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.
5 Reasons Why a Financial Plan Is Essential for Performing Artists
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.
You may have inconsistent income
Performing artists' income streams are similar to freelancers and contract workers — multiple, varying and inconsistent. You can learn how to manage your income and expenses on a monthly basis and mitigate the risk of not being able to pay the bills through smart, informed financial planning.
Your creativity requires stability
If you’re distracted and stressed about your finances, it may impact your creativity or ability to perform at your best. A financial plan ensures that your finances are in order and stable, which creates peace of mind and can ensure your creativity flows more freely.
You need money to stick to your craft
Let’s face it — being a “starving artist” is not ideal. Managing your finances wisely can ensure you continue your craft without having to take a break or pick up an extra job to pay for bills.
You need to plan for retirement
Working forever isn’t an option for most people. Depending on your craft, you may need to retire earlier than your peers. Financial planning involves preparing for retirement — and it takes time for those funds to grow. Doing this as early as possible ensures you have enough to live comfortably once you retire.
You have to plan for the worst
Financial emergencies can happen at any moment, including an income stream loss or unexpected bills. A financial plan ensures you have a safety egg through insurance and emergency funds, and enough to get by without sacrificing your craft.
Take Charge of Your Finances
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.
1. Set Financial Goals and Know Your Numbers
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.
When setting a goal, make sure it's SMART: Specific, Measurable, Achievable, Realistic and Timely. Seemingly impossible goals are easy to set aside, and you want to ensure your goals drive you towards making the right decision.
2. Build Healthy Financial Habits
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.
Habits to Help Improve Financial Health
Automating your finances can help you learn to live within your means. By setting up automatic payments for bills or savings and creating alerts for fraud and credit card spending, having these items set up helps you control your finances better. This is especially important if you have a fluctuating income.
Learn how to identify needs from wants
A good way to discipline yourself is to start recognizing what you need versus what you want. This can help you avoid spending on impulse purchases and can keep you on track to achieving your financial goals.
Use your credit card wisely
Not all debt is bad debt. Having a credit card and using it wisely can help you build your credit score. Avoid racking up unnecessary debt and only spend on what you can pay for immediately. A good rule of thumb is to pay your monthly bill in full each month, which will help you keep your spending in check, build good credit and keep your debt accrual low.
Be a smart shopper
It pays to seek out or wait for deals when shopping as much as possible. It also helps to utilize any discounts you qualify for. By shopping smartly, you can get what you want guilt-free and even set aside some money towards your savings instead.
Regularly review your finances
Take a look at your bills, bank statements and even your credit report. Looking at your bills regularly ensures you aren’t getting charged more than you should, while examining your bank statements and credit reports ensure everything is in order and you aren’t at risk of fraud.
3. Make a Personal Budget
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.
Outline all your baseline expenses
List all the essential expenses you have, such as debt, insurance, rent, utilities and estimated monthly expenses including gas and groceries.
Determine your income
Fluctuating income means projecting when and how much you’ll receive. This also dictates how long your income needs to last.
Pay yourself first
Part of your baseline expenses should be your savings, debts, emergency funds and taxes. Set aside money for this after paying for your essential bills.
Have a monthly spending limit
Stick to a realistic and reasonable “fun money” number, but keep in mind that this should change each month based on your income.
Get rid of unnecessary expenses
Try to remove any subscriptions or membership you don’t use to increase your savings or the amount you use toward your debt.
Re-evaluate your budget each month
As your income changes, so should your budget. Review your budget monthly and try to put as much as you can toward your debt, savings and emergency funds.
4. Saving Strategies
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.
- Automate your savings. Determining a set amount of money to be deposited into another account on a regular basis can help ensure you’re saving even a small portion of your income. Ideally, you’ll also want to supplement it with extra deposits as you can.
- Start small, grow it in increments. It's easier to start saving small amounts and growing that number as you grow more disciplined. Saving $20 a week for one month and increasing that by another $10 the next month will be easier than immediately taking out $200 from your income for your savings.
- Set windfalls and tax refunds aside. If you happen to get a bonus because of your performance or receive your tax refund, set a portion towards your savings instead of opting to spend all of it.
- Follow the 50/30/20 rule. When budgeting, set 50% of your income aside for bills, 30% for wants and 20% for savings. You can simply adjust the "wants" percentage if your income dips, but try to save at least 20% at all times.
