Episode 23
Ten Money Conversations to Have with Fellow Musicians
Let’s talk about where we are at with money and 10 money convos to have with your fellow musicians Nearly 70% of Americans have less than $1,000 in savings. 25% of Americans have no savings at all. The average U.S. household owes $7,149 in credit card debt. 40% of Americans spend up to half of their income servicing debt. Less than 1/3 of Americans use a budget.
0:00:01.7 S2: Welcome to the show that explores the methods and strategies on blocking the financial side of your music business with over 40 years combined experience. Here are your host.
0:00:12.5 S1: Chris Webb and Dave Tanka.
0:00:15.8 S2: Welcome to musicians Tipton, we talked about musicians and money, where we break the financial ice in the green room and give you something else to talk about than the drummer spandex. I'm your host, Chris Wall, he joined by my co-host and the guy that just looks good in everything, Dave Tang.
0:00:32.4 S1: Totally false Crisler shorts to a video shoot this weekend, and everyone said that the reflection from the lights off my legs Museo the cameras. So I'm not doing that again.
0:00:48.6 S2: Are they as red as your forehead is right now? I was in the sun, not too much, as the statistics concerning our use of money are not particularly good, especially in the artistic world. Today, we are going to re-focus to the core concept of this show and give you conversation starters for you to bring to the next guitar center, hang out in the acoustic to room. By the way, I am on the hunt for more stats, if anybody out listening right now has any articles or studies that they'd like to share in regards to artists and money, please send them to musician tip jar at gmail dot com. But let's talk about where we are at with money and the 10 money combos to have with your fellow musicians right after this
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0:03:20.4 S2: Make sure you rate, subscribe to this podcast, leave us a comment and go to our website and sign up for a free weekly newsletter where we will connect you to other related articles and providing with help for resources for your music business. This week's quote, the week comes from Robert kiosk, another great read, if anyone hasn't read any of his books, he says, it's not about how much money you make, it's about how much you keep and how hard it works for you. Nine out of 10 musicians quit their dream of going pro because of financial reasons. Now, I just made that up, but I bet you did in line when I said it, what if it's not our talent, but our planning... That's the problem here.
0:04:04.4 S1: For the record, Chris, I believe you. Just in case, no one else out there believe you, I was sold on
0:04:11.9 S2: That line, the following are at least a good overview of some real financial stats for you to Nolan from Joshua Becker, he's a writer for becoming A minimalist dot-com. This is a pretty recent article that I grab this front, it says, nearly 70% of Americans have less than 1000 saved. To me, that was me about 10 years ago, maybe 15 years ago, somewhere in there, when I really started getting into the finance world, and I realized... I had a problem. 25% of Americans have no savings at all. The average US household owes 7149 in credit card debt. 40% of American spend up to half of their income servicing debt, and less than a third of Americans use a budget... I bet if we could pull these into artists, those numbers would be the same or worse.
0:05:14.8 S1: To 40% of Americans spend up to half of their income servicing debt is an unbelievable number, and just shows how hard it is to get out of debt, 'cause you also need to be saving. You're doing that, it's a big cold to dig yourself out
0:05:33.6 S2: Of it, and it's a long road, and there's lots of strategies on that, and we have some great books on our Book Club page that we recommend for people who are trying to figure out those, if they're in those positions, I definitely recommend that. That's one of the first things that you should decide to do is get out of that debt 'cause it holds you down, these stats make it seem so obvious why money is the most common conflict for Americans and relationships, including bandmates. It's also one of the leading causes of stress. Not to mention probably the leading cause of dream killers, career killers, the iron to all that, of course, we are also living in one of the most, if not the most entrepreneurial economies in our history, especially with the internet and the new world it has created by the way, another interesting stat that I found is that as of January 2021, less than 60% of the world's population has internet access right now. So in many ways, we're still in the wild West days of what the world wide web really will be. And it's coming soon. SpaceX keeps putting more satellites all over, so the world's gonna have free Internet as musicians, we can sing a song that is so personal to our innermost feelings, but we claim up when we talk about our finances, just as a song where it can be said in a way that inspires others, soak in healthy money conversations.
