Article: "6 Money Mistakes Made by Musicians..."

[Old No7]

Well, musicians for sure, are not the only ones who can make mistakes with money...

 

Anyway, I read this article on "6 Money Mistakes Made by Musicians..." (link follows) https://www.musicradar.com/news/6-money-mistakes-made-by-musicians-and-how-to-avoid-them while traveling this week, and figured I'd post it here for review and comment.  The UK writer also has a blog on musical money matters which you can subscribe too; for free, if I recall.

 

With inflation and gas prices soaring, maybe this will help someone out.

 

Old No7

[Reezekeys]

Haven't read it yet, but I'd like to enter my vote for "single biggest money mistake made by musicians":

 

Making music your vocation! 🙂 

[KuruPrionz]

I read the article. I fully. agree with purchasing used gear or borrowing gear if needed for a one time use. Take great care of the gear you borrow and return it promptly. As to borrowing, be prepared to loan something out here and there as well to trusted friends. Play the game and others will participate, in the end you'll need to own fewer things.

 

Something that many overlook is that you can buy used items to sell. It's a matter of doing research and being FAST. It's also a matter of only purchasing items to re-sell if the sell price provides a solid margin of profit - you may end up "owning" something for longer than you think. Be wary of stolen goods, I like shopping thrift stores for this reason and once I bought a custom Warmoth 8 string bass from a craigslist seller who was moving to Thailand for a job in 4 days. He even showed me the plane tickets, lived in a nice home and came across as a genuine straight shooter. $200 with the hard shell case, I got almost $600 for that one. 

 

And 4 years back I found a vintage figured koa ukulele at Goodwill for $5. It needed some repairs, I sold it as-is on eBay with lots of sharp photos for $500. I figure nobody who steals something will donate it to a thrift store - pretty safe place to buy things. I've done it many times. 

 

I also think everybody should start a Roth IRA and put money into it. Buy stocks, choose well and let them go up. Be prepared to sell on the news if expedient and hold good companies through the bad times, they will come back. The earlier in life you start this, the better off you'll be down the road. 

[The Real MC]

#7 Make sure the recording contract does not restrict audits of the books.  The major labels will do everything to deprive you of your royalties, and place every obstacle possible to auditing the books to make it difficult to file a lawsuit over royalties.

 

#8 Develop an autograph that is NOT your legal signature.  Any crook can make a facsimile of your autograph and use it for fraud IE signature on contract or loan agreements.

 

#9 The music industry is full of scam artists and songsharks who want to steal your money while acting as your best friend.  Tom Scholz spent a lot of money to break free of scam agreements during the first two years of Boston.

[timwat]

I thought the article was well-intentioned, yet very arbitrary in its advice and presumptuous about a musician's situation.

 

I'm convinced the #1 money mistake for all adults: Not learning fundamental financial literacy, which at least includes budgeting, why we make spending choices, saving, delayed gratification, long-term vs. short-term focus, self-discipline, real value, opportunity cost, good vs. bad debt, credit (history vs. score, what factors affect your score), basic investing for civilians, taxes, insurance and retirement. 

 

Every adult should learn how money works. Only then can a person understand the consequences and real cost of their choices, including the choice to pursue a full-time music career, or purchase that new synth that was just announced, or whether this gig I was just offered is really worth it.

 

Most of us learn how money works later in life, often from the school of hard knocks and choices we regret. Problem is the cost and consequences of poor choices increases exponentially with age. Making a bad money choice at 13 might cost us a few hundred dollars, versus making a bad money choice at 33.

 

 

[Old No7]

5 hours ago, timwat said:

Most of us learn how money works later in life, often from the school of hard knocks and choices we regret. Problem is the cost and consequences of poor choices increases exponentially with age...

 

 

 

I agree -- good points.

 

Old No7

[Rod S]

19 hours ago, timwat said:

I'm convinced the #1 money mistake for all adults: Not learning fundamental financial literacy, which at least includes budgeting, why we make spending choices, saving, delayed gratification, long-term vs. short-term focus, self-discipline, real value, opportunity cost, good vs. bad debt, credit (history vs. score, what factors affect your score), basic investing for civilians, taxes, insurance and retirement. 

 

Fully agree - I work in a large american multinational company and I see folks in director level positions making really unfortunate decisions, with visible impact to their families short term and long term, and it baffles me.  I was fortunate my father worked in closely with finance, was well off, and taught us very early to make the right decisions.  

 

Back to the topic - Close friend went to engineering university at the same time as me, said screw it and became a musician.  He used to tell me he wouldn't be able to deal with corporate politics, backstabbing and so forth. 

 

Several times I've helped musician friends financially (close to my main area) and legally (not my area, but I have experience and lot of contacts, if only to steer them out a potential mess), some of these times putting together revenues vs costs for productions, preparing businesses cases to apply for government incentives for arts, things like that - and damn, the asymmetry was absurd.  In one side musicians oblivious to their risk and total naiveté to ill-intentioned people, and on the side some unscrupulous folks worse than I've encountered in the business world.  

[timwat]

Asymmetry is right. 

 

A fair number of young musicians I know are worse-than-apathetic when it comes to money and business. They presume their high minded pursuit of artistry elevates them above the moral necessity of grinding for filthy lucre. Thus, they aren't willing to do the hard work of negotiating, compromising, selling, making clients delighted, etc. Inevitably they end up beholden or obligated to someone who WILL do all the hard work of business, who sometimes is less than scrupulous. And when you talk to the biz-head person, often what you hear is, "I deserve this share of the pie because dealing with this knucklehead has cost me all this stress, additional client management, lost sleep, cleaning up messes after the fact. My value is higher than that dude, because without me he wouldn't be working." 

 

I've seen FL (financial literacy) change peoples' lives - both in the workplace, their personal lives, musician's professional lives, private sector, education, college students, stay-at-home moms, the whole gamut. One of the reasons I teach it now.

[CowboyNQ]

Interesting article.

 

Some of the ideas were pretty good.  The definition of assets and liabilities was a bit woolly, the journo must have read Kiyosaki at some point and got a bit muddled up in the head.  I don’t know if depreciation is a thing in the US either, if so that was completely ignored.  I do agree about the overspending on gear though.

 

If I were to add one it would be “maintain control and oversight of every aspect of the band’s finances”. In my experience many people in artist management roles have little idea about this and/or look to exploit the artist’s lack of knowledge/care about the money side of the game to their own advantage.  Nonetheless too many musicians are happy to abdicate their duties here.