Category Archives: Career

How Robo-Advisors Can Help Music School Graduates Succeed

First, start keeping a budget

If you have recently graduated from music school and are having a hard time making ends meet, do not be surprised—you are hardly alone in that respect.  It is notoriously difficult to make a living as a musician.  Berklee reports that the starting base salary for an orchestral musician runs anywhere from $28,000-$143,000.  Needless to say, a lot of musicians are earning at the lower end of that bracket—and many musicians cannot find full-time employment at all.  Long-term unemployment is common.

If that is your situation, you may wonder how you will ever be able to save money for retirement.  Even if you eventually do start pulling in a high salary, you may be getting a late start at saving up a nest egg.  Plus, there is a good chance you will always be struggling just to pay your monthly bills.

Even so, that is a challenge these days for workers in all professions—not just musicianship.  Millennials in particular are having a very hard time saving for retirement—if they can save at all.

This is why there are now new investment products aimed specifically at consumers who have very little time and money to invest, but who still want to give themselves a shot a building p a retirement fund.  One of those products is known as a “robo-advisor.”

What Is a Robo-Advisor?

A robo-advisor is a software program which is designed to replace the role of a traditional human financial advisor.  So instead of getting advice on your investments from a human being, you just open an account, upload information about your financial situation and goals, and receive automated advice personalized to your needs.  You can then make investments directly through the same platform with a few simple clicks.

How a Robo-Advisor Can Help Struggling Musicians to Save for Retirement

Why use one of the top robo-advisors instead of going a more traditional route for your retirement investments?

  • Start investing even if you do not have a lot of money.  A lot of musicians have very small savings accounts—if they have anything saved at all.  But even if all you have is $100 to invest, you can do it through a robo-advisor.  By contrast, the entry barriers at traditional investment houses might be insurmountable.
  • Cut back on fees.  It is not cheap to talk to a human financial advisor—much less have one manage your portfolios for you.  Nonetheless, most people do not have time to learn how to manage their investments manually.  You want to focus on becoming a great musician, not starting a career in investing.  A robo-advisor offers you a third path—one where you can take a hands-off approach without paying the high fees commanded by traditional financial advisors.
  • With a robo-advisor, you can check up on your accounts anytime.  You do not need to call anyone or visit an office; you just log on using your desktop, laptop, or mobile device.  You can see how your investments are doing or make changes any time of the day or night.
  • If you need to ask a human expert a question about your finances, you may be able to do so—without paying an arm and a leg.  Many of these companies have advisors you can speak to over the phone.
  • The advice that you get is tailored to your situation, and if you need to revisit your investments later to diversify, the program will take care of it for you.  So you do not need to do the hard work of researching and rebalancing your portfolio yourself.

With so many different robo-advisors out there, how do you figure out which one to go with?  You should stick with companies which are well-established and which have strong reputations, and you should search for features which are a fit for your needs.  Two of the top choices right now are Betterment and Wealthfront.  Before you can figure out which one is right for you, you need to compare Wealthfront vs. Betterment by reading reviews.

Saving up for retirement as a struggling musician isn’t easy.  Even if you manage to find steady work, there is a good chance that you will be earning a low salary. And even if you find a job which pays well, it may well be a temporary gig.  Even if you only have a small amount of money saved, however, you can invest through a robo-advisor and build a nest egg!

Where Do Musicians Fall In Terms of Average Net Worth?

Where Do Musicians Fall In Terms of Average Net Worth?

If you are currently in music school, thinking about it, or have already graduated, you may be wondering how much money musicians actually make and what kind of net worth you can expect.

Berklee reports that there is actually quite a significant range in musician earnings, depending on where you end up:

• Orchestral musicians may start anywhere from $28,000-$143,000. This is for a full-time season. If you work a shorter season, your salary could be lower.

• If you work for a community orchestra, you might receive around $100-$120 for each of your performances.

• Military musicians earn anywhere from $21,000-$77,000.

• If you are a Broadway pit musician, you will probably earn $800-$1,500 per week for as long as the show is on.

• Club musicians may earn anywhere from $75-$125 for club dates.

If you check the link, you can find a much more comprehensive list covering numerous other music careers.

How does all of this average out?  According to the US Bureau of Labor Statistics (BLS), the 2015 median pay for musicians and singers came out to $24.20 per hour. Job growth is slow, however, and the BLS also reports that many musicians work only part-time or intermittently and suffer from long periods without work.

