Tips For Keeping A Music Budget

Five ways songwriters can save, make, and keep more income
January 16, 2019

Managing your finances properly is critical to a successful and long-lasting music career. And although some musicians might wish someone else could do all the numbers for them, that’s not often the case.

Once you start earning a living from your songwriting, the key is to put that money to use in smart ways. That means spend less, pay less, and make more.

Here's how...

Don't Spend What You Don't Have To

The first step in keeping a music budget is to be thrifty. Save money wherever you can. There are three main areas where you could stand to save a bit — areas where you don’t need to spend thousands even if you feel you should.

Recording Space

Renting recording space is expensive. Booking studio time can cost up to $500 an hour, and even though that includes the equipment and sometimes an engineer. After a few hours that can add up.

But for around $1,000, you can invest in your own equipment and record in your home. People even record songs on mobile devices, like Steve Lacy who recorded Grammy-nominated songs on his iPhone.

Read our full guide on how to budget for and build a recording studio for any stage of your career.

Music Videos

Contrary to popular belief, you don’t need to drop thousands on a music video. Yes, it’s important to have a good music video, but you can keep the spending to a minimum as long as you have a good hook.

The most viral videos on YouTube were filmed with a smartphone and an idea.

Exhibit A is OK Go’s “Here It Goes Again.” It’s just four guys and eight treadmills, but’s it’s one of the most entertaining music videos out there. It went viral several years ago and, as of this writing, has over 44 million views on YouTube.


Nowadays, you can make a professional website yourself. Because of the easy-to-use tools available to you, there’s no need to hire a costly website designer. A professionally made website — including designing and launching — can cost anywhere from $3,000 up to $20,000, depending on the number of pages you need.

Fortunately, there are services like Bandzoogle and Bandcamp that cater specifically to musicians, while others like Wix and Wordpress are allow you to design your own website (no coding needed).

Keep More of What You Make

Saving is one thing. Not overpaying is another. Depending on how much you make in a year, your age, and your filing status, you may have to pay taxes on your music income.

That means you should set money aside for taxes throughout the year. The recommended amount to set aside is 20-30% of your income. (The best way to know for sure is to contact a local tax consultant.)

The key to paying less in taxes is through smart deductions. A deduction is a business expense that you’ve incurred during the year that lowers your taxable income and, in turn, your tax liability.

As a musician, there are plenty of things you can deduct. Here are a few (according to TurboTax):

  • Gas and mileage: Keep all of your gas receipts and track your mileage for travel to recording sessions, performances, and lessons.
  • Instrument maintenance: Save receipts from the maintenance and repairs of your instruments.
  • Musical events you attend (tickets and parking): Yes, you go to a concert to have fun, but you’re also learning about the current trends in the music industry and researching how you can improve your own performances.
  • Memberships to professional associations: Examples include the Nashville Songwriters Association International (NSAI) or the American Federation of Musicians. (AFM)
  • Business services fees: these would be things like lawyer fees and the cost of having a tax consultant prepare your taxes.

And did you know that there's a special tax break just for songwriters that could cut your taxes by as much as half? It's called the Songwriter's Equity Gains Capital Act of 2006. Read all about this songwriter tax break in this easy-to-understand guide.

Stay Organized

For the income you do keep, it's important to keep track of it. Knowing what's coming in and what's going out can get confusing fast if you're not organized.

Keep Personal And Music Money Separate

This tip is very important. If you’re building a music career, you must treat it like a small business. Therefore, you’ve got to keep your music income separate from your personal bank accounts.

If you don’t, stuff will get pretty messy pretty fast.

Tax time can get pretty confusing as you try to figure out what income and spending should be tagged “music” and what should be tagged “personal.” Also, doing this helps you view your music career as a small business, which keeps you disciplined.

So if you don’t already, open up a free business checking account for your music income and spending. That include separate debit cards, checks, account numbers for payments, etc. You can always transfer money from your "business" account to your personal account as a sort of salary if needed. But pay for anything that might be tax deductible from your "business" account for tracking purposes.

Create An Emergency Fund

You never know when an emergency will hit. If you did, it wouldn’t be called an emergency. This is why an emergency fund is crucial for anyone, musicians in particular.

Many times, musicians don’t have health insurance, usually because it’s too costly to buy privately. Those who do can have high deductibles and co-pays. But if you have a fund specifically for health issues that come up, you’ll have a bit of a safety net.

Also, those touring will experience lots of surprises on the road — vehicle problems, stolen equipment, or equipment breaking. But if you have money set aside for these types of unforeseen events, you won’t take as big a hit.

Even setting aside $100 a month for your emergency fund can make a difference.

Put Your Income To Work

Any business owner will tell you that you need to reinvest in the business, some as much as 50% or more of income. If you don’t reinvest, your career most likely won’t grow.

But relying on incoming revenue alone makes for slow growth. That's why many businesses take on investors, or sell stock to the public, to obtain the capital needed to reinvest in their business TODAY.

Until recently, that's not something songwriters or other musicians could do. They've had to rely on advances, which are often difficult to recoup and have other restrictions or requirements that come with them.

But there are thousands of investors willing to advance you a lump-sum of money in exchange for a percentage of incoming royalties on your past work. You can then use the proceeds in any way you like, without having to recoup with the royalties you earn from any music you make in the future.

Here's a video that explains how songwriters can re-invest in their "business" the way corporations do today:


A career in music can be difficult enough without money problems making it harder. Financial independence is critical to gaining the artist freedom you need to make the music you want to make.

Hopefully these tips will help you get there.

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