Freelance Musicians: Finance Planning Tips Guide
Written by  Daisie Team
Published on 9 min read


  1. Set and track your financial goals
  2. Create a budget and stick to it
  3. Manage taxes as a freelance musician
  4. Plan for retirement as a freelancer
  5. Consider insurance coverage
  6. Build an emergency fund
  7. Invest in your musical career
  8. How to handle debt and credit

As a freelance musician or composer, balancing the scales of creativity and finance can often feel like a tricky symphony. Just like mastering a musical piece, getting a grip on your finances also requires understanding, practice, and fine-tuning. That's where financial planning steps in, offering a strategic framework to ensure your financial notes hit the right pitch. In this guide, we'll walk through key aspects of financial planning for freelance musicians and composers, starting with the fundamental step of setting and tracking your financial goals.

Set and track your financial goals

Setting and tracking financial goals might sound like a dull task compared to composing a riveting piece of music, but it's just as important. You wouldn't start a composition without a melody in mind, right? Similarly, you can't start your financial journey without defining your financial goals. Here's how you can hit this note:

Identify Your Financial Goals

Start by writing down your financial goals. Whether it's purchasing a new instrument, saving for a music tour, or investing in a home studio, it's important to know what you're aiming for. Writing down your goals not only makes them more tangible but also serves as a constant reminder of where you want your money to go.

Make Your Goals SMART

After you've identified your financial goals, it's time to make them SMART: Specific, Measurable, Achievable, Relevant, and Time-bound. This approach ensures your goals are well-defined and makes it easier for you to track progress. For instance, instead of saying, "I want to buy a new piano," a SMART goal would be "I want to save $3000 to buy a new piano in the next 12 months."

Track Your Progress Regularly

Remember, a goal without a plan is just a wish. So, after setting your SMART goals, create a plan to achieve them. This plan could include setting aside a certain amount each month, cutting back on non-essential expenses, or finding additional income sources. Check in on your progress at least once a month, and adjust your plan if needed.

Keep in mind; financial planning for freelance musicians and composers isn't a one-size-fits-all solution. Each person's financial goals and circumstances will be unique, so it's important to tailor your approach to fit your individual needs. Now that you've set your financial goals and have a plan to track them, you're ready to hit the high notes of your financial symphony.

Create a budget and stick to it

Just as a well-structured composition gives a sense of harmony to a piece of music, a well-planned budget brings harmony to your finances. Creating a budget and sticking to it is a key aspect of financial planning for freelance musicians and composers. Here's how to get started:

Understand Your Income and Expenses

Before you can create a budget, take the time to understand your income and expenses. Income for freelance musicians can be unpredictable, making it more important to have a good handle on your earnings. Keep track of all your income sources, whether it's from performances, royalties, or teaching music. Similarly, jot down all your expenses, from bills and groceries to instrument maintenance and marketing costs.

Create A Budget

Once you have a detailed overview of your income and expenses, it's time to create your budget. One simple approach is the 50/30/20 rule, where 50% of your income goes to essential expenses, 30% to lifestyle choices, and 20% to savings or debt repayment. Of course, you can adjust these percentages to fit your needs and financial goals. The key is to ensure your income covers your expenses and allows room for savings.

Stick To Your Budget

Budgeting isn't just about creating a plan; it's also about sticking to it. This might be the toughest part, especially when you're tempted to splurge on the latest instrument or music equipment. But remember, every dollar saved is a step closer to your financial goals. So, keep your financial symphony in tune by sticking to your budget.

Creating and sticking to a budget may not seem like the most exciting score you've written, but it's a vital part of your financial composition. It provides a clear view of your financial health and sets the rhythm for achieving your financial goals. Now, keep the momentum going as you read on to the next section about managing taxes as a freelance musician.

Manage taxes as a freelance musician

No one likes to talk about taxes, but they're a crucial part of financial planning for freelance musicians and composers. As a freelancer, you're essentially a small business owner, which means taxes work a bit differently than for those on a payroll. Here's how to manage your taxes effectively:

Understand Your Tax Obligations

As a freelance musician, you're responsible for paying your own taxes. This typically includes self-employment tax, which covers Social Security and Medicare, and income tax. Depending on where you live, you might also need to pay state or local taxes. Make sure you understand what taxes you owe to avoid any nasty surprises.

Keep Track of Your Expenses

As a freelancer, you can deduct certain expenses from your taxes. This includes things like the cost of instruments and equipment, travel expenses for gigs, and even a portion of your home if you use it as a workspace. Keep detailed records of these expenses; it'll not only make tax time easier but could also save you money.

Consider Hiring a Tax Professional

Taxes can be complicated, particularly for freelancers. If you're unsure or simply want to ensure you're doing everything correctly, consider hiring a tax professional. They can help you navigate the complexities of the tax system and potentially find deductions you didn't know about. It's an investment that could pay off in the long run.

Managing taxes as a freelance musician isn't the most glamorous gig, but it's an important one. By understanding your tax obligations, keeping track of your expenses, and considering professional help, you can keep your finances in tune and hit the right notes in your financial symphony. Next, we'll move on to an often overlooked aspect of financial planning for freelance musicians and composers: planning for retirement.

Plan for retirement as a freelancer

Planning for retirement might seem like a distant concern, especially when you're busy making beautiful music. But it's a vital aspect of financial planning for freelance musicians and composers. Just because you don't have a traditional 9-to-5 job doesn't mean you can ignore your future financial health. Let's look at some key points to consider.

Start Saving Now

When it comes to retirement savings, earlier is always better. Even modest contributions to a retirement fund can grow significantly over time thanks to the magic of compound interest. Remember, time is your biggest ally when it comes to growing your nest egg.