So if you find yourself struggling to get by on a musician’s salary, you should not be surprised. Even though the median hourly rate of pay is actually not too bad, over time it may not add up to a whole lot.

Being a musician often follows the “feast or famine” cycle of income. For a few months, you may be doing great—but then you end up out of work and burning through all the money you made.

Where Do You Fall in Terms of Average Net Worth?

If you try to look up the “average net worth of musicians,” you will find a lot of lists of the richest musicians alive. This is not very useful information, as it does nothing to shed light on the net worth of the average musician. There is really no point in comparing yourself with the highest earners.

A much more useful thing to do is to consider the average net worth of workers altogether, and then consider where you fall with regards to that.  The average net worth by age is actually quite a bit lower than you may think.  If you click through to the link, you will find a chart which compares the average net worth by age and percentile.

Are you under the age of 35?  If so, if you have just $7,000 or so (and that includes all of your assets, not just the balance in your bank account) to your name, then you are actually doing better than 50% of your peers.

It is difficult to extrapolate how you fit in with other musicians given this data, because there are so many variations where lifestyle is concerned. You might for example earn $30,000 a year as an orchestral musician, and you might sit next to a player who earns the same amount. Whereas you have $6,000 to your name, he might have $20,000.

Even if you graduated the same year and started working at the same time, there are many other factors to explain the difference in your net worth. He might have had more savings or borrowed less for school. He may work a second job. He may have a spouse who brings in a second stream of income. He may have fewer expenses.

The bottom line here is that comparing yourself to other musicians is only so useful. In the end, the only person you are really competing with financially is yourself. Try not to be too hard on yourself if you have a low net worth right now; you are trying to make it in a tough field where it is hard to find full-time work.

Do what you can to cut back on expenses and get more gigs. Consider a day job if you need one. Do not worry about what the guy in the next chair is making. Just focus on playing your best and saving and investing toward your financial goals.

6 Tips for Budgeting After You Graduate From Music School

budgeting

Getting into music school is a huge accomplishment; graduating and embarking on your professional life afterwards is an even bigger achievement.  But it is not without its cost.  Music school tends to be quite expensive to attend.  Take Berklee for example, which has its 2016-2017 degree costs totaling to $63,118 per year.  Once you graduate, you will be neck-deep in debt.

Just to add to your woes, musicians do not make a lot of money on average.  The BLS reports the median pay in 2015 to be just $24.20 per hour.  Many musicians work part-time, and the field is growing slowly.  This is why many graduate musicians do not even end up working in their chosen field.

So how can you effectively budget your money after graduation so that you can save up toward retirement? It will not be an easy journey, but there is a lot you can do, even at a low income. Here are a few helpful tips and tricks to make the most of a limited income while paying off massive student loans!

1. Start accounting regularly.

1.Start accounting regularly

The first and most important thing you can do to make sure that you are optimizing your budget is to actually start keeping a budget! Most people never track their expenses, and if they do, they do not have a system for it.

Come up with a systematic way to keep track of how money flows and out of your grasp. You need to figure out 1-if you are in the red or the black, and 2-how you can increase your profitability each month. Once you know where your money is going, you can start cutting unnecessary expenses.

2. Build an emergency fund.

2. Build an emergency fund

You may feel tempted to start trying to pay your debts off right away when you graduate. This is not actually the best approach though. In fact, before you worry about any other consideration, you need to start stockpiling an emergency fund. How large or small this should be is up to you, but around $1,000 is a good amount.

Make a vow not to touch that money for any reason except dire circumstances, and only if the expense will make a lasting improvement in your circumstances (do not throw it down a black hole). If you do find yourself in a situation where you have to draw on emergency funds to throw down a drain, it is time to make a change (i.e. downsize to a smaller apartment).

3. Pay off as much toward your loans as you can right away.

3. Pay off as much toward your loans as you can right away

Once you have your emergency fund set up, start paying off as much as possible on your loans as quickly as you can. This will ultimately save you a lot of money in the form of interest.

4. See if you qualify for any aid.

4. See if you qualify for any aid

As a musician, you may be living near or below the poverty threshold. If so, you may want to check into state aid programs which you might qualify for. For example, you may very well be able to get food stamps to help you out, even if you cannot get unemployment compensation.

5. Consider a day job.

5. Consider a day job

Trying to make a living as a musician is very difficult, whether you are trying to become a rock star or a concert pianist. You may have to accept employment in another field while you are trying to get your foot in the door and land that coveted chair in the orchestra hall.

