The Independent Musician’s Guide to Not Going Broke

Musicians, producers and engineers often face tough career propositions. Here’s how to avoid losing your shirt – in good times and in bad. With a little bit of intelligent planning, you might even come out ahead.

If you’re anything like the average American, chances are that you have a credit card with about $7,000 in unpaid debt, and if you’re lucky, you might have about $6,000 in your savings account.

There’s also a 76% chance that you’re currently living paycheck-to-paycheck, and that if you lost all your income tomorrow, you wouldn’t have enough money saved to cover your bills for 6 months.

But wait, it gets better: If you went to college, odds are that you’re carrying almost $30,000 in student loan debt, and there’s about a 1-in-8 chance that you owe more than $50,000.

Image courtesy of Flickr user _ET

And don’t even get me started on retirement.

When it comes to planning for the future, there’s about an 80% chance that you aren’t on track to save enough money to retire comfortably by the age of 65, and a 45% chance that you haven’t saved any money for retirement at all. Hell, there’s even a 56% chance that you have no clue how much money you’ll need to set aside if you do want to retire someday.

Here’s a hint: It’s a lot more than you think.

If you’re currently 30 years old, and you want to retire at the age of 67 with something around a median salary, you’ll need to have roughly $2 million in the bank.

That’s right: By the time you retire, you will need to be a multi-millionaire, just to get by with a basic middle-class salary. That’s how the compounding effects of inflation work.

Musicians, engineers, and other creative professionals, unfortunately, are likely to be even worse off and have less of a handle on personal finance when compared to peers in other fields.

By now, most of us have probably heard that old joke: Q: “What does a musician do when he wins a million dollars?” A: “Keeps playing gigs until all the money runs out.”

But it doesn’t have to be that way.

Now That I Have Your Attention, Here’s the Bright Side

Now that I’ve scared the bejesus out of you for my own amusement (and your own damn good) let me assure you that it’s not too late to do something about it.

Thankfully, mastering your finances doesn’t necessarily mean giving up on music. If anything, it may be the only thing that can keep you in it.

A few years ago, when I was approaching 30, I had a fairly “cool” job doing audio production work, but I was a lot like the average American when it came to personal finances: I had credit card debt, negligible savings, no real retirement account to speak of, and not enough income to sustainably support even the modest lifestyle I was living. Basically, I was living the much-maligned “millennial” lifestyle.

Today, all that has changed. I am by no means wealthy. But I’m debt free, on track to save up for both a retirement and a home, and if I lost every one of my sources of income tomorrow, I’d kinda be okay. (For a little while anyway.) And none of it required giving up on the things I care about most.

The freedom you get – both creatively and economically – from being in that kind of position is something that I just can’t put a pricetag on.

When you get your finances together, you can finally afford to say “yes” to the things that are important to you and “no” to the things that aren’t. You can set aside time to figure out how to perfect your craft, and how to make it economically sustainable. And at the risk of sounding like some dopey self-help author: you can do it too.

Here’s the thing: It’s not even that hard to do in the long run. But it does take discipline and some real effort – especially at first.

Although there’s a pretty clear path to getting your act together with your personal finances, most people don’t start on it nearly soon enough. And those that do almost inevitably end up kicking themselves for not getting started sooner.

Don’t worry: If you’re not on the path already, no one is blaming you for not knowing your way around this stuff. For some reason or another, they just don’t teach this stuff in high school or in college. (And if they did, who knows if we would have listened.)

But whether you’re 25 or 39, it’s time to start thinking about this stuff, now. Because the sooner you start, the less hard you’ll have to think about it. And the more time you can spend making great art instead.

Where to Start

As dry and boring and un-punk-rock as the words “personal finance” sound, mastering your own pocketbook is probably one of the top skills that any musician, engineer, producer or creative professional needs to work successfully in today’s industry.

By now, it should be pretty clear that record labels aren’t just handing out huge advances. YouTube, arguably the most popular music discovery engine in the world, isn’t exactly a gold mine either. And even if it were, they’re not really “hiring musicians” to make all those videos, because that’s kind of “not how the world works.”

Creative types these days tend to be small business owners, in effect. And if you can’t handle your own personal balance sheet, how the hell do you ever expect to run a creative business?

