Actor and Artist's Guide to Personal Finance

It’s no secret that working in the arts and entertainment industry can pose financial challenges, especially if you’re just starting out. Adequate financial planning is the key to maintaining the longevity of your career as a performing artist, which is why it’s important to understand how to budget, find the right insurance, start saving and investing, get out of debt and start planning for retirement.

Money can be a delicate topic for most performing artists. After all, navigating student debt and living expenses on multiple and fluctuating income streams is a challenge in itself on top of managing your career. However, learning how to plan financially for the future is essential.

The average hourly rate for actors is $21.88 in May 2020, according to the U.S. Bureau of Labor Statistics. The hourly rate is even lower for those performing at colleges, universities and dinner theatres.

Below are a few reasons why performing artists need to make financial planning part of their repertoire.

Having a financial plan is essential, but many performing artists may not know how to build one or where to start. While creating a budget or planning for retirement are common concepts, they are often set aside in favor of impulse purchases, other costs or because retirement is such a far distant future concept.

To improve financial literacy, performing artists must learn how to financially plan from the ground up, such as setting goals and building healthy financial habits to investing and purchasing insurance.

While it’s easy to come up with goals for your career, matching that with a financial plan is another factor altogether. For example, you may want to build your own theater down the line, but knowing how to finance that should be part of that goal.

The first step of financial planning involves looking at where you are and setting realistic financial goals based on that. This is what will drive your budget, savings strategy, retirement plan and every financial decision you make. It’s important that you base your goals on where you are in the moment, rather than where you expect to be in the future. After all, you can adjust your plan as your income stream increases.

Setting goals is easy, but ensuring you build the right financial habits to achieve them is the real challenge. No amount of budgeting or saving strategies will actually give you the discipline to follow through with your goals. Creating healthy financial habits is essential to ensure you actually reach your goals. Not only can discipline yourself help you financially, but it can also even extend to your craft and improve your career.

One of the most important parts of any financial plan is the budget. This is especially important as many artists, especially actors, painters, singers and writers, often face fluctuating income and may even experience a period where money doesn’t come in at all.

With the right habits and tools, creating and sticking to a budget can help stabilize your expenses and grant you peace of mind.

As part of your budget, setting aside money every month for savings can help with a number of things. Not only does it help you in case of an emergency, it will also get you closer to reaching your financial goals.

Fortunately, there are a number of easy-to-follow savings strategies that can be adjusted based on a performing artist’s varying income.

While the cost of a performing arts degree varies based on the university and the level of degree pursued, most students graduate with an average of $36,510 in federal student loan debt. Tackling student loan debt can be crushing to deal with depending on where performing arts majors graduate.

Eliminating your debt should be the first priority after graduating to make room for financial goals. Below are a few resources that can help performing artists with their finances and debt.

• Craft Emergency Relief Fund: This grants emergency assistance funds to artists working within a craft discipline that meets the eligibility requirements.
• Musicians Foundation: The Musician Foundation grants medical and allied living expenses for emergencies and pays debts on behalf of musicians that qualify.
• Sweet Relief: The Sweet Relief initiative provides funds for musicians and music industry workers who are financially affected by the COVID-19 pandemic.
• Artist Relief Project: This program helps artists, musicians and performers in any craft or discipline whose income has been impacted by cancellations or closures.

Amidst the hustle and bustle of a performing arts career, investing can be easily forgotten. Long-term investing is important to include in your financial plan as it can provide you peace of mind, help you stay financially secure, maintain your quality of life and help you make better decisions throughout your career.

While it may be difficult to immediately start investing through costly avenues like real estate, there are a few ways you can start saving and investing early on in your career.

Those in the performing arts industry know that there is no official retirement age. Even if you stop performing live, there are still opportunities behind-the-scenes that can keep your career going well past the average retirement age of 67.

Despite this, planning and saving for retirement should still be one of your goals. After all, the ailments that come with old age, such as poor eyesight or dexterity, can inhibit your ability to fully continue your craft.

As a self-employed individual, the most popular options you have are a traditional individual retirement account (IRA) or a Roth IRA. Both traditional and Roth IRAs give you tax breaks, with the only difference being how and when you get the tax break. A traditional IRA taxes you when money is withdrawn, while a Roth IRA taxes you when you deposit. The limit on contributions for both accounts is the same at $6,000.

You can also consider a solo 401(k) plan. It works just like your traditional 401(k) plan where you can contribute a maximum amount each year tax-free. This reduces your taxable income each year, and it can also cover your spouse.

Tax season can be complicated for artists. From dealing with multiple income sources and expenses to figuring out what you can write off, the extra work can be tedious. Knowing ahead what to do and how to do it can help make the process easier.