Explore Your Retirement Account Options

As a freelancer, you have several options for retirement accounts. Solo 401(k)s, SEP IRAs, and Roth IRAs are all options that can offer tax advantages. Research these to see which one might be the best fit for your financial situation and future goals.

Consider Professional Advice

Planning for retirement can be complex. A financial advisor can help you understand your options and create a plan tailored to your specific needs. It might seem like an extra expense, but it could be a smart investment in your future financial security.

Planning for retirement as a freelancer might feel overwhelming, but it doesn't have to be. Start saving now, explore your retirement account options, and consider seeking professional advice. With thoughtful planning, you can ensure that your post-performance years are as harmonious as your career. Now, let's talk about another essential aspect of financial planning for freelance musicians and composers: insurance coverage.

Consider insurance coverage

Insurance might seem like a dull subject, especially compared to the thrill of performing on stage. But having the right insurance coverage is a key part of any sensible financial planning for freelance musicians and composers. Let's look at some of the main types you might want to consider.

Health Insurance

Health is wealth, as the saying goes. As a freelancer, you don't have an employer to provide health insurance, so it's up to you to get covered. Whether you opt for private insurance, a marketplace plan, or a health sharing plan, make sure you're protected against unexpected medical costs.

Instrument Insurance

Your instruments are your livelihood. If anything happens to them, it could put a serious dent in your income. Instrument insurance can protect you from the cost of repairs or replacement. Some policies even cover theft or damage while you're on tour.

Liability Insurance

If someone gets hurt at one of your gigs, or if property is damaged, you could be held responsible. Liability insurance can protect you from the financial impact of these situations. It's a bit like a safety net for your career.

Insurance may not be the most exciting topic in the world, but it's a crucial part of financial planning for freelance musicians and composers. Health, instrument, and liability insurance can give you the peace of mind to focus on what you do best: creating and performing music. Next up, let's explore the importance of having an emergency fund.

Build an emergency fund

Have you ever had one of those days where everything seems to go wrong? The car breaks down, the laptop crashes, and a gig gets canceled at the last minute. These are the moments when you'll appreciate having an emergency fund. It's a financial cushion that can help you navigate life's little surprises.

Why is an Emergency Fund Important?

An emergency fund is a safety net. It's money you've set aside specifically for unexpected expenses. As a freelance musician or composer, your income might not be as steady as in other jobs. An emergency fund gives you a buffer during periods of lower income, or when you're hit with surprise costs. It's like a financial safety net, always there when you need it.

How Much Should You Save?

How much you save depends on your personal circumstances. A common guideline is to aim for three to six months' worth of living expenses. This could cover you for a period of illness, or if you're between jobs. But remember, it's not about reaching the goal overnight. You can start small and gradually build up your fund over time.

Where to Keep Your Emergency Fund?

Your emergency fund should be easily accessible. A high-yield savings account could be a good option. The money is safe, you earn a bit of interest, and you can get to it quickly when you need to.

Building an emergency fund is a key aspect of financial planning for freelance musicians and composers. It might not seem as exciting as playing a sold-out gig, but it can provide a sense of financial stability and peace of mind. Now, let's move on to the next step in your financial plan: investing in your musical career.

Invest in your musical career

Just like a sprouting seed, your music career needs constant nurturing. Investing in your musical career doesn't always mean splashing out on the latest gear. It may be about honing your craft, upskilling, or expanding your network. Let's explore some practical ways you can invest in your career as a freelance musician or composer.

Seek out Training and Education

As in any field, continuous learning is a key to success in music. That could mean taking a masterclass to learn a new technique, attending a music conference to stay up-to-date with the latest trends, or even hiring a coach to help you improve your stage presence. You may also consider online courses or tutorials. The goal is to keep growing and improving at your craft.

Network, Network, Network

They say it's not what you know, but who you know. Networking can open doors to opportunities you didn't even know existed. Attend industry events, join local musician groups, and be active on social media. You never know where the next big gig will come from.

Upgrade Your Equipment

While it's not all about having the latest gear, quality equipment can make a difference. Whether it's investing in a better instrument, a high-quality microphone, or a reliable laptop for composing, make sure your equipment is up to the task.

Remember, investing in your career as a freelance musician or composer is a long-term strategy. It's about planting seeds today that will grow into opportunities tomorrow. Now that we've covered how to invest in your career, let's shift gears and discuss how to handle debts and credits in the next section.

How to handle debt and credit

Whether it's a student loan from music school or a credit card balance from buying new equipment, debt can weigh heavy on a freelance musician's mind. Here are a few suggestions to help you navigate the world of debt and credit responsibly.

Understand Your Debt

First things first: know what you owe. Make a list of all your debts, including the amount, interest rate, and due date. This will give you a clear picture of your financial situation and help you prioritize payments.

Pay More Than the Minimum

If you're only paying the minimum amount due on your debts, you're just scratching the surface. Try to pay more than the minimum whenever possible. This will help reduce your overall debt faster and save you money on interest in the long run.

Manage Your Credit

Your credit score is like a financial report card, and it can impact everything from your ability to rent an apartment to the interest rates you're offered on loans. To keep your credit score healthy, make your debt payments on time, try to keep your credit card balance below 30% of your limit, and avoid applying for new credit too often.

Remember, dealing with debt and maintaining good credit may seem daunting, but it's an important part of financial planning for freelance musicians and composers. With a little discipline and a lot of determination, you can get a handle on your debts and maintain good credit. Now, let's move on to our next topic: building an emergency fund.

If you're a freelance musician looking to take control of your finances, don't miss the workshop 'Freelance Freedom: What You Should Know' by dominique_eloise. This workshop will provide you with essential tips and strategies to help you navigate the financial challenges of a freelance career and achieve financial freedom.