Balancing a day job on top of your music career can be challenging, but it can pay off in more way than one. First of all, you will probably make more money this way. Secondly, you will have more security. If something goes wrong with your music career, you have the day job to fall back on.

Finally, having a day job can add to your emotional well-being. Struggling all the time to make it with something like music where the odds can easily be stacked against you can really take a toll in terms of stress and anxiety. Your day job gives you a psychological buffer.

6. Try a robo-advisor.

6. Try a robo-advisor

Finally, make sure you have the tools to make the most of your income after graduating from music school!  One of the smartest moves you can make is to start using a robo-advisor.  A robo-advisor can provide you with customized advice for managing your finances at a much lower cost than you would pay a human advisor.  Compare Betterment vs. Wealthfront, two of the top robo-advisors.

It isn’t easy to make a living as a musician.  Between crippling student loan debts and a low income, you can really suffer trying to save for retirement.  But with these tips and tricks on your side, you have a great chance to succeed!

How To Start Saving For Retirement As A Musician

How To Start Saving For Retirement As A Musician

Trying to make a living as a musician, much less retire, is no easy feat. When you launch your career, chances are good you already are drowning in thousands of dollars of student loan debt.

To top it off, you have to struggle to find work in a highly competitive field.

Even if you do, it may not be the most highly paid work. You may start to wonder how you will ever be able to save for retirement.

You are not the only one.  America is facing a looming retirement crisis.

According to Time magazine, one in three Americans have no retirement savings at all.  That does not mean that the government is prepared to deal with it.

There are really no guarantees that anybody else is going to be there to help you when you reach retirement age.

That is why you need to help yourself, even if it feels impossible right now. How can you start to save for retirement as a struggling musician?

1. Have a budget.

Have a budget

The very first thing you can do to make a real difference in your life is to have a monthly budget. You need to calculate exactly how much money is (typically) incoming and outgoing.

There may be some variation in that since you are a musician; that makes budgeting extra challenging.

Once you have added everything up, you can figure out if you are in the red or black, and hopefully you can start to see why.

2. Cut back on your expenditures.

Cut back on your expenditures

Once you get a clear portrait of your monthly finances, you can start taking steps toward bringing your finances into the black. That will probably mean curbing your costs wherever possible.

Even if you are living a thrifty life, there are probably still some changes you can make.

Move into a smaller home or apartment, reduce your utilities bills through conservative power and heating use, and so on.

3. Look for a steady gig.

Look for a steady gig

A lot of musicians move from gig to gig without finding anything steady. You may spend a lot of time performing as an understudy. If you find yourself in this situation, it is easy to get to the point where you convince yourself that is all there is.

But you should not give up looking for a steady, permanent job. There are some opportunities out there. For example, you could join the military.

Musicians in the military enjoy numerous benefits. You have a chance to travel and see the world. You get a steady paycheck, and you do not need to constantly worry about how you will pay the bills.

If you cannot find a full-time job as a musician, you may want to consider getting a part-time job doing something else.

4. Set up a retirement plan.

Set up a retirement plan

Unless you happen to find a permanent employer who offers a retirement plan (increasingly unlikely these days, especially for a musician), you will probably have to handle your own retirement.

This can be very challenging as there are numerous different options out there and you have to take on all the risk.

Investigate plans like traditional and Roth IRAs. Talk to a tax advisor. Working with an expert, you can figure out an approach which will help you to maximize your income later in life.

5. Start using a robo-advisor.

Start using a robo-advisor

Not everyone can afford to talk to a personal financial advisor or tax advisor. As a struggling musician, you simply may not have that opportunity.

So what do you do? Consider using a robo-advisor instead.

What is a robo-advisor? It is a software program designed to replace the need for a human financial advisor.

You simply sign up on the robo-advisor website and upload your financial information. The robo-advisor will analyze your situation and help you figure out what you can do to save money and budget toward the future.

The program can even advise you on retirement plans which may be a good fit for you.

Robo-advisors are rising in popularity, so there are now dozens to choose from.  If you are not sure where to begin in your search, you might try one of the top two: Betterment or Wealthfront.

Read a review of Betterment, and then check out this review of Wealthfront.  Make a list of your needs and priorities, and then pick the service which seems like it will be the best fit.

Working as a musician and trying to make a living is already a challenge; putting aside enough to save for tomorrow may seem impossible. But if you make some smart life choices and luck is on your side, you have a real chance to succeed!