Typically, performing artists are classified as self-employed individuals. You are required to file an annual return and pay estimated taxes quarterly. Quarterly payments are simply used to pay for Social Security and Medicare taxes along with income tax, as these are payments that are withheld by an employer.

It also pays to know that there are a variety of deductions you can make. You can deduct advertising fees, business insurance, materials, meals and entertainment and even the cost of your professional development. Keep your invoices and spending receipts organized to ensure you can claim those deductions for your annual return.

Being a performing artist means that your craft relies on you being fit, healthy and able-bodied — any accident could spell the end of your career. This is why insurance is so important, as it provides you and any of your beneficiaries with a contingency plan.

Some recommended insurance policies for performing artists include:

• General Liability Insurance: This pays for injuries and/or damages to third parties that occur as a result of your performance.
• Errors and Omissions (E&O) Insurance: E&O insurance can provide coverage if you fail to do a job correctly and it results in a financial loss.
• Disability Insurance: Having disability insurance can cover for your income in case you get into an accident that leaves you disabled. It can cover your rehabilitation and even up to the short time after you recover.

Certain insurers may also offer artist-specific policies that are catered to those in the performing arts industry, but they may not always be available in your area. Make sure to contact your local insurer to ask if they have any performer-specific insurance policies you can benefit from.

Beyond getting insurance policies to protect your livelihood, you should also get insurance that protects your personal life. This can range from renters insurance and home insurance to health insurance and car insurance. While it may seem costly to get a range of coverages, comparing insurance quotes can help you find the cheapest premiums.

Good paying jobs may be infrequent, which is why it’s essential to find side gigs to pay the bills and keep your savings growing. Fortunately, there are a number of flexible opportunities that can help you improve your skills and earn money at the same time.

While it may be simpler to opt for easy and flexible side jobs, try to instead focus on maximizing your art and talent by finding gigs that work to your strengths. Certain jobs may provide an opportunity for you to exercise your talent or build certain skills you need.

If you fully want to capitalize on your talent and creativity, consider starting a business. You can put up a regular show at your local theatre, start a performing arts school, or even create a wedding band. Finding ways to monetize your craft can even help you strengthen your network and improve your reputation in your field.

However, starting a business is never easy — you’ll have to think about regulations, taxes and the like. Below are a few tips to help you get started.

Learning about finances is a universal struggle for anyone in the arts and entertainment industry, including performing artists. This is why there are a number of resources available to help support performing artists, such as grants, loans, financial planning to labor protections and skillbuilding. We’ve compiled a list of some of the most relevant and valuable to help you research what best supports your career path.

• Actor’s Equity Association: A labor union that helps actors and stage managers in theatre negotiate wages and improve working conditions.
• American Association of Community Theatre: An organization dedicated to helping both individuals and organizations in the theatre community. They provide programs and services that can help with finances, streaming, reopening theaters and more.
• Americans for the Arts’ COVID-19 Resources: A nonprofit organization dedicated to helping Americans within the art industry. They provide a regularly updated list to a number of grants, loans, advances and paycheck protection options for those in the arts and entertainment industry.
• Foundation for Contemporary Arts: To help pursue unexpected opportunities to perform or tackle unexpected expenses close to performance dates, the Foundation for Contemporary Arts grants urgent funding for visual and performing artists who are deemed eligible. Grants can range from $500 to $3,000 and are given every month.
• League of American Orchestras: The LAO offers a number of artistic programs that can support your career as a conductor, composer or musician through funding, support and networking.
• OPERA America: OPERA America has a number of programs that can provide singers and other performing artists with the necessary tools to better their skills and boost their careers.

Being a performing artist comes with many challenges — both creatively and financially. While it can be illuminating to go through difficult creative periods, a financial struggle may not yield the same results.

Below are a number of financial assistance programs that can help performing artists manage and navigate their finances.

• Actors Fund: The Actors Fund provides emergency financial assistance to those in need. This is available to union and non-union workers in entertainment and the performing arts. They also offer applications to more than one fund, where you can be eligible for more than one.
• American Guild of Musical Artists (AGMA) Relief Fund: The AGMA is a nonprofit organization that offers support and temporary financial assistance to members through their relief fund.
• The Blues Foundation's HART Fund: The Handy Artists Relief Trust, or HART fund for short, provides financial assistance to Blues musicians that are a result of health concerns.
• The Jazz Foundation's Musicians' Emergency Fund: To help musicians in times of crisis, the Jazz Foundation offers housing assistance, pro bono medical care, disaster relief and direct financial support through their funding program.
• SAG-AFTRA's Financial Assistance: Through their financial assistance/disaster relief fund, the SAG-AFTRA offers emergency assistance to those affected by the pandemic, which includes help with basic living expenses.