Managing Finances as a Professional Dancer

Published on 31 July 2023 8 min read

Set up a budget
Handle taxes as a freelancer
Plan for retirement
Save for an emergency fund
Manage variable income
Consider health insurance
Invest in continual training
Think about your post-dance career

As a professional dancer, you've mastered the art of pirouettes and pliés. But what about the art of managing finances? It's a different kind of dance, but every bit as important. Whether you're just starting out, or you're a seasoned pro, understanding how to manage finances as a dancer is key to keeping your financial life as balanced as your en pointe. Let's take a look at some steps you can take to make managing your money a graceful routine.

Set up a Budget

Just like a good warm-up is essential before a performance, setting a budget is your first step in managing your finances effectively. Here's how you can do it:

Track your income: Jot down every single penny you earn. Whether it's from your regular gigs, teaching dance classes, or even that side hustle you have going on, include it all.
Identify your expenses: From rent and groceries to your dance gear and training costs, list out all your monthly expenses. It might be helpful to break them down into 'needs' (like rent and food) and 'wants' (like that new leotard you've been eyeing).
Subtract expenses from income: This will show you how much you're left with at the end of the month. If you're spending more than you're earning, it's time to rethink some of those 'wants'.
Save and splurge: Remember the advice from Ortiz, the educational director and principal dancer with Nickerson-Rossi Dance? She suggested that after subtracting your expenses, divide the remaining amount in half. One half goes into savings, and the other half is for fun stuff. This way, you're not just working hard, but also enjoying your hard-earned money.

A budget is not just a one-time thing though. It's a living document that changes as your income and expenses do. So, make sure to review and adjust it regularly. Mastering how to manage finances as a dancer starts with setting up a budget. And as with any dance routine, practice makes perfect!

Handle Taxes as a Freelancer

Most dancers are independent contractors—that's freelancer in tax-speak. As thrilling as it is to be your own boss, it also means you're responsible for your own taxes. But don't let that intimidate you! Here are a few tips that can help:

Understand Self-Employment Tax: This is a combination of Social Security and Medicare taxes that you need to pay. The current self-employment tax rate is 15.3%. So, for instance, if you earn $50,000 in a year, you'll owe $7,650 in self-employment tax.
Quarterly Taxes: Unlike salaried employees, freelancers need to pay taxes every quarter. If you don't, you might face penalties. The IRS provides a worksheet in Form 1040-ES to help you calculate how much you owe each quarter.
Deduct Expenses: Documenting your work-related expenses can significantly reduce your taxable income. Did you buy a new pair of ballet shoes for a performance? Deduct it. Did you travel for a gig? Deduct it. Just make sure to keep all your receipts!
Get Professional Help: Tax laws can be complex. Consider hiring a tax professional who understands the unique tax situation for freelancers. It can be an investment that saves you money in the long run.

Handling your taxes as a freelancer might seem like intricate choreography, but once you get the hang of it, it's just another part of how to manage finances as a dancer. And remember, even the best dancers have coaches. Don't hesitate to seek professional help if you need it!

Plan for Retirement

When you're caught in the passion and rhythm of dance, retirement can seem like a distant encore. But it's never too early to start planning for your final bow. Here's how to do it:

Start a Retirement Account: As a freelancer, you don't have the luxury of an employer-sponsored retirement plan. But you can set up an Individual Retirement Account (IRA) or a Simplified Employee Pension (SEP) IRA. Both offer tax advantages that can help your savings grow faster.
Automate Your Contributions: One of the best ways to ensure you're consistently saving for retirement is to automate your contributions. Set up an automatic transfer from your checking account to your retirement account each month. It's like setting a recurring rehearsal—it happens without you needing to think about it.
Consider a Diversified Portfolio: Just as a diverse repertoire keeps your performances interesting, a diversified investment portfolio can keep your retirement savings robust. This means investing in a mix of assets—like stocks, bonds, and mutual funds—to spread out risk.
Get Help from a Financial Advisor: Planning for retirement is a complex dance. A financial advisor can help you choreograph your moves to ensure you're on track. Look for advisors with experience working with freelancers or artists.

Planning for retirement might not be as exciting as mastering a new routine. But it's a vital part of how to manage finances as a dancer. Remember, every step you take now is a step towards a secure future.

Save for an Emergency Fund

Every dancer knows that a flawless performance requires a safety net—both on and off the stage. In the world of finance, this safety net is your emergency fund. Let's look at how to build it:

Define Your Emergency Fund: An emergency fund is a stash of money set aside to cover unexpected expenses. This might be anything from a sprained ankle that keeps you from dancing, to an unexpected car repair. Aim to save enough to cover three to six months of living expenses.
Start Small: Don't fret if you can't save the full amount right away. Start by setting aside a small percentage of your income each month. Think of it as a warm-up—every little bit helps you get closer to your goal.
Keep it Accessible: An emergency fund should be easily accessible—you never know when you might need it. Consider keeping it in a high-yield savings account. This allows your money to grow, while keeping it within reach when the unexpected happens.
Don’t Touch It: This might be the hardest step. Your emergency fund is for emergencies only. It's not for a new pair of dance shoes or a last-minute trip. It's there to give you peace of mind and security in case of unexpected expenses.

