3.1

Fiscal and Financial Management

As a musician, you’re likely familiar with the feast-or-famine cycle—one month you're overloaded with gigs, the next month you're struggling to make ends meet.

The key to financial stability in such an inconsistent environment is to create predictable cash flow, allowing you to live and invest in your career without the anxiety of fluctuating income. Here are some ways to achieve that.

  • Close-up of a person playing a violin, focusing on their hand on the strings, with a music stand in the background. NZ Session Collective Session Musicians.

    "Self Salary"

    This method involves paying yourself a consistent, steady paycheck, even when your income fluctuates. You become your own “employer,” taking a fixed amount regularly, regardless of your monthly earnings.

    How to Set It Up:

    Calculate Your Baseline Needs
    Determine your fixed monthly expenses (rent, utilities, groceries, etc.) and add a reasonable amount for variable costs (entertainment, transportation). Assume your total monthly expenses are $3,000.

    Set a Realistic Monthly Salary
    Choose a salary that covers your expenses and leaves a buffer. For instance, paying yourself $4,000 a month ensures coverage and some extra.

    Build Your Business Account
    Treat your income as a business account. When you earn more than $4,000, transfer the surplus to a separate "business" savings account. In months when you earn less, draw from this account to pay your salary. Over time, this system balances your cash flow.

    Why It Works:
    This approach prevents overspending during high-earning months and safeguards your budget in slower periods. It’s especially useful if your income fluctuates due to seasonal factors like festivals, holidays, or tours.

  • A silver trumpet resting on a dark fabric surface. NZ Session Collective Session Musicians.

    "Buckets"

    Instead of following a strict budget that might be disrupted by unpredictable gigs or expenses, organise your finances into "buckets" for more flexibility.

    1. Essential Expenses Bucket
    This covers your baseline needs: rent, food, bills. Fund this first using the salary you pay yourself (as outlined in "Self Salary").

    2. Business Growth Bucket
    Allocate 10-20% of your income for career-related expenses like studio time, new gear, marketing, and travel. This ensures that big purchases don't disrupt your personal finances.

    3. Emergency Fund Bucket
    Build savings to cover 3-6 months of essential expenses in a separate emergency fund. This is crucial for handling gig cancellations or income dry spells. Start small, contributing 5% of your income, and increase as you can.

    4. Taxes Bucket
    Set aside 20-25% of your income for taxes, including income tax and GST. This helps you avoid financial stress during tax season.

  • A white electric guitar lying on a patterned rug with various guitar pedals and effects connected by cables on the floor. NZ Session Collective Session Musicians.

    "Deposits"

    Secure at least 50% of your fee upfront before starting any work or performance. This protects you from cancellations, non-payments, or delayed payments.

    How to Implement:

    Set Clear Terms
    Clearly state in contracts or invoices that work will only begin once the deposit is paid.

    Final Payment Upon Completion
    Ensure the remaining payment is due immediately after the gig or project, avoiding long payment windows like “Net 30 days,” unless you're working with a large client and can handle the delay.

    Use Invoicing Tools
    Utilise digital invoicing platforms (e.g., Xero, MYOB) to track payments and send automatic reminders for unpaid balances.

    Why This Works:
    Upfront deposits and strict payment terms protect your cash flow, reduce risk, and reinforce professionalism, showing clients that your time and services are valuable.

3.2

Budgeting for Musicians

Creating a realistic budget is essential for musicians who face the unique challenge of managing fluctuating income streams while covering both fixed and variable expenses.

To begin, musicians should assess their income by tracking average earnings over the past 6 to 12 months.

The NZSC Musicians Budgeting Guide

To being, it’s helpful to categorise income into active (from performances) and passive (such as royalties) sources, and to forecast peak income periods during busy seasons like summer festivals or holiday events.

Next, it’s important to compile a detailed list of all expenses. Fixed costs, which are non-negotiable monthly bills, include rent, utilities, insurance, and loan repayments. Musicians should also account for variable expenses, such as gear maintenance, travel, and marketing efforts, along with irregular costs like medical bills or equipment repairs that can arise unexpectedly.

