Professional Development

V E L O P M E N T PROFESSIONAL D E Managing your money as a freelancer

Money management for musicians can come down to a matter of strong contracts, following up payments and knowing your rights

Beyond that, there are other steps you can take to manage the money you earn effectively, which is particularly important if your income comes from several different sources. This feature offers some helpful guidance.

Getting to grips with money, improving confidence in dealing with financial choices and options and having the knowledge you need to manage money well are all valuable skills to develop. Personal financial management also requires self-awareness, so that you can understand your own attitude and behaviour towards money.

Having strong financial skills plays a foundational role in our overall wellbeing. Taking the following five steps should help you get on top of your money.

The idea of putting together a budget or spending plan might make you want to run for the hills, but having a robust, well-thought-through budget means you’ll be able to understand and control your spending and be better placed to manage unexpected circumstances, which is particularly important if your income fluctuates.

Use the ISM budget calculator to get yourself started. Be completely honest and look at what you have coming in and going out and how you can affect those. Next, start consistently tracking your spending. Apps such as Budget Builder, online budgeting tools from banks or a simple Excel spreadsheet can all do the job.

Plotting your income as a musician in a regular way can initially seem tricky but it is possible.

Try to get ahead of yourself by aiming to start each month with enough funds in the bank to cover all your essential expenses. Getting to this cushioned point may take time, but it’s a great goal to work towards and will help smooth out any bumps in your income.

Next, aim to create an emergency fund. Two months’ essential expenses would be a solid goal. Making this part of your monthly spending plan will also help. You might also want to create other ‘pots’ for named purposes, eg ‘the car pot’, ‘the Christmas fund’ .

You might find it helpful to set up separate bank accounts to cover different types of spending (eg bills, rent, subscriptions etc) and then set up standing orders to transfer money into these accounts from your main account and direct debits for each of the bills from each of the accounts. Alternatively, there are jam jar bank accounts designed to let you divide your money into different ‘pots’ within your main account. When money comes into your account, the amounts you’ve agreed are set aside in the pots for your essential bills and then these are paid via direct debit or standing order. It is important to check the terms of and conditions of these types of accounts.

Lastly, whichever of these options you use, or even something else, take it all step-by-step. Make your steps realistic, achievable and scalable. It’s not easy and some weeks and months you’ll slip up, but persist and keep going.

3. Get ahead of tax and National Insurance

Try putting some money away towards your tax and NI bill every time you get paid. Look at transferring it into a separate account so you’re not tempted to spend it. There are online calculators such as TaxScouts (taxscouts.com/calculator/national-insurance) or HMRC’s Ready Reckoner (gov.uk/self-assessmentready-reckoner) to help you calculate how much tax you are likely to owe. The government’s MoneyHelper (moneyhelper.org.uk/en) site also offers help for selfemployed people and members can direct any tax questions to the Tax Helpline (01275 376038).

This might seem like a counter-intuitive suggestion if making ends meet is a challenge, but engaging with savings is a key piece of the puzzle. Savings help you plan for special events, build a cushion for emergencies and lessen your need to borrow.

There are plenty of small ways to start saving, from using your bank app, or ‘rounding up’ pennies from your payments into a side account, to setting up a payment to a savings account as soon as any income comes in. If you lock that money away before you ‘ see’ it, you’ll be less tempted to use it elsewhere.

Help is always out there. Don’t fight the tide trying to fix it all yourself. The ISM website has debt advice and resources, and members can also access the 24-hour personal support and advice line for emotional and wellbeing support. Visit ism.org for more information.