09: Intro to Personal Finance for Musicians
with Tiffany Soricelli
How would you define personal finance?
I would define personal finance as one's own personal relationship with financial matters, and that's not just money, though. A lot of times that's where the focus tends to be. But it's also around one's own money beliefs, their, their financial system, their habits, their, their reaction to consumer-based marketing, all of those things. I think that all plays into one's own personal finance story.
Kellogg:
What are some of the biggest money mistakes you see young musicians making?
Soricelli:
How much time do you have? Not just today. I think one of the biggest money mistakes that I see young musicians making is ignoring their finances, pretending that it doesn't exist, and compartmentalizing, always taking that like, “ostrich head in the sand” approach to money: If I don't pay attention to it, it will go away.
But the thing is, is that when people ignore their finances, they get, they tend to take on a life of their own. They can get more unwieldy and create a lot more stress and mess for a lot of young artists. One of the things that I say early on is when you are a student, live like a student, and when you are a graduate student, live like a student. And when you are in the professional world, but still a young artist, live like a student. I mean, live below your means and build your financial systems and your behaviors to allow yourself the opportunity early on in your career to build a healthy nest egg, savings, financial foundation, because of the foundation that you built early on, is going to carry you through your entire career.
Kellogg:
When you say that a music student should live like a student, what does that look like?
Soricelli:
That means, you know, being really mindful that unless you're winning huge competitions out the gate, which if you do, that's great. But also that's temporary money that's not guaranteed to exist for your entire career. You need to know the beginning salary for the career that you've chosen. And if you are, you know, maybe you're privileged enough to or talented enough to get into a wonderful institution that is paying you to go there and giving you assistantships, and you're teaching, and that's all wonderful. But if you maxed out $30,000 in student loan debt to live while you're getting a free education or your free training, you're starting $30,000 behind the gate.
When I say live like a student, be really mindful of the lack of consistent income that's coming in. And you take advantage of living frugally, making really intentional decisions around where you spend your money and know that you know where you spend your money and how you invest your money. And investing not just in the market but in things around you and in experiences and in life, in your instruments. All of that will have long term ramifications of how long it takes for you to be financially solvent and stable.
Kellogg:
What is the one most important thing that a young musician could do to improve their finances?
Soricelli:
I think the, the most important thing a young musician can do to improve their finances is engage in their finances.
Becoming really good at your own financial management takes practice, not unlike everything else musicians do. The more you practice, the better you get at it, the better handle you have on your own financial behaviors. And so for some people, that's save early. But I think the best thing to do is engage, know your numbers, know your financial systems, and make a plan.
Not necessarily make a financial plan, but make a plan for how I want to spend my money or what I'm going to do to earn money, you know, things like that, not, not sit down and do an analysis in a Monte Carlo scenario, but really just know and be intentional with how you handle your money. That's, that's the key.