- Consider a high-yield savings account. A high-rate savings account can ensure your money is growing — even by small amounts. Use a compound interest calculator to figure out how much you can earn in a few years with consistent deposits.
5. Get Out of Debt
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.
6. Start Investing
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.
Tips for First Time Investors
Start with an Individual Retirement Account (IRA)
As artists and performers are typically self-employed, opening an IRA or Roth IRA can grant tax advantages and ensure you have something saved for retirement.
Invest in a mutual fund
If you don’t have the time to learn or research about the right stocks or investments for you, consider mutual funds. Essentially, this is where investors pool their funds and a professional invests it for them.
Consider a financial advisor
If you are gifted or receive a large sum of money and would like to invest it but don’t know what to do, you can hire a professional. A financial advisor can help you figure out the right investment avenues for you.
7. Plan for Retirement
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.
Start your retirement planning as early as possible. Calculate how much you need on an annual basis to survive and take advantage of compound interest that comes with retirement accounts.
8. Tax Planning
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.
9. Get the Right Insurance
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.
Consider consulting an insurance broker if you’re not sure what types of insurance you need. They are qualified professionals that work with a range of insurance companies who can advise you on what type of coverage is available and that fits your budget.
Leverage Your Talent to Create New Income Opportunities
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.
Popular Creative Side Gigs for Performing Artists
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.
Below are a few creative side gigs you can consider that may help you improve your talent, depending on your craft:
- Be a voice over artist. There is an increasing demand for voice overs with different dialects and accents, which makes it a great gig to practice your accents.
- Try your hand in sales. Despite being a demanding job, being successful in sales can help you develop a variety of “personas” that you can tap into during auditions.
- Teach a class or a workshop. Learning never stops. By teaching a class or starting a workshop for other practicing performance artists, you may end up discovering new things about your craft you didn’t know about.
- Attend parties as a character. If you want to start practicing how well you can truly step in and out of character and how well you can handle audiences, look for gigs as a party character. You can try being a certain character for a show or even participate in a puppet show.
- Tour the city as a guide. Being a city tour guide requires a lot of outgoing energy, so if you’re in a field where constant pep is required, you may want to check out tour guide opportunities in your city. This also sets you up to meet some interesting people along the way that can expand your network.
Monetize Your Art and Start a Business
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.
Figure out what you want to do
There are many avenues for performing artists to start a business from their craft. Think about a business that you’ll enjoy the most, and consider whether it’s something you can do solo or if you need to hire someone else to help as this will determine your tax burden.
Create a business plan
A business plan is necessary to ensure success. Outline your strategy, the competitive environment and your target audience. You will also want to include any long-term goals to keep you on track.
Understand the risks
All businesses incur some sort of risk, especially any business in the performing arts. Identify if there are any peak or low seasons for your business and figure out what you can do during the downtime.
Map out your finances
Regardless of what you want to do, you need to consider the cost of any equipment, taxes, marketing and transportation that your business will need. If you plan to be a wedding band, for instance, factor in the equipment you’ll need to purchase.
Look for a mentor
When you have your business plan and your finances set, look for a mentor who can help you. This can be someone in the industry that you know, or someone who at least has a knack for business.
Keep timing in mind
Start your business at the right time. Aside from doing it when the economy is healthy, you also want to launch it at a time when your business can succeed the most. Whether this is near or far from a holiday time period or just before the beginning of the season, timing it right is vital.
Expert Insight on Personal Finance for Performing Artists
Managing your finances as a performing artist can be challenging. To provide you with some financial insight that comes with your career, a few experts have provided their advice on financial planning below.
- What is the best financial advice for performing artists?
- How can I start my own business as an artist? What are the first steps that I need to make?
- As most artists have multiple sources of income with varying volatility, how can performing artists best budget their money?
- What savings and investment strategies should performing artists opt for?
CEO at Prysm Talent Agency
Tax Strategist at Estate CPA & Partner at Sundin & Fish, PLC
Founder of Iseler Financial, LLC
Certified Finance Expert, President & CEO at Inheritance Advanced
Resources for Performing Artists
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.
Financial Assistance for Performing Artists
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.
About Nathan Paulus
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- The NYU Dispatch. "Voice Over Trends in 2020 and Why Voice Over Coaching Remains More Important Than Ever." Accessed November 10, 2021.
- U.S. Bureau of Labor Statistics. "Actors: Pay." Accessed December 15, 2021.