this tour life

Surviving This Tour Life: a financial guide.

March 31, 2017
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So far ‘this tour life’ has explored the many ways to manage both the physical and mental health issues in the touring industry. Now we would like to address a topic that can have a significant effect on both — let’s call it your “financial health”. We’ve all heard that negative stress has a profoundly undesirable effect on your health and well-being. Our finances can also have fundamentally the same consequence on our overall health. In fact, many of us put our money concerns over our own health needs. At times it may be difficult to focus on much else when you’re constantly worried about your financial situation. We are considerably less stressed if we develop a healthy relationship with money.  Money can be the top source of stress for most people and the freelance nature of the touring industry is certainly no exception…

The 2011 APA Stress In America report found that out of the eight top sources of stress in America, five were financial: money, work, the economy, job stability and housing costs. A survey done by the associated press and AOL examined stress caused by debt and found that respondents suffered more: headaches/migraines, depression, heart attacks, muscle tension/lower back pain and ulcers/digestive problems.

Feast or Famine…

Anyone who has worked in this business for more than a couple of years knows this job can be fraught with many ups and downs. At times we are working so much there seems to be no end in sight but inevitably that end will come. A typical tour has an average shelf life of around 12 – 18 months. Sometimes gigs can last 2 years or more – if you’re lucky. Most of us will find ourselves looking for our next gig every year or so, and sometimes it can be a month to month endeavor.

You may find yourself fortunate enough to have a seamless transition from one gig to the next but more often the end and start dates don’t quite line up. We often lose out on jobs since we cannot realistically be in two places at once. We may need to leave a tour early to secure work for the next year or more. We may also, at times, decide to decline work for the purpose of proving loyalty to secure our future longevity with an Artist. All of the uncertainty forces us to deal with the likelihood of many missed opportunities, possibly jumping to the wrong gig or damaging our professional relationships depending on the outcome of our choices. We may stay with a tour fearing we might lose out on a “secure” paycheck only to find it was not as “secure” as we thought. In touring, we make our decisions for all sorts of personal reasons but far too often it is the economic stress of our individual situations that guides rationale. In order to lessen our stress levels we should have a financial plan.

Make a Plan

Creating a budget for yourself is a good first step in taking control of your financial health. Having a budget will allow you to make sure you are prepared for times in between gigs, unforeseen emergencies and for retirement. A very general outline for budgeting in the freelance world is

50% for living expenses

30% for taxes (unless you are taxed by who you are working for)

20% towards savings/retirement

This of course varies from person to person depending on how much you make and what your necessary living expenses are. Not everyone is able to allocate a full 20% to savings; if this is the case, the percentage amount can be reduced, but this formula should provide motivation for you to increase your value and re-evaluate what you consider discretionary spending.

Having savings available for when you are unable to work is essential.

→Have a savings account with 3-6 months of living costs available, most freelance guides recommend having 12 months available if you can. If you are savvy enough to get to the 12 month point — consider putting 6 months of it into investments or a high yield savings account. Let your money earn some money for you (living costs are bills, necessities & discretionary spending).

Maintaining a separate emergency account for emergency spending.

→Medical costs, broken down car, broken fridge, etc… An easy way to start building up a cushion is to set up a direct debit into a savings account, even if it’s just $25 a week.

Account for health insurance.

→You may want to have a saving account just for health care costs or needs in event of losses or reduced income.

→There are savings accounts that are designed to be used in conjunction with a high deductible health care plan called a health savings account (HSA). The money you put into these accounts is not taxable.

Keep your expenses low.

→Less is more. If you don’t already know, more things don’t necessarily equal more or lasting happiness. If we have our needs met, we can live a pretty good life. Try to avoid a ‘hedonic treadmill’ effect where once we acquire something new eventually we get over it and need to buy other new things to retain this feeling. As touring crew, we learn how to travel for months with more of what we need and less of what we don’t. We leave behind cars, houses and lots of material goods in exchange of a backpack and a suitcase. Living within or below your means will keep you out of debt. There is so much more to life than stuff; like experiencing the world — which is one of the major reasons why we believe most of us do this crazy job.

Prepare for Taxes

Not having enough cash available to pay your taxes at the end of the year can feel very stressful and potentially put you into debt with the government. If you are receiving any payments that aren’t taxed before you get them make sure to have 30% of that income available for taxes.

Opting not to have taxes withheld from your payments can also be an investment strategy. Your taxes are not due until the end of the year. This means all the money you pay towards taxes before they are due isn’t earning you any interest. If you hold onto the money you can earn interest or invest it allowing you to earn some extra income before paying your tax bill.

Do you Qualify for Unemployment?

According to the Department of Labor, you need to meet two criteria to qualify for unemployment:

You are unemployed through no fault of your own: That means you are out of a job due to reasons beyond your control, like a layoff. So, if you quit your job or are fired for gross misconduct, you are not eligible. “Gross misconduct” generally refers to illegal or dangerous acts committed in the workplace.

You meet your state’s requirements for time worked or wages earned: Every state has different rules.  You can find your state’s rules here.

Review your Finances Regularly

Since we work in a freelance/employee style (1099 contractor vs. W-2 employee) industry our financial situations can vary drastically; because of this it is important to stay in tune with your financial situation even after taking control of your finances. Regularly check in just to make sure everything is in good health and also to help you keep your financial goals in mind. There are a few different resources that allow you to aggregate all of your financial information into one place. Doing this allows you to quickly and easily review your financial situation.

Track Expenses

Keeping good records of money spent for business purposes can really help you when it comes to tax season.

One method is to have a credit card that you use for all of your business expenses. This lets you easily review and input business expenses for tax purposes. The IRS requires a statement that shows the transaction date, the payee’s name and the amount you paid.

Remember…

Credit is their money, debit is yours. Credit is the safer option as long as you don’t fall into debt.

Use cards with rewards that will benefit you.

Use one card for tour and one for home to keep track of expenses and spending.

Paying off the cards every month is best! Most major credit card companies allow a 21-28 day grace period before interest is charged.

If you find yourself unemployed, don’t avoid your creditors if you’re struggling to pay. See if they can do things like freeze your interest rate. It benefits them to not let it get out of control, until you can get back on track.

Diversify your Gigs.

Consistent work from one-act may provide a steady income but you may become overly dependent and limit your resume and contacts.

Continue to learn new skills.

Network.

Market yourself.

Get others gigs.

Create multiple sources of income.

Plan for Retirement.

Most of us don’t have the luxury of employers that offer retirement plans or incentives and it is important that we prepare. There isn’t one right way to prepare for retirement and many strategies are available. The IRS outlines types of qualified retirement plans and offers some comparison charts between account types for you to consider. There are also services such as wealthfront.com that automate investment strategies based on your individual financial situation.

Get Independent Financial Advice.

We are not financial experts or advisors so invest time looking into all these concepts for yourself. It’s worth it.

 


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