Remember, building an emergency fund is a marathon, not a sprint. It’s a key step in learning how to manage finances as a dancer. Over time, you'll find this financial safety net as crucial to your career as the physical one beneath your trapeze.

Manage Variable Income

As a dancer, you're no stranger to unpredictability. Just as every performance is unique, so is your income. Some months might bring in a standing ovation and a hefty paycheck, while others might be quieter. Here's how to manage finances as a dancer with a variable income:

Track Your Income: Keep a record of your earnings for each month. This will help you understand your income patterns—when it peaks and when it drops. You can use a simple spreadsheet or a budgeting app. Not a numbers person? That's okay—think of it as choreographing your finances.
Build a Baseline Budget: Based on your income history, figure out your average monthly income. Use this to create a basic budget that covers all your necessary expenses like rent, food, and dance classes.
Flex Your Budget: In months where you earn more than your average, resist the urge to splurge. Instead, use that extra income to bolster your savings, pay off any debt, or invest in your future.
Plan for Lean Months: If you know that certain months are typically slow, plan ahead. Adjust your budget, cut back on non-essential expenses, and tap into your savings if needed.

Managing a variable income may feel like a complex dance routine at first, but with practice and discipline, you'll master the steps. And remember, just like a challenging choreography, the key is to keep going, adjust as necessary, and always strive for balance.

Consider Health Insurance

Let's face it: as a dancer, your body is your livelihood. A sprained ankle or a pulled muscle can mean more than just pain—it can mean time off work and lost income. So, when thinking about how to manage finances as a dancer, health insurance should be a top priority. Here's why:

It Covers Medical Costs: From routine check-ups to emergency surgeries, health insurance can help cover a wide range of medical expenses. That way, you can focus on healing rather than worrying about how to pay the bills.
It Provides Peace of Mind: Knowing you're covered in case of illness or injury can provide immense peace of mind. It's one less thing to worry about when you're on stage, giving your all.
It's a Smart Financial Move: Paying a little each month for health insurance can be far more manageable than facing a massive medical bill out of the blue. It's a bit like a safety net for your finances.

Choosing the right health insurance may seem like a daunting task, but it's an important step in managing your finances as a dancer. Look for plans that suit your needs and budget. And remember, investing in your health is investing in your career.

Invest in Continual Training

So, you've mastered the pirouette and the plié, but the learning doesn't stop there. Continual training is key for every professional dancer—and it's a smart financial move too. You may wonder, "How does investing in more dance classes help me manage finances as a dancer?" Let's find out.

Keeps Your Skills Fresh: Dance trends evolve, and so must you. Staying up-to-date with the latest styles and techniques can make you more versatile and in-demand as a dancer. It's like investing in the most valuable asset you have—yourself.
Expands Your Career Options: More skills mean more opportunities. Imagine being able to teach a dance class, choreograph a performance, or even branch out into different dance genres. With continuous training, you're not just a dancer—you're a multi-talented professional.
Helps You Stand Out: In a competitive field like dance, every edge counts. By constantly honing your skills, you become more than just a dancer—you become a standout performer. And that can lead to more gigs, higher pay, and a more stable income.

Remember, continual training is an investment in your future. It may cost a bit upfront, but the potential returns—both financial and personal—are worth it. So keep dancing, keep learning, and keep growing. Your career—and your bank account—will thank you.

Think About Your Post-Dance Career

Let's chat about something you might not want to think about just yet—the time when you'll hang up your dance shoes. It's not the most fun topic, but planning for your post-dance career is a smart way to manage finances as a dancer.

Start Early: The earlier you start planning, the better. It's never too soon to think about what you'd like to do after your dance career. Choreography, teaching, or even opening your own dance studio might be your next steps. The point is, having a plan in place can ease financial stress down the line.
Transferable Skills: You've got more than just dance moves up your sleeve. Dancers are disciplined, resilient, and creative. These are transferable skills that can be valuable in many other careers. Think about how you can apply these skills elsewhere to build a financially secure future.
Education: Consider further education to expand your career options. Whether it's a degree in arts management or a certification in fitness instruction, additional qualifications can open doors to new opportunities.

Remember, the curtain doesn't close when your dance career ends. With careful planning and wise decision-making, you can ensure a financially comfortable life after dance. So, start considering your post-dance career now—it's one of the best steps you can take in managing finances as a dancer.

If you're looking to improve your financial management skills as a professional dancer, don't miss the workshop 'A Freelance Artist's Guide At Making Finances Make Sense' by Kelsee Thomas. This workshop is specifically designed for freelance artists and will provide you with the knowledge and tools necessary to manage your finances effectively and confidently.