Today I am beginning an experiment of blogging at least once per week. I will aim to post something every Monday related to guitar, gear, music education, music business, or other related topics.
The new year and upcoming tax season has me thinking about my finances through the scope of a freelance musician and guitar teacher. The reality is that my income is extremely variable and I am paid many times throughout a single month (or week). Many of the budgeting tools I have come across seem to be intended for people with a regular monthly income. Keeping track of everything can be extremely time consuming.
I am making an effort to track my income, expenses, and mileage weekly on Monday afternoon using a spread sheet designed by Rip Phelan of Rip’s Music. He calls the spreadsheet “Musicians Gig Keeper” and it is available here. I had to add a new sheet for logging miles and I hope the sheet will be updated to include miles soon. This weekly tracking doesn’t take long to do and will save me time on next year’s taxes. Monday afternoon (after weekend gigs) is the optimal time to track this information.
Saving as you go
Another financial effort I am making (and sticking to) this year is setting aside 25% of my income for taxes and 15% for savings. The 25% may seem a bit high but takes self-employment tax into account along with income tax. This saving will likely leave some money remaining after all is said and done with expenses that I can then spend on GEAR (I could really use another amp). The idea of saving 15% comes from The Law of Success In Sixteen Lessons by Napoleon Hill (affiliate link). I highly recommend this book and will likely blog about it in the future. I am currently saving my 15% in a simple savings account but plan to look into some higher interest options in the future. Think of this 15% as retirement savings that an employer would normally deduct from your paycheck.
I challenge you to take control of your finances if you are a self-employed musician (or other creative occupation).
Two things you can start doing now to take control of your finances:
- Track income, expenses, and mileage weekly
- Save for taxes and retirement from each paycheck