur combined with knowledge of basic skills, you can start to conquer your fears around money and begin to forge a healthy relationship with making and spending money, with the goal of achieving financial freedom.
How do you feel about making money as a musician? Start out by taking the Financial Freedom Quiz.
The Financial Freedom Quiz-Part I
Complete the following sentences:
- Money is…
- Money never …
- Money always …
- My biggest fear around money is…
- When it comes to money, I wish I knew…
- If I could change one thing about my relationship to money, it would be …
Your answers typically pinpoint your biggest fears around money. Fears stop us dead in our tracks and hold us back. To be successful, it is important to face your challenges. And by facing these fears, you are on your way to doing something about your financial situation.
Facing Your Fears
Many of my musician clients and students avoid looking at their finances because of an underlying fear of what they might find. When I have my clients do a budget or review their bank statements, many of them feel a sense of relief that things are not as bad as they thought! This provides a powerful incentive to continue the process towards financial freedom.
If, on the other hand, you find the courage to do something about your finances and are distressed to see what you find (like the true cost of that MacBook Pro that you put on your credit card last spring and are still paying off), the facts are often enough to mobilize you into action.
Either way, give yourself points for facing your fears. It’s the start of doing something about them. And the best place to start is by acquiring financial literacy.
The Basics of Financial Literacy
One of the top fears is not knowing how to manage your money. Perhaps your answer to the Financial Freedom Quiz looked something like this:
“’I’m afraid that I will never learn how to manage my money because I’m too dumb to learn how.”
(I have heard these very words emerge from the mouths of talented, intelligent musicians who are anything but dumb!)
The good news is that not knowing how to manage your finances is a skill gap that can be taught, not a moral failing that you are doomed to live with forever! You can achieve basic financial health by mastering the following skills:
• Making a budget of your expenses;
• Knowing your different revenue streams and how to maximize your income within those streams;
• Controlling your spending
• Staying out of credit card debt
To help you get started, I recommend Suze Orman’s The Money Book for the Young, Fabulous and Broke (Penguin 2007) (ISBN-13: 9781594482243) which gives you access to her private on-line resources. You can also check out the free resources on the Suze Orman website.
So devote some time to reading up on financial literacy and committing to a program of budgeting, saving and watching your expenses. Decide which is your hot-button issue. Start off tackling one area at a time. Set aside some time each week–even if it is only 15 minutes twice a week–and commit to those healthy actions. You will be amazed at how quickly you can begin to get a handle on your finances.
Next time, we’ll take Part II of the Financial Freedom Quiz to explore some additional fears around money: not knowing your career options and excessive spending. Stay tuned!