If you’re serious about making a sustainable career in music or any other creative field, handling your money effectively is going to take four steps: 1) Setting up an automated investment plan, 2) Paying down debt, 3) Getting realistic about your budget, and 4) Making more money.

All that is pretty easy to say, and a little harder to do. But it can be done. Here’s how.

Step #1: Set Up Automated Investments

Some of the best money advice I ever got was “Whenever you get a paycheck, use it to pay yourself first.”

Meaning: Every time you earn money, first take some of that money and save it in an investment account.

Better yet, make this process automatic. Otherwise, it’s almost impossible to keep up.

If you leave that investment untouched, whatever money you save this way can and will double itself many times over throughout the course of your life.

Better yet, if that investment is happening automatically, before you get a chance to even think about spending it, you won’t even miss it.

Financial surveys show people have an uncanny knack for spending almost exactly what they make each month, no matter how much they earn. So learn from psychology, hack your own brain, and get started with automated investments, immediately.

Here’s some good news: You don’t have to be some kind of Warren Buffet-style investing genius to make your savings double its value many times over in the long run. It doesn’t take scammy “get rich quick” schemes either.

All that this kind of return-on-investment really requires is putting your money in low-cost index funds on a regular schedule, and then not freaking out when the market dips and dives and does loopity-loops.

(Yeah, the market will do that. Get used to it. That’s just how it does. It’s been doing it for a couple hundred years now, and shows no signs of stopping just because it makes people uncomfortable.)

You can let the suit-and-tie types freak out needlessly about the short-term changes in the markets and all that nonsense. By investing regularly in low-cost index funds, you can get a great return, and then take your savings in brain power – as well as your zen-like understanding of the cyclical nature of life –  and use it to make great art.

And here’s the real kicker: All those suits who are worrying themselves stiff about picking individual stocks and “timing the market”? It is, in the words of one great lyric poet, all “sound and fury, signifying nothing.”

Try as they might, pin-striped analysts and popped-collar day traders consistently fail to beat the returns of a basic, low-cost, diversified index fund, which is all that you really need to avoid going broke, long-term.

Also keep in mind that I’m not suggesting that you start investing money in order to become some super-wealthy, soulless, finance-obsessed music business magnate who eats starlets for breakfast and hides hardworking musicians’ royalty checks in a secret safe somewhere.

What I am saying, is that in order to have any of the things your parents probably took for granted, namely: A decent home, savings, some degree of financial freedom, the ability to keep living in a good neighborhood once you get settled into it, etc., you’re going to have to figure this stuff out. In the 21st century, it is no longer optional.

Sorry if you don’t like it, but them’s the breaks. Don’t blame me, it was already like this when I got here. I’m just trying to tell you what’s up, in case you didn’t already know. Because looking at the numbers, it seems that many of us never got the memo.

Set Goals, Find a Smart Place to Put Your Money.

Okay, so you’re sold on this whole “invest some of your money” thing? Great.

We’re still going to have to figure how much you need to save, as well as where to get that money from. But first, let’s look at the power of compound interest, which Einstein is widely rumored to have called “the greatest mathematical discovery of all time.”

Image courtesy Flickr by 401k 2013

If you could find a way to spare just $5, $10 or $50 a week, that’s enough to get started, and to get some pretty incredible results, too. Let’s do the math:

$50 a week x 52 weeks x 10 years = $26,000. Easy, right?

Wrong. With compounding interest at 8% (which is exactly what you’d expect from a total-market index fund over the long term, all the stock market ups and downs included) you’d actually end up with over $40,000 after just 10 years.

That’s enough for a downpayment on a pretty damn decent home, just by finding a way to set aside $50 each week.

Within just a few years, you’d have already hit over $10,000 in a half-decent market with this $50/week investment. These days, you could make a pretty killer album with that kind of money. So go for it. Set a goal, and invest in yourself.

Alright. Now that you’re super-sold on this idea, I’d like to pull the rug out from under you:

I’m going to recommend that you don’t start by saving up for an album or a house first. No. The absolute best way to start building wealth so that you can be the master of your own creative life is by putting your money into a tax-free retirement account.

Hear that sound?

That’s the sound of thousands of people clicking away from this article right now so they can read an article written by someone who’s going to tell them what they want to hear.

Don’t be one of them.

