How to Budget for a Musician
According to the Bureau of Labor Statistics, a self-employed musician's earnings are a reflection of the number of jobs played within a year or the number of hours or weeks spent engaged in contract work. The career-minded musician must use his hourly wages and contract payments to sustain not only his personal life and expenses but his music business as well. This makes budgeting a key element in the musician's life and pathway to financial success.
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Instructions
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Compare your historic earnings from both traditional work and musical pursuits to determine an average monthly or annual income. You may find it helpful to budget both on the annual level and the monthly level in order to properly gauge the impact of non-monthly expenses, such as taxes, on your overall earnings.
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Add all of your monthly living expenses related to your primary residence. Include rent or mortgage payments, property taxes, home insurance costs and utility bills. Record these as household expenses.
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Total other regular monthly expenses such as grocery bills, cell phone bills and credit card payments. Record each separate expense as a different category. For example, list your grocery costs and credit car payments separately.
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List both the monthly and annual standard expenses associated with your musical career. Some expenses, such as guitar picks, instrument strings and piano tunings, may occur monthly. Major expenditures, such as replacement instruments and estimated tax payments, occur less frequently.
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Keep a mileage log for your vehicle and label the miles driven in each trip as either personal miles or business miles. Divide the business miles driven by the total mileage to arrive at the percentage driven for business.
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Multiply the percentage by your total auto costs within a month to arrive at a rough estimate of your monthly vehicle costs allotted to the music business. This also provides you with your monthly auto costs related to personal use. Continue to maintain the mileage log.
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List the average monthly cost of any bus, train or airplane tickets purchased to travel to gigs. These tax-deductible business expenses can consume a substantial portion of your income and must be taken into account when planning a budget.
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Add your predicted monthly business expenses and personal expenses separately before adding the two totals together. Compare the cumulative total to your income. If your expenses are substantially more than your income, you can either eliminate one of your expenditures or take on additional performances to cover the gap.
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Tips & Warnings
If you cannot base your estimated income and spending on invoices, receipts and previously paid bills, it may take several months of budgeting expenses to achieve a great deal of accuracy.
Mileage logs help you calculate the income tax credit for business use of a vehicle at the end of the filing year. Both the standard mileage rate and actual expense method of calculating vehicle related tax deductions rely on information from mileage logs.
Maintain receipts to substantiate your business-related purchases and travel costs.