0:07:11.0 S2: And the bottom line is, if we don't get control of our finances, our dreams to be musicians, an artist and entrepreneur, they become unsustainable, let's not let each other lose our dreams because of bad financial management. We need to have these conversations with each other to learn from each other. So here are 10 conversation starters that you can have while you're sitting around for those two hours after the unnecessarily early sound check before we get into each one.
0:07:46.8 S1: You told me a story the other day about a student that came up to you and said, You know, I get the podcast, we're talking about how money is important in music business, but he said that he really wanted to concentrate on the music.
0:08:08.0 S2: He said that finance or money, he didn't even use Word finance, he said That money made him feel uninspired and that money took away the artistic side of his passion, and so I said, Well, I understand that because there is that aspect of a feeling... It's not an artistic thing, it's not an emotion, it takes away sometimes magic in being an artist, but I said, Well, what's slowing you down from making that next great album? And he said, Well, it's really expensive. So okay, so to... And in next week. So without further ado, here are 10 musicians and money conversation starters. Number one, what percentage of your income do you take home and What do you keep in your business, how do you decide what that amount is? I don't know if you're asking me these questions, but I'm just gonna answer them
0:09:11.7 S1: 'cause I think it's a good practice. Absolutely, I take 20% right away out of every check I get and put it away for taxes, and that's something I wanna worry about later. I take 10% out after that and I keep it in a... Just a rainy day music account for the business for emergency fund and for future projects, if I wanna make an album, I am slowly building up that mate for the album, and I think what... You turned me on to this in the beginning when we were talking about garment first uses like grab an envelope, and I'm sure the book was written early enough on cash was more on hand than it is now, but the album gets an envelope and put some money in that envelope each time, so I kind of depending on what's coming up in the future, but I always start with get rid of taxes, make sure having a con for that, and then I keep 10% out of every check in the business.
0:10:16.7 S2: And then the rest you decide to take on...
0:10:19.7 S1: I don't take it home with me, I'll either put it in a bank or I'll pay bills. But I never really... You know what I'm saying? Yes, I know, interesting.
0:10:31.6 S2: But yeah, obviously you're on have to pay your expenses, and then the rest I...
0:10:35.4 S1: Yes, I keep it in the account and then I have... What I would say is, what I try to reach as a salary Monthly, that I'm taking out for myself each month and whatever is left over, but I don't touch that 10% that I just know I have to think profit first and keep that in there before and that's how I make decisions for what kind of money is coming in and what money is coming out, those are two things that I don't touch.
0:11:03.0 S2: For me, I take out a set Emma, I take out a sediment, which isn't really a percentage, because sometimes I make twice as much one month, then another month, so I have a set amount that goes to the family, and the rest just stays in the account, and it's on a spreadsheet to keep track of it, and that number just builds up, so by the end of the year, I have this giant fund in that main business account, and then it has all the percentages and everything acetylene track in my spreadsheets, but it's all just sitting in one fund, besides the monthly withdrawal, question number two, do you have a monthly payment on your equipment or gear, how do you decide how much you're gonna spend on gear?
0:11:48.7 S1: I went first, the last one, Chris.
0:11:51.9 S2: Or... Yeah, I keep a list of things that I know I'm gonna start to need soon, there's the obvious stuff like your strings and tuners and the basics, and that just comes out of my monthly expenses, but figure expense is like a new guitar or some equipment for my recording gear or show stuff that I will plan ahead at least six months and I'll be taking... It'll be setting that it's money aside a little by little until I can buy it, but I will decide what I'm buying pretty early on too, and I try to time it around sales like Memorial Day or some... Whatever, you know that they always do. And I have a guy, sweet water that I almost always work with. 'cause I feel like I get the best deals and I know I'm gonna get what I need by working with them.