I’m insisting that you start by putting your money in a tax-free retirement account specifically because it is not only one of the most important pieces of financial advice you’ll ever get, but also one of the most widely ignored. And because the later you start, the more screwed you’ll be down the road.

Truth is, many musicians and freelancers might not even end up contributing enough in to Social Security in order to get some payouts back when they’re old. And those that do? They can expect an average monthly payout of about $1,200 a month.

That’s just about enough to subsist on a steady diet of cat food and Ritz crackers in your golden years.

How Much To Save

If you’re 30 now and you want to retire with something around the median U.S. salary, you’re going to have to end up with about $2 million in your investment account at age 67.

(Provided you plan on living another decade or two longer, like most folks who reach that age seem to do in this country.)

The most important thing is that you start now. Literally. Like, as soon as you’re done with this article.

If you wait 15 years, you’re going to have to put in several times as much money, every single month down the road, just to hit the same target. Even if you put in just $10 every month now, that would be a real head start.

Think of it this way: If a 25 year-old were to put in just $100/month for 10 years, and then stopped contributing completely by age 35, she’d have over $200,000 by retirement.

Meanwhile, if she started when she was 35 instead, she’d have to invest that same amount for 30 years. And she’d wind up with 25% less to show for it in the end!

That is the power of compound interest. Amazing if you use it. Depressing if you don’t.

Thankfully, it’s never too late to start. Just remember that sooner is always better than later.

To figure out exactly how much you’ll need to save each month in order to avoid a couple decades of getting acquainted with what Whiskas tastes like, try a retirement calculator.

Personally, I use the retirement calculator on Mint.com, which I’ll proceed to brainwash you into trying out for the remainder of this article. If you want to try one that you can use real quick without signing up for a free Mint.com account, try this one from Yahoo. (Yes, they’re still around. No, this isn’t 1999.)

Where to Save

An IRA, or “individual retirement account” lets you get a huge tax savings on your investments. For musicians, audio engineers and other creatives, I recommend setting up a specific type of tax-free account called a Roth IRA.

With a “Roth” version of an IRA, you put in after-tax dollars, and when you take the money out in the end, you don’t have to pay any taxes on your returns. Since you stand to double your money every decade or so, just by keeping it in index funds, that’s a pretty damn good deal.

This is especially good for musicians, who often get paid in cash, and are generally too lousy about documenting income and expenditures to get the most out of the pre-tax contributions of a traditional IRA.

There are other benefits, too: If you’re uneasy about putting all your initial investments into a tax-free retirement account, where they’ll be locked away til your old, a Roth IRA is an especially good bet.

If you do end up having an emergency where you need to use that money, you can take out your full principal investment to help cover it. (Although you’ll forfeit any of your interest on it.) Meanwhile, if you want to buy a house or pay for education for yourself or a loved one, you can make an early withdrawal of both your principal and your interest for those kinds of things. Essentially, a Roth IRA has all of the benefits of a tax-sheltered retirement account, and the flexibility to deal with unexpected costs.

That maximum that you can put into a Roth IRA is $5,500 a year (or $6,500 if you’re over 50.) That’s just over $450/month. I recommend maxing this out as soon as you’re able. If you can’t do that immediately, don’t worry. Getting started now is the most important part.

If you have a day job or a salaried position that offers a 401(k) or other retirement plan, use that too. If they offer an “employee match” option where, for every dollar you put in, they put in a dollar, take it. Max that out. To do anything else is to turn down free money.

What to Invest In

At its most basic, an investment portfolio is made up of a collection of stocks and bonds. Fortunately, the key to getting reliably great results isn’t “picking the right ones.” The key is owning a piece of all of them.

It may sound counter-intuitive, but 200 years’ worth of data and research shows that it’s essentially impossible for even professional investors to know which stocks will go up before they do. Again and again, even the “experts” fail to consistently beat the basic returns of the overall market by just “picking stocks.”

To invest in an intelligent way, all you really need is to buy into a single “Total Stock Market Index Fund”, and a good “Total Market Bond Index Fund” as well. That’s it. This is not rocket science. All the data shows that this kind of broad diversification, coupled with regular, automatic contributions, is the most surefire way to get uncommonly good returns. It’s not hard. But you do have to take action.

