Fancy cars and nice houses, the best restaurants and most expensive drinks, gear that you'll rarely use that costs a fortune and even the regular "crazy night out" sounds like a lifestyle many musicians strive for. The reality though, 1% of all working or full-time musicians make enough to actually live such an extravagant lifestyle. In our book, musicians often make three critical mistakes when it comes to their music careers. Today, we're going to talk about the first. (Later this week, we'll talk about the other two). The first critical mistake a musician makes is living the rockstar lifestyle before they're actually a rockstar or better yet, living the rockstar lifestyle while money comes in but then continuing even when the financial backing ends. We're going to give you an example that might help you create some goals for yourself as you shoot for the "rockstar lifestyle."
About 20 years ago, there was a band from New Jersey that worked their butts off to make it in the industry. They tried everything from playing live 5 nights a week while working day jobs, buying fan club subscriptions to secure fans, even paying the big bucks to record with top producers in NYC and LA. Although they continued putting in the hard work, in the end, they kept hitting brick walls left and right. The sad thing was that their songwriting and music passed through all of the filters; radio friendly songs, major fan base, a hard working band that was willing to do whatever it takes, major networking community, and support from major producers. No one knew the next step.
Luckily, their hard work paid off. Seemingly overnight, one of their radio friendly songs went viral. It actually started with a connection at a college radio station miles away and one thing lead to the next. Within four weeks, their single sold huge numbers as it moved up and played for many weeks on commercial radio. This was what they had been waiting for and it launched their music careers. For five years this group was signed to a major label (with a hefty signing bonus right out of the gate), sold hundreds of thousands of copies of their hit single and had success with three full length albums and many national tours. Things were looking awesome as they raked in more money than many others would see in their lifetime. Within five years, when all dues were paid and everyone else not in the band got their shares, the band took home a collective $12,000,000. With four members in the group they split everything equally and lived a great life financially. Sadly, after their five year stint though, the label they were with dropped them with no sign of anyone else picking them up. As a result, record sales dropped and larger tours ended with no major marketing and little backing from fans. From then forward, income for each member was about as much as a middle class American business man. Although that seems awesome and maybe even like a dream to the hardworking, undiscovered musician, this was nothing compared to the millions they made in a short five years.
The problem? Three of the four members continued to live as if they were on the road to making three million dollars every five years (which comes to about $600,000 a year before taxes). If you know anything about how money works, spending like you make $600,000 a year while only pulling in an average salary puts you into debt fairly quickly. Without surprise, the band eventually split and the three "unprepared" members filed for bankruptcy. The latest news found two of those members working hard at rebuilding a financial foundation through music and the third working at a Home Depot back in Jersey.
The person to learn from? The bassist. (Who said bassists weren't smart?!) The bassist planned for the ups and downs most musicians experience within the industry. In an online interview, he stated that he planned as if the group would be a one hit wonder and anything else that came in was all a bonus. "I didn't think we would become the next U2 or Nirvana, so I wanted to plan my life accordingly. If it happened, sweet, if not, I wanted to be prepared."
So how did he prepare? The bassist saved 50% of all income over the course of their successful five years, putting nearly $300,000 away a year for five years into a Roth IRA (retirement fund) that he COULDN'T touch for 30 years. He then budgeted so the rest of his money would last him until he could have access to his money he put away. Therefore, on top of what he currently makes, he gives himself a $50,000 yearly allowance from the large chunk that was previously made. Not a rockstar salary, but here's the kicker. Without putting another dime into his retirement account, due to compound interest, when he has access to his account in 2023, (he'll be 50 by the way) he'll have access to almost $12,000,000 for 5 years of work he did 30 years ago! Oh, and he doesn't have to work... ever again... unless he wants to.
Now before you think that's crazy because you wouldn't want to wait 30 years for your money, don't forget that one of the guys spent it all in the beginning and is now looking to work at Home Depot for the rest of his life and the bassist gets to live like a rockstar for the rest of his life.
Before you decide to live the rockstar lifestyle now, what are you doing to plan for the ups and downs of the industry? Maybe you're not a musician and you need to plan for the industry you are in. What are you doing to plan for the ups and down of your financial life? If you have any thoughts or other stories of people living the rockstar lifestyle within the industry, please share below!