0:12:34.7 S1: I'd do the same with the water, I do things a little bit differently now than I probably would 10 years ago, I think because I have other lines of income right now for myself that I'm diversifying what comes in, that I have a little leeway that if I work with a company like soot Water, and they have a credit card with zero interest for two years, I can divide up that payment from a year to maybe 18 months, and I know I'm not losing money on interest, and I can make that part of my expenses and I'm also waiting, you know, the investment, so am I gonna get a return on this larger purchase quickly, how does it affect my career, does it enhance it? And as long as it doesn't put me in Financial Jeopardy 10 years ago, I think your comment is right on that starting six months ahead of time plan, definitely around those Thanksgiving deals. I guess when I read that question, I thought of if I had to do something today, but planning it is always better. You're right on that one.
0:13:47.3 S2: Well, situations can come up, which actually will talk about in question number four, but question number three, are you currently saving money for retirement? This is a great question to ask a lot of people, because some people, especially some of these young musicians that I play with sometimes, and weddings that are just getting started in their careers, I haven't even thought about something like this yet, but the question would be, are you currently saving for your retirement, and are you happy with how much you're saving... When did you start?
0:14:15.5 S1: I didn't start until, I think I was 40. I was very late in the game to start looking at retirement, so I opened a Roth account through my acorns, and that is a set amount, it is not a percentage, so I know how much I can put in that each month, and then how much is tax deductible up for that year, and I try to do that for that year and eat you're moving forward because you can calculate pretty much how much you're gonna get in retirement at what age... And because I started so late, I have to put in more. And I would like to see go right, but man, if I could have started that just at 30, I would have been the end of the game.
0:15:02.5 S2: Which is why these conversations are great to have with someone who's just starting in this career, it can be a serious game change, whether or not this career really pans out all the way until they retired.
0:15:13.0 S1: We have a friend who just turned 24, and for her birthday, I gave her a check to start in account like that. Cool, and I said, This is for you to put in here, I want to see that you started it and start thinking of this now, and it changes everything in 40 years. What that money will turn into it... It's amazing question.
0:15:41.6 S2: Before, do you have insurance? And can I ask you how much you pay for it? Now, this one is one where talking numbers really isn't very uncomfortable because insurance is just one of those things you shop, and it doesn't matter what kind of insurance we're talking about, you just shop it. Right. Most people will agree, especially things like life insurance, I am a big... I am totally against whole life insurance, and that's another debate for another day, but whether you do a whole life or just term, which are the two types of life insurance, you just shop it and so asking about things like that, but then also within music, do you have insurance on your business, are you protecting yourself if you fell off the back of that ledge or some drunk person spelled their beer on you and electrocuted you sooner
0:16:33.8 S1: Microphone and not all your teeth...
0:16:35.6 S2: Right. Which you know, these things happen. And so, insurance actually is surprisingly cheap, even for stuff like that, you just need to know where to get it. By the way, I have a contact, which I just shared with a whole lot of our fellow musicians because we're working out some contracts with some venues, and you buy a year's worth of insurance and it varies on the... What state you're in? All that stuff, so I can't really give you a number, but I can tell you that for one year of it to cover you for a million dollars per performance, it's very reasonable, and it will save your ass if some bad stuff happens.
0:17:15.2 S1: There's a lot of companies to... For health insurance, and if you check out the Artists blog posts for Spotify, they have 101 now your resources links, and they give you a whole bunch of different options for health insurance, which we will list musicians capture as well, just to see some of the providers that we're familiar with and some of our friends use, and maybe we can see if we can get some of them on the phone to talk about it because it is definitely a different lifestyle, you're traveling a lot more and you're around a lot more people and normally would be teaching. Yeah, remember when we hear... We have a kid where Chris and I used to teach, there was four districts of students within a small area, and then kids would come in with snotty noses, and then another kid would come in from another virus from another school. And my health insurance, I think I reached that deductible that year was two years before I stopped teaching because I was just sick all the time.