A useful budgeting strategy is the 50/30/20 rule: allocate 50% of your income for necessities (needs), 30% for discretionary spending (wants), and 20% for savings. The ratio can change based on your own goals. Establishing a consistent monthly salary can further help in managing income volatility; by creating a salary fund, you can set aside surplus earnings during higher-income months to draw from during leaner times.

To navigate irregular income, aim to save 3 to 6 months’ worth of living expenses in an emergency fund and consider setting aside a percentage (10%–20%) of each payment for savings. When windfalls (large, often unexpected, amount of money) from projects or performances occur, allocate these funds carefully, splitting them between your salary, savings, and a portion for discretionary spending, while also considering investments for long-term growth.

The Musicians Budgeting Guide

We really believe in the sustainability of the music industry. We’ve crafted a highly detailed budgeting guide, and put the power in your hands. This is a free resource, and includes a Visual Dashboard, Cash Flow and Income Summaries, Needs - Wants - and Future Categories, Balance and Expense Trackers, and Breakdowns. Fully customisable and just for you. <3

3.3

Managing Process and Payments

By creating professional invoices and having clear terms of service, you can lay a strong foundation for your transactions.

This section will guide you through effective invoicing techniques, the importance of clarity in your agreements, and practical tips to navigate the challenges of delayed payments or no-shows, ensuring you receive what you deserve for your services.

Crafting Invoices & More

  • Professional invoices make you look organised, help ensure timely payments, and eliminate confusion.

    • Use an Easy Tool: Many musicians use PayPal for invoicing because it’s simple, widely trusted, and allows you to receive payments directly. Tools like Stripe, Wise or Excel/Google Sheets are also excellent for more robust tracking.

    • What to Include in an Invoice: Every invoice should have these essential elements:

      1. Your Details: Name, email, phone number, and business name (if applicable).

      2. Client’s Details: Client’s name, business (if applicable), and contact info.

      3. Invoice Number: A unique reference to track payments (e.g., INV-2024-001).

      4. Description of Services: Be specific (e.g., “Performance at [Event] on [Date] for [X] hours”).

      5. Itemised Costs: Break down fees (e.g., performance fee, travel costs, etc.).

      6. Total Amount Due: Clearly state the final amount owed.

      7. Due Date: Specify when payment is due (e.g., "Payment due within 14 days of the invoice date").

      8. Payment Methods: List options like bank transfer, PayPal, or card.

      9. Late Payment Terms (Optional): You can mention if a late fee applies (e.g., "2% interest added after 14 days").

  • A clear Terms of Service (TOS) establishes mutual expectations, reducing the risk of disputes or confusion. It serves as a contract for your services.

    • How to Write a Simple Terms of Service:

      1. Service Description: Specify exactly what you’re delivering. Example: "Live performance at [Event Name] on [Date] for [Duration]."

      2. Payment Terms: Mention your payment expectations. Example: "The total payment of [$X] is due within [X] days of receiving the invoice."

      3. Cancellation Policy: While deposits are optional, you can have a policy about cancellations or rescheduling. Example: "Cancellations within 7 days of the event will require 50% of the agreed fee."

      4. Responsibilities: Include what’s expected from both parties. Example: "Musician will provide their own equipment. Client must ensure the event is ready at the agreed-upon time."

      5. Late Payments (Optional): If relevant, include a late payment clause. Example: "A late fee of 2% will be added for payments not made within 14 days."

    Example TOS Clauses:

    1. Payment: “All payments are due within 14 days of receiving the invoice. The client is responsible for any transfer fees.”

    2. Cancellations: “In the event of cancellation by the client within 7 days of the gig, 50% of the fee is required.”

    3. Rescheduling: “If the event is rescheduled, the deposit can be transferred to the new date, subject to the musician’s availability.”

    4. Late Payment: “Invoices not paid within 14 days will incur a 2% late fee. Payment reminders will be sent automatically after this period.”

    • Make It Your Own: Customise your TOS based on your needs, but make sure it includes the essentials of payment, cancellations, and services provided.

    Tip: Send your TOS with your invoice or share it before finalising any gig agreement. Make sure your client agrees to the terms in writing (an email confirmation is fine).