The traditional wisdom is to invest heavily in stocks when you’re young, since you have time on your side to absorb their higher risk and reap their higher rewards. Then, as you get older, you’d switch slowly toward bonds as you begin to need more stability. If you’re in your twenties for instance, you might start with 80% to 100% invested in stocks, and as you reach retirement age, you might have less than 35% in stocks, and most of your investments in bonds.

Some folks will recommend that you diversify even further by putting 10% or more into international index funds, REITs, precious metals or commodities, or through any number of different “asset allocation” strategies. There’s some evidence to suggest these approaches are a good idea too. But you don’t have to obsess over any of that stuff if you don’t want to. It just does not make a huge difference, especially at the early stage when you have decades ahead of you to offset your short-term risk.

One simple, common-sense consideration is that when stocks are getting very cheap, you’d be smart to buy more more of them. And when stocks are getting very expensive, it may be smart to buy fewer of them, and buy either more bonds, or other cheaper and less “bubbly” assets instead.

If you find that getting into researching investments stimulates your intellectual curiosity, feel free to study them further. Just don’t get greedy, and don’t waste too much energy that is better applied to developing your career and creating assets of your own. Because that’s where your real earning power and growth will come from.

Who To Invest With (Plus: Additional Savings Goals)

There are plenty of good companies that will allow you to set up a Roth IRA and get started quickly.

Charles Schwab is one good one. They have very low minimums, and signing up for their brokerage account will give you access to one of the best free checking accounts in the business. Their checking account pays an usually good interest rate and better yet, Schwab will eat your fees at any ATM, anywhere in the country.

Vanguard and Fidelity are also great places to set up your account if you have a little more to start with, and T. Rowe Price offers a lot of great options as well. John Bogle and Vanguard practically invented the idea of low-cost index fund investing. One of the benefits there is that as a customer, you’re also a part owner, kind of like with a credit union.

Recently, I’ve also set up some of my investments through an extremely simple newer service called Betterment, which offers an extremely simple and well-diversified way to invest toward specific goals. One big dial allows you to adjust your asset allocation between a basket of diversified stocks or bonds, which are automatically rebalanced for you. Betterment’s built-in savings calculators can also help you set up and plan for specific goals. This and Wealthfront are probably two of the easiest options available if you want to concentrate on your work and your life much more than your investing and saving.

At the other extreme, if you start to get really interested in investing and want to put together diversified baskets of stocks and other assets on your own, buying them all at once at a low price, then Motif Investing is a fun, useful and cost-effective service that I’ve come to enjoy.

Any of these are a fine place to start.

Once you’ve maxed out your contributions to your tax-free retirement account, and once you’ve claimed any employee-matching 401(k) funds you might be entitled to, you can think about starting to invest toward other goals, such as setting up an emergency fund, buying a home, financing an education, saving toward a commercial recording project, or launching a businesses.

Step #2: Pay Down Credit Card Debt

We just got through the biggest, and to most musicians, the scariest and most unfamiliar part. From here on out, we’re going to start moving faster.

Remember all those great things I said about compound interest just a minute ago? About how it’s extremely powerful and can increase your wealth so much faster than you ever thought possible and all that jazz?

Well, good. Because that’s exactly what credit card companies are doing to you. The only difference is that where you’re earning 8% on average, they’re fleecing you for 14%, maybe as much as 25%.

Want to realize just how scary this is?

First, imagine me holding a flashlight under my chin. Good. Now imagine that you have about $10,000 in credit card debt at 25% interest with a $210 minimum payment. (Which, for the average, American is actually not much of a stretch.)

Do you know how long it would take you to pay that off?

Never.

Yes that’s right, “Never.”

Yes, I know that’s technically not grammatically correct, but it’s the damn truth.

It would take you “infinity” amount of time. You would quite literally die paying off that credit card debt. It would outlive you and come back to haunt your grave.

Boo.

Let’s put this into perspective: If you lived for 1,000 years, in this scenario you would have ended up paying off $5 billion (that’s the interest on your original $10,000) and you’d still owe another $212 million. Which in turn would continue to collect interest. Year after year. Until the sun explodes. (Which would probably just make it angrier.)

These kinds of credit card deals are not uncommon. Which is exactly why if you have credit card debt, your #1 priority, after starting up your long-term tax-free retirement account, is to begin automatically throwing a good chunk of money at this heaping sore in your finances as soon as possible.