0:18:31.5 S2: Number five, Are you doing anything to pay off your school loans, credit cards, car loans, or other unsecured debt, are you trying to do it early? And now I wanna remind everybody that these lists of questions are not for you to go out and tell everybody what you think, that's what we're here for. But seriously, if you're using this list, please do it in the intent to learn from your friends and not be bossy if possible, it's more about making us all aware of the possibility of being in a better situation, and that's why this is an important question because debt is a dream killer? It weighs you down, it makes it impossible to do things or much harder, much longer, and including things like planning for retirement, so there's all these rules, all these Gurus, these financial cros will say, and most of them are pretty smart things, and so... I won't repeat them all here, but you know if you go to our book page, you can see a lot of the people that we follow, and all of them will agree with you that getting into a bunch of debt are staying in a bunch of debt is the first thing you gotta change, you tell each other when we find a new guitar that we love, or we just played a new venue that we love, let's call a musician friend, say, Oh, you have to play this place, so why not? If you find some tips that might help you financially, let a musician from now, I just got this awesome rate for health insurance, I don't know if you're looking for, but check it out, tell him I sent you.
0:20:10.8 S2: Number six, do you set a financial budget for your business and what has worked well for you, any apps, any programs or anything of your own design? I think a lot of people find different ways of doing it, and I think a lot of times it comes organically, but now there are so many websites, and we've listed a whole bunch in previous episodes for you to try out things like mint dot com, which is the one I use, still do it, QuickBooks, financial capital is another one that does a good job with their budgeting tool... Oh, and WIA is another one I'm a fan, which is, You Need a Budget.
0:20:51.0 S1: What's it called?
0:20:53.0 S2: It's an acronym, IAB. You Need a Budget. Luke, do you have a process you use for decisions or accepting bids or particular work... What I mean by this question is, what makes your decision of what gives you take and which ones you don't, which projects you take on, which ones you don't, whether you're a recording artist or an engineer to... Or amputation. Or a gigging musician. And I think it's important that you set parameters on this because otherwise you find yourself in situations where you're pissed at yourself, like in March, I took a gig and I drove two hours to it and I was like, Why am I here? It's way less than I ever would accept. Normally, I mean, yes, we're in a pandemic, and so my brain's thinking, bring in what you can, so it's not unreasonable, but it... STI shouldn't have done it. I still think that, no, I think I should've taken it. And so it's interesting to get other people's feedback on how they make those decisions.
0:21:56.2 S1: I kinda have the thing... Three rules for myself. The first one is how much exposure does it provide not only for myself as a singer-songwriter, but then if it's just a different kind of gig, will that lead to more gigs through this... Yeah, how does it benefit me? Networking was, and how can I benefit the situation or help the situation... The second one is, How much time does it take to get there? 'cause that's a huge one, and a lot of venues and places don't even take that into consideration at all they see is by the moment you walk into the establishment, and we're not talking about for ticketed gigs. But that's a concern too. Like, how many people are gonna be there? How can you know if I'm gonna drive three hours is worth my time, and how far is it to the next location if a motor... Does that make sense for me? And then lastly, I'll go to how much it pays because it has to find the entire trip, number one, and then number two would be, I'll go into my budgeting and look at my bills and how much have I set aside and how much do I need to make this month.
0:23:09.4 S1: And does it fit into that? Number eight.
0:23:12.9 S2: Do you invest any money in real estate or the stock market, where do you go to find advice? For me, in is when I'll just say that I'm at a point now where my focus is to diversify, and so I still do invest and I still have my Roth IRAS and some investment funding like that, but I'm really focused on real estate right now, just to diversify, 'cause I don't have any... I know you already have a rental property.
0:23:41.5 S1: But even that with that a very fortunate to own the home and Boulder, but how do I make that money work for us in our family, is that we pay a little bit extra each month towards the principal, because we know that if we can make one more payment a year, then when we all were gonna make 80K back, which if we just paid the basic every month that we would lose that. So it's an investment. And then with stock market, I'll just go back to acorns and stash because they kinda walk you through it, and you don't have to be an expert, and I've learned a lot from both apps.
