The Simple Path to Wealth by JL Collins
This is not a financial guide for freelance musicians. These are just my thoughts from reading The Simple Path to Wealth and how I have thought about applying it's concepts to being a professional musician. I do not wish to assume that I know the financial intricacies for all musicians because I very much do not. If you read this and have certain things to add or if you object to any of my ideas based on where you live, what type of music you perform, or literally anything else, please please please say something in the comments. I will happily edit if it comes to light I wrongly assumed or made a more potent error. This blog post is more about getting the conversation started rather than me trying to say what the musical community at large should or should not do in regards to finances.
Also, another quick disclaimer that this book is not a get rich quick scheme. It is an approach to money that takes practice, patience, and a valuation of what you are willing to sacrifice right now for greater gains later in life. Unless you stumble upon a fat wad of cash, the practices detailed by in Collins, or any respectable financial plan for that matter, will not change your life overnight. However, responsible and intelligent financial actions do have the capacity to dramatically improve your quality of life over the course of 15, 30, or even 50 years.
About 2 weeks ago, I was on a plane to Los Angeles when I started reading The Simple Path to Wealth by JL Collins. The book popped up on my Kindle’s suggested read list, I said ‘eh’, and I dove in. I’m glad I did. Collins lays out a no-nonsense and easy to understand approach to growing your wealth through eliminating debt, correct saving and investing patterns, and learning to use accounts such as Roth, IRA, and 401(k), to their full advantage. I had very little practical understanding of any of these topics before reading, but Collins makes it truly easy. He even understands that people don’t like thinking about money. In his introduction he writes,
“”But Dad,” my little girl once said to me, “ I know money is important. I just don’t want to spend my life thinking about it”.
Same. I feel like a little girl all the time.
However, Collins makes a compelling argument as to why people should put more concentrated thinking into their financial lives. He consistently states the most important thing money can buy is our time and freedom, which is possible through the previously said saving and investing. I remember thinking, ‘woah. This has huge potential for musicians. Well, potential for everybody, but especially musicians’.
As musicians, we love playing music more than anything else. The phrase, “ I just want to play” is used so much it’s almost a clichè. After reading The Simple Path to Wealth, I’m convinced that with some prudent and deliberate financial action, musicians can create more of that freedom thing we cherish and desire so much. Another term Collins associates with financial freedom is F-You Money. F-You Money is having enough money to be completely free of the demands of others and able to do exactly what one wants with their life and time. Doesn’t that sound like a musician’s dream?
I also love other musicians. We work diligently on our craft, collaborate with other artists, and are generally an intelligent and thoughtful crowd. I have met more musicians with random talents, skills, or knowledge than I can count. I LOVE IT. We seek new things to play with new people and enjoy drinking a beer over it afterwards. Also, having worked on cruise ships for a few months I can say music truly is a universal language; It is a beautiful field filled with beautiful people. However, while musicians are deeply skilled in their area of study, other life skills could be as equally undeveloped. One such skill might be personal finance.
We don’t do it for the money. Sometimes even talking about it with musicians can be taboo. The pursuit of money just isn’t why we got into the field. However, that doesn’t mean we should neglect ideas and practices related to our financial well being. Contrarily, I believe that given the financial nuances of a musician’s lifestyle, well thought out personal finance should not only be explored, but practiced in full. Given enough time and careful planning, getting smart with finances can allow musicians to do more of the things we love while simultaneously preparing ourselves for greater financial commitments and security later in life.
Collin’s book installed into me 4(ish) main concepts:
Paying off and avoiding debt is essential for the accumulation of any wealth
Save more than you spend
Saving and investing is relatively simple, contrary to what the financial industry makes it out to be. The fancy jargon and numbers benefit those that write the rules.
Heavy saving and investing is worth it in the long run, even if you aren’t working with a large income.
I know what you’re thinking.
“How can I think about saving and investing when I’m too busy paying student loans, rent, instrument repairs, etc?”
"I don’t make a ton of money from gigs and my part time job doesn’t really pay that great either.”
“Why would I take time to plan out my money when I could be working on my craft?"
I hear you, and unfortunately don’t have a good answer for you. You would have to make those decisions for yourself based on what you value in the long and short term. I just think musicians need to have these
thoughts and conversations to begin with.