Fortunately, credit card companies are just evil, demonic, soul-polluting behemoths from the depths of hell. They’re also businesses! Which means it’s actually in their interest to get you on a plan to pay back the money they lent you, instead of going all Road Warrior on them and checking out of your obligations completely.

9 times out of 10, you can call your credit card company – or any other creditor – and try to negotiate a payment plan that’s going to work for everyone. Do this now. (If you have good credit, you can also think about consolidating all your debt onto a lower-interest card.)

Make sure to prioritize wiping out your credit card debt above all other financial goals, other than contributing something to your retirement account, just to get started.

Also, realize that with real care, credit cards can be used for good.

If you use them for a few small purchases and then immediately pay off the balance you can build good credit, which could potentially save you hundreds of thousands of dollars if you ever decide to buy a home or start a business.

Similarly, if you use a credit card for all your major purchases and then immediately pay off the balance you can get buyer protections or frequent flyer miles than can make carrying the card worth it.

But, if you want to use a credit card to buy music or recording gear you can’t immediately afford?

Yeah, don’t. Basically: No. Never do that. At all.

If you need that kind of stuff for business, take out a business or personal loan. And if you have trouble getting one? Take a moment to think about why.

I’m serious. It takes some doing to get a loan for a music-related business for a damn good reason. Is music a hobby? If it is, that’s okay. Realize it, enjoy it, and don’t let it bankrupt you.

Step #3: Create a Budget That Doesn’t Crush Your Soul

If you want to be the rare kind of musician, producer or any other type of creative professional who’s not going to go broke, then you need to create a budget. There is no way around this.

I know it’s not sexy, it’s not fun, it’s neither punk rock nor rock n’ roll. But it is central to leading a life where you don’t have to run and dive into a desk job when you turn 35, or keep working as a bartender or barista until you’re 73.

Here’s the good news: It’s not as hard as you think. And once you do it, it doesn’t feel that stifling at all. If anything, it feels oddly freeing.

For what may be the first time in your life, you can think about calling a cab without wondering whether or not you can afford it. You’ll know.

You can go out to a nice dinner or a great concert, or buy friends a round of drinks without feeling guilty or uncertain later on. If those things are important to you, put them in your budget. Then, you can spend extravagantly on the things you care about.

The flipside to this is that you have to cut mercilessly, ruthlessly, on the things you don’t really care about.

Maybe you like cooking and don’t care about eating out. Maybe you love buying records and don’t care very much about clothes. Maybe you like having some money for concerts but you could care less about going to the movies. Maybe you love to collect vintage T-shirts, but you really don’t care less about more than one guitar, or vice versa. All that is fine. Your budget is yours to make.

Personally, I don’t care about taking cabs. I budget $0 for them each month and I never take them. I don’t care about the convenience of taking the subway either. I like to bike almost everywhere anyway, and so I budget a lot less than most city dwellers do for public transport. I don’t like to drive so I can spend more on an apartment. I don’t really care about eating out more than a couple times a month and going to the movies more than a few times a year. I budget accordingly.

This means that when it comes to the things I do care about, I can ratchet up what I spend and buy things guilt-free.

I do like having good coffee and tea and mind-blowingly good groceries in the house. I do like records and books and having a powerful laptop and great audio tools that are fun to use. I like working in good studios instead of lousy ones and with the great people instead of the cheapest ones. I like getting The New Yorker every week and giving good tips whenever I do go out.

I can afford to do those things without even thinking about it because I recognize that I can’t afford to do everything. And that’s huge. When you budget that way, you don’t feel like you’re missing anything at all.

How To Budget

It may sound counter-intuitive, so I’ll repeat it one time: One of the main reasons that creating a budget is such a great idea is that it lets you think about your budget less. It’s already decided.

But to draft your first monthly budget, you’re going to need a place to start. I recommend tracking your spending for a couple of months. You could do this the hard way – with paper and pencil, or you could let a free app do it for you, instantly and without thinking about it for even a second. (Guess which method I prefer.)

Check out http://www.mint.com.

