From Struggling Artist to Star: The Financial Journey of an Entertainer
Entertainers have special needs when it comes to managing their money, and these needs change over the course of the entertainers' careers. In the early days, when nothing comes easily, the challenge is not spending all their money.
Later, needs shift to making good investment decisions and saving for whatever comes next. These are the areas creative people tend to pay little attention to, even though they affect them every day.
Early in their careers, when entertainers often are living on the edge with very little money and a precarious income stream, the thought of positive cash flow is like a dream. Then, when something clicks and they get their first good gig, they forget all that and want to splurge. Understandable, for sure, and even necessary. Celebrating success is a good thing, but it's not sustainable.
Here's why:
1. The next good gig may be months away, which means the income they have from the first gig may have to last a long time.
2. Whatever they do with their money, they will have a tax bill to pay come April 15.
Good money managers work with their clients to set a reasonable budget. Expenses are prioritized. The first priority is ensuring that necessities like rent, phone, utilities and taxes are paid on time. Saving for taxes and the future also are part of this bucket. Next comes paying off existing debts. Expenses such as hair and makeup, costumes and clothing, public relations, and gifts are considered after that. Finally, discretionary spending, the last amount to be allocated, is added in.
But good money managers do more than pay bills and manage cash flow. They also are teachers who explain the value of budgeting, positive cash flow and saving for a rainy day. Goals are set for each of these areas, and the money manager monitors whether they are being met. If necessary, the budget is adjusted.
As careers advance and the gigs come more regularly, the dynamic shifts. Choices are made about tax strategies and investment strategies. Big purchases like a house are considered. Saving for the future becomes part of the budget. Charitable giving becomes possible. Discretionary spending increases.
All of this is important to creating a secure future.
Having a money manager with the right knowledge and expertise is important for someone to whom wealth and fame can come virtually overnight. It is a trust relationship. You need to believe that person has your best interests at heart when he or she tells you it's not the right time for you to buy that thing you've always wanted. And you can celebrate when that person tells you that you've stuck to your plan and you can go get it.
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