Performing Artists and Weighing Financial Wellness

“Artists are the gatekeepers of truth. We are civilization’s radical voice.” – Paul Robeson

It is easy for us “civilians” to underestimate the tenacity, drive, persistence, and energy of the performing artist, and that they only know to give 110%. They are entrepreneurs, idealists, and they understand that job security is not there for them and, as a result, they hustle to generate several sources of income to pay your way. A study in 2016 [1] estimates alternative work arrangements comprise 16% of the workforce in 2015, up from 10% in 2005. This work life is often referred to as the “gig life” (e.g., freelancer, independent contractor, on-demand or temporary worker, and excludes those who rent an asset (e.g. Airbnb) or sells goods they produce (e.g. Etsy)). You are the original members of a fast-growing group in the workforce.

What’s on Your Mind?

What is probably on your mind is the upcoming audition and how you are going to deliver a snapshot of “your best”. What voice type and dance style are they looking for, and what should you wear? A good friend of mine was one of 30 people invited to audition for a role in The Lion King on Broadway. There are no prizes for making it to the final two, one has to get up and get out there and do it all again. Add to this that living in New York City is not cheap, nor is the ever-increasing cost of dance lessons, voice coaching lessons, and studio classes. Who needs to think about finances when you have all this going on, you’re an idealist, not an accountant, you’ve been working toward this all your life and you are going to give it your all, and if need be hit the credit card and win the audition.

Financial Wellness, a Weight or Wings?

Financial wellness is about being able to manage your day-to-day finances, achieve your financial goals, and protect yourself against major financial risk[2], this can be a challenge and an uphill battle for the performing artist, and others. Having to think about your finances can feel like a toothache and talking to a financial advisor can seem like a visit to the dentist. However, there is a part of you that is pragmatic and understands that your finances represent an important part of your efforts and that you need to keep up with them and have your finances working towards your goals. You have probably discovered that your financial situation either works for you, or works against you, rarely does it just sit in neutral, your financial circumstance is a weight, or a set of wings.

Relationship First then Expenses

So how do I, as a financial advisor, work with performing artists? First of all, I need to get to know and understand you before I can work with you to create a better financial experience. I need to earn your trust and for you to understand I am there to support you. In brief, I need to be someone you can rely on for the best financial decisions for your circumstances. It is important to know that Boerum Hill Financial Advisors is a fiduciary fee-only advisor that is held to a fiduciary standard that requires the disclosure of any possible conflicts of interest we may have. We receive no commission on any financial products or services, and as a result, our advice has your best interests at heart. This is in sharp contrast to non-fiduciary advisors who need only meet a suitability standard for selling you a product or advice that is based on the investor’s objectives, income, and age.

Once we have gotten to know each other, and we have decided to work together my next step is to understand your expenses, and in particular the following four categories of expense:

1. Non-discretionary/Essential - Fixed

2. Non-discretionary/Essential - Rising

3. Healthcare

4. Discretionary/Non-essential - Variable

We will not start the budget process with income, rather, I’ve found it best to start by understanding your monthly and yearly expenses and their period highs and lows. Knowing your expenses by category makes for better expense management as each category deserves different attention and focus. Fully understanding your expenses and their cycles is valuable for our next task, managing your cash flow cycle and determining what you need as an emergency fund, or I sometimes call and opportunity fund. Getting your cash flow working with you is a good confidence booster for everything to follow.

Passive income?!

Let’s talk about income. I will start with an idea that you may think is outside the box. Wouldn’t it be great to have a source of reliable passive income so you can free up your time to pursue the important things in your life that provide you with a feeling of financial wellbeing? You may think this is pie-in-the-sky, “how can I afford a rental property, or earning royalty income, or receive income from an investment portfolio?” It is easier said than done, but it is something worth working towards, even though it may take time to save for that apartment down-payment and to create a great credit score. Something you may also want to keep in mind, as a self-employed person, is establishing a Solo 401(k) account that allows you to save tax free, and also borrow from the balance, this can help you make a down-payment and/or improve your credit score by retiring some high-interest credit card balances. Achieving a passive source of income will only happen if it’s your goal, and something you want to achieve.

“The beauty of life is to be outside the box, so that the box doesn’t exist .... to limit a human being to one mode of expression is really a crime.” – Herbie Hancock

Take a Step

Chances are you are not looking just for some investment recommendations. You are more likely wanting guidance in setting goals and achieving them, realistic expense planning, tax-efficient investing, and safe debt levels. These topics are very easy to postpone, and many times people make major financial decisions without sound advice, which can eliminate options for the future or delay them. This is an area where a trusted financial advisor can be of great value, someone that can provide you with support, objective advice, and keep it real and understandable. Finding the right financial advisor for you is not easy.

In short[3]: the best advisor will understand your situation and can fit your investment plan to you while explaining things clearly. Look for someone who is a professional counselor first and foremost, and not just a businessman investor – to borrow a key distinction highlighted by author Charles Ellis[4]

Feel free to contact me for a no-obligation “get to know meeting”, my email – This email address is being protected from spambots. You need JavaScript enabled to view it. I look forward to hearing from you.

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[1] Lawrence Katz and Alan Knueger, “The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015,” 2016. Alternative arrangements include temporary and part-time work, as well as contractual arrangements, such as independent contractors.

[2] Prudential, “The Power of the Wellness Effect,” 2017

[3] See Zvi Bodie and Rachelle Taqqu” Risk Less and Prosper” page 174. John Wiley & Sons, Inc. 2012

[4] See Ellis, C “The Winners’ Game,” Financial Analysis Journal 67, no.4 (July -august 2011)