If you went to music school how much did you learn about personal finance? Did you take any classes that ever mentioned working in a gig economy or piecing together an income from multiple revenue streams? I enjoyed learning about 20th century serialist music, but a few courses on actually working in the industry would’ve been equally if not more so applicable.
This an area where our universities and conservatories come up painfully short. There are a few exceptions to the rule, particularly with more forward thinking schools on the coasts, but in general, graduating students aren’t prepared for the business, entrepreneurial, and financial aspects of their respective scenes. Because that information isn't part of the traditional music education, we must seek it out ourselves. There are probably specific resources for this exact thing, but I don’t yet know what or where they are. The Simple
Path to Wealth was my first foray into the world of personal finance, but I know I will keep going.
An under appreciated and little discussed aspect of a musician’s financial scenario is multiple revenue streams. Most people get paid their fixed wage or salary from their 9-5 and that is what they count on every month. Contrastingly, musicians have access to many different streams of income. Streams might include gigs (duh), teaching lessons, commissions from writing, or larger educational endeavors such as judging or clinicing. The interesting thing is that we have the power to augment these streams or maybe even create our own. As mentioned before, so many musicians have interesting talents, skills and knowledge. There might be a niche in your local scene where you could put your idiosyncrasies to use and morph them into a useful, relevant, and potentially profitable skill.
*cough* BLOGGING *cough*
I would be remiss if I did not mention the inevitable uncertainty in a musician's income. Obviously it is more difficult to clinic bands when school is out for the summer and there are less gigs to be had in the winter when it is freezing cold. Having an honest understanding of this reality can help us prepare so that we are never truly that far off from meeting our monthly financial needs. Taking from Peter to pay Paul may not be ideal, but anything is better than implosion due to lack of planning.
Another common grievance might be that musicians don’t make enough to consider saving and investing. I
disagree for 2 main reasons.
First, it is almost always possible to cut costs. Cutting costs is an automatic way to increase your income, even though most of us won’t like the process. Yes, I’m suggesting frugality. There are probably cheaper apartments and it is possible to spend less on food, eating out as much, events, etc. If your lifestyle costs all or most of your monthly income and you are considering different financial practices, this might be the place to start.
Secondly, it is within your power as a freelancer to book more of ‘whatever’ gets you paid. This might not necessarily translate to automatic income, but if you put in the time it is possible to manufacture money from one of your streams. This could potentially upset your work/life balance, but it is still an option.
I know I already said it, but this is information we must seek out ourselves. The benefits of the financial world are not automatically barred off to musicians because of what we do. A basic understand of these concepts could pay dividends far beyond the scope of our regular day to day and month to month habits. Literally.
I should also point out that Collins’ book is not an end all be all financial bible. I enjoyed an initial read through and his writing style resonated with me personally, but I will continue to seek different ideas and practices to further hone my knowledge and skills. My current financial plans and priorities have been constructed through the lens of the Collins’ ideas, yes, but that does not mean that his ideas are suitable for every musician. I only hope that after reading this post, you consider these thoughts and prune them to match your own, unique situation.
If you’re curious, my rough financial priorities go something like this.
Get out of debt.
All of my income right now is going towards paying off my student loans. If things go according to plan (lol), I will be debt free by late December or January of next year.
Identify expenses and create a budget for 2020
I plan on moving to Minneapolis in the winter of 2020. Awesome timing, right? That means I will need to account for a higher price in rent, gas, food, and entertainment. Once I have a rough number for what that will look like month to month, I will know how much I will need to...
Save 70% of income ( or as much as possible)
This one is audacious and I don’t think I will initially be able to make it happen. However, I will save as much as possible and continue to work towards that 70%. This means working towards where 30% of my income is dedicated for month to month living from #2.
Create a fun fund from the 30%
I need the fun fund. One reason I want to move to a bigger city is to have access to all the cool music, food, and art associated with a big city. This means I will move a dedicated amount of money each month for doing things I enjoy and find valuable - going to concerts I want to see, going to a nice dinner with my girlfriend, buying tickets to a baseball game, etc.
Buy my first stocks
I don’t know when exactly this will happen, but I’m aiming for the end of 2020 or beginning of 2021. Perhaps my priorities will have changed by then, but who knows.
As always, thanks for reading! Please leave comments below as I would love to hear from some of you. Until next time!