0:24:24.9 S2: And we do have a podcast plan to go into detail on how to start investing, it'll be a very basic overview of what we recommend you try out at first, and this is just gonna be our opinions, you're not financial advisors, but it is gonna give you an opportunity to kind of see some places that you might wanna try to start with number nine what is the best piece of financial advice you've ever received? You go first, I always fall back to when one of my clients, who I've been teaching music to for years, but who has given me so much invaluable financial guidance in return, he once said that money only does what you tell to do. And it's really eye-opening concept, when you start to realize that if you take that to heart, that you can pretty much explain every situation you are in or ever have been in, and it puts that finger pointing right back at yourself. That's great advice. Mine. Don't spend it if you don't have it. Don't put yourself into that. That is a really good one too. Alright, number 10. And last, what have you learned from your financial experience in the music business?
0:25:41.9 S1: I've learned it's always changing and planning for the unexpected is so important.
0:25:48.4 S2: I've learned that it's not gonna out the way you think it is, but it'll work out really well if you stick with it, and I think it's probably more of a life thing, but the truth is that it's more about continuing on in this business, it's about showing up...
0:26:05.8 S1: Definitely a marathon.
0:26:07.5 S2: I'm sure you will find some that don't wanna talk about this and some that don't have any answers to some of these questions, but this conversation might also be the start of helping them shed light and all of these questions for their own personal finance. If you want some references back to episode 14, we talk a lot about how to find your community, and it might help you find some people that are like mine that are super into talking about these things, and also if it's something that you're struggling with with the idea of having these conversations, perhaps refer back to episode 12, where we talk about the money mindset for musicians, so a couple of DOS and donuts, first of all, don't ask how much money someone makes.
0:26:54.6 S1: That one thing to add to that though, and I think you and I have done this, but maybe because we've been friends for so long, it's a lot easier... I've reached out to musicians and gigs, not so much talking about their financial hole, but if I'm going for a gig and I don't wanna over-bid or under-bid Frank Frank... So I play the Johnny's on the south side. Can I ask him What you got paid for that... That would be the only time I think that you can share those type of things.
0:27:32.6 S2: Yeah, and that's definitely a friend question, right, to a lot of these questions you could ask to just maybe an acquaintance in the business, but that's a friend question.
0:27:44.2 S1: Number two, to be willing to have money conversations with your fellow musicians, don't be afraid to start these conversations.
0:27:51.7 S2: And the last one of these three dues donate is don't let the numbers blind you from the principles... I always think about this as getting a gig for 500 used to seem impossible, and now adding more zeros to that isn't unheard of in what I've seen, and so it's really hard to understand those concepts depending on where you are in your career, and I think that it's easy to let those numbers intimidate the way you're thinking, so the idea is, let the numbers go. And I only have one action step for this episode because I thought, You know what, we don't need three, we don't need to keep giving you extra lines, and we just need you to do one thing with this kit, which is pick one friend, a musician, friend that you play with that, you work with that you trust, that you like, that you are interested in learning more about that. You aspire to do some of the things they're doing. Whoever that might be, grab some coffee or a beer or whatever you do, and pull out this list, which will be on our website at resistance type under 10 conversations to have with your friends about money.
0:29:07.0 S2: We know that your time is valuable, and we so appreciate you spending this time with us and being a part of our community, it is our hope that you feel the sense of community here at musicians tip churn are willing to get involved and contribute. So if you do find stats or musicians and money articles, please do send them our way 'cause it really will help, and the best way to get ahold of us as... Checkout musicians
0:29:28.1 S1: Tip jar dot com or send us an email musicians titer at gmail.
0:29:33.6 S2: That's always thanks for joining us. Remember, there's already enough for everyone, you just need to know how to get it until next time on behalf of Dave dampening myself, Chris way, please stay safe. Stay healthy. Take care of each other. It's action, not opinions. They were actually payables. This his musician, Tim career, nothing on this show should be considered specific, personal or professional advice, please consult an appropriate tax, legal business or financial professional for virtualized vis individual results of guaranteed and all disasters have a potential for profit last, these are operating on behalf of musicians Taj LLC, exclusively.
0:30:25.0 S1: It could be a tott