I use Mint.com, which is made by the same company that developed QuickBooks and Quicken. It’s free, it’s secure, and it helps you create and track budgets, investments and goals. If I don’t know how much I have left in my budget for a particular category, I can check it on the go from their free mobile app.

Once you type in your bank account information you can track your past and current spending to see exactly where you’re money has been going, broken down by category. (Yes it’s safe to enter your bank account information. They use bank-style encryption, and no one can actually move money around using the service, not even you.)

Seeing where you have been spending your money is a great place to start when you’re trying to figure out where you should be spending it.

First, start with a realistic appraisal of what you have been spending on average category by category. Then, make a budget that reflects this spending, but with a slight slant toward where you want that spending to end up. Mint makes this easy.

Focus on cutting the things you don’t care about too much, and preserving (or even increasing) what you spend on the things you do care about.

But don’t get too ambitious. Just like with beginning to exercise or learning an instrument, you can’t jump in and expect to get where you want to go overnight.

When you’re trying to change your spending, set small, achievable goals, and keep heading in the right direction, bit by bit. Better that you get there eventually than burn out all your willpower at once and get nowhere at all.

And remember, your budget is your own. No one has to see it. And no one can judge its effectiveness except for you.

With that said, here’s the part I can’t stress enough: A portion of the money you make should go immediately into long-term investments and paying down debts before you budget for anything else.

Yes, this includes groceries and rent.

If your reaction to this is: “I can’t do that! I already spend every penny I make. If I saved 10% or whatever, I’d have to make significant changes to what I do in my life.”

Well, yeah. That’s kind of the whole point.

Do you hear that sound?

That’s the sound of thousands of people clicking over to TMZ simultaneously in a futile effort to numb the pain.

Don’t do it. Stick with me.

Step #4: Earn More Money

Once you start developing a smart and sustainable budget, after the initial amazement, optimism and novelty begins to fade, there will come a point when you realize that you just can’t cut your spending any further.

What are you going to do? Start making your own soap? Never buy pants again? Go on the Karen Carpenter diet? (Ouch. Too soon?)

You’re eventually going to start realizing that there are truly important things that you just can’t afford without taking on debt.

How are you going to catch up on savings toward the things that matter to you most? How are you going to take vacations to places other than the roof of your building?

At a certain point, you’re just going to realize that you need to start earning more money.

How to Make More Money by Really, Really, Trying

At first the idea of asking people for more money may seem scary, dirty, daunting, improbable. Especially for someone who works in music at a time when recorded music revenues are down by 60%.

But maybe one of the reasons that we got here in the first place – as an industry – is that we stopped thinking about these things.

Perhaps at some point music professionals, as a group, forgot how to budget and forgot how to ask others to pay us for all the value we offer. Maybe we even forgot that our job is to create things that other people value so much that they desperately want to give us money to keep on doing those things.

Maybe we forgot that part of our function, as an industry, is to ask people to pay us the money so we can keep making the things that they like.

Aren’t artists supposed to help remind regular people of what’s really important?

With that in mind, if we’ve forgotten that one of the most important things in life is to sustain doing the things we love, to create things that other people value, to demand that others respect us and show us what we’re worth, then what the hell good are we?

If we forget to do these things and if we forget to remind people that they, and we, are important, we are by definition failing at our jobs at as artists.

So, what I’m saying is that maybe it’s time we focused on what we can do to earn more money.

If you’re working as an unpaid intern somewhere, ask yourself where that’s supposed to lead. To more unpaid work?

If you’re playing shows only for “exposure”, ask yourself when and where that exposure is supposed to end. Exposure for what, anyway? Another non-paying gig?

If you’re putting out a product and no one seems interested in buying it, maybe ask if you’re taking the right approach or putting your resources in the right place.

If you’re working a dead-end assistant job, ask yourself how long it’s supposed to last. How much more “experience” you need?

And are there new things you can start doing, in that job or in another one, in order to make more money and offer more value to the world than you already are?

How to Ask For More Money: The Creative Employee Version

If you work for someone else, here’s how to get a raise:

Figure out what matters most to the person who’s signing your checks and deciding your salary.

(Is it having more time? Is it making more money? Is it leading a more pleasant day-to-day life or is it earning more prestige?)

Then, figure out how to give them that, and how to make them realize just how much you’re delivering.

That’s it.

If you really do that, any sane person who has the ability to pay you more will pay your more, or they will risk losing you.

If you really do that – if you’re not just telling yourself you’ve done a great job, but can demonstrate that you have done a great and relevant job and can back that up with facts and results – you will have done something that is Incredibly Rare.

Anyone who doesn’t pay you more for that doesn’t deserve you. And if they want to pay you more but can’t afford to? Well, you’ve just focused on solving the wrong problem for them. Focus on the “helping them afford to” part, or find someone who can already afford you.

So, what is your employer or client’s biggest problem?

One way to find out is to guess.

Your boss or client seems concerned about sales? Figure out to improve them. She always seems overworked? Figure out how to take tasks and projects off her plate and execute them flawlessly.

The other way to find out is to ask.

Tell your boss or your client your intentions. Explain that you want to move up in salary and responsibility, and ask what you would have to do in order to get that kind of consideration.

What kind of service would they actually pay another $5, $10, $20 for? What kind of results would they need to justify a pay increase?

Then, deliver, and find a way to prove that you’ve delivered. Show them the numbers. Spell out the results.

If you ask, most good business owners have a few ideas about what’s really important in their business and where they need to make up some ground. Chances are the mere fact that you took any initiative at all to find out what those things are is going to come as a refreshing surprise.

Trust me when I say this is a depressingly rare and unusual thing for people to actually do and follow through on the simple things we’ve just described. But these kinds of actions are the very things that great businesses and booming economies are built on.

But what about if you’re an independent operator who serves clients, customers or fans?

How to Ask For More Money: The Creative Entrepreneur Version

There are essentially two criteria to making money on your own. You’ve got to find people who:

A) Have the ability to pay (ie, they’re not broke) and

B) Are willing to pay. (ie, they actually think that what you’re selling has some kind of rare and useful value in their lives.)

This is easy to say, harder to do.

Teenage rock bands might be willing to pay for recording services. But are they able to? A wealthy hobbyist might be able to pay for you to mix his recording, but is he willing to? Maybe yes, maybe no. What if he likes the idea of mixing it himself?

You can ask these question about any number of things: Selling records, teaching, consulting, licensing, writing jingles, playing concerts, doing repairs, designing tools, whatever.

Wherever the answers are “yes” and “yes” there is pretty good potential that you can make a living.

When the answers are “maybe,” “sometimes” and “it depends,” know that you will have an uphill battle, but that if you’re dedicated enough, you might just have a chance to eek it out.

When the answer to either of these questions is a definite “no”? Run.

Run far, far, away and never look back.

The Final Calculation

If you’re starting from a net worth of $0 – or from a negative number, like a shocking number of Americans – you have a long road ahead of you, just like I did.

You will not get to your destination in one leap. Your path will at times seem incomprehensibly long. It is bumpy and curved and dusty with age. The particular road you’ve chosen is a tiny one, and it is lined with towering casinos, flashing lights, and charlatans who are happy to hastily draw you a map in the sand for whatever you have in your pockets.

But the path is also clearly outlined. As worn, littered and potholed as it may become, it will never fully disappear. It is always possible to find it again somewhere. And the further along you get, the simpler and more scenic the ride becomes.

There are also beautiful, monumental milestones on this path. You can stop and rest at one or another if you like. But the path never really ends, not until you can no longer walk it.

Ultimately, it’s not so much about where you finished, but about whether the path took you to the places you always wanted to visit, and whether you remembered to enjoy the journey while you had your chance.

And thankfully, the chances are that you’re not just like the average American who we so depressingly described at the beginning of this article.

Why? Because you just got to the end of a 6,000-word article about mastering your personal finances and developing a professional career in the music business. And that’s something that a lot of people never do.

Keep reading things like SonicScoop and Trust Me, I’m a Scientist, learn to be mindful of the difference between price and value, and watch out for false turns along the way.

Here’s wishing you a little bit of luck, and a lot of good sense.

Justin Colletti is an audio engineer, educator and journalist.

Realizing that you need to get started is just the beginning. To dive deeper into your personal finances, Justin recommends starting with Ramit Sethi’s I Will Teach You To Be Rich, or The Boglehead’s Guide to Investing by Larimore, Lindauer & LeBoeuf. Both books are fun, thorough, clear-eyed introductions, free of jargon and B.S.

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