Are You Making One of These 6 Common Financial Mistakes?
Many dancers would rather do just about anything than spend time on their finances. They procrastinate when it comes to recording their income and expenses, and put off investing for another day. As artists, we would rather be in the studio. But looking after your financial health can actually lead to more artistic freedom.
Here are six common traps to avoid:
1.Relying on credit cards
One of the worst traps an artist can fall into is living off of credit cards. Some performers do this between shows to make ends meet. But credit card and interest charges build quickly.
2.Shunning non-dance work
Adding part time work can make the difference between having extra money, and being unable to pay your bills. There is no shame in finding ways to support your art. When I was a dancer, I sold produce at a local farm each morning. In the afternoons and evenings, I taught ballet and yoga.
“A lack of career security is inherent to the path of an artist,” says Miata Edoga, national financial wellness consultant for The Actors Fund. “Many performers believe that if they do anything outside of their creative career, they are less of an artist. Trust that you are a full person with many, many gifts. You can explore these talents to generate additional streams of income. Then, if the outside world isn’t seeking the part of you that’s a dancer, you’ll have options.”
3.Not writing a budget
Suze Orman once reported on “Oprah” that most people underestimate the amount they spend by about $500 per month, regardless of how much money they make. Take the time to go through your past expenses to get clarity on how you’ve been spending. Then try a free online program budgeting program like Dave Ramsey’s Every Dollar where you can plan for all your expense categories. Edoga points out that many dancers often forget the big, but sporadic costs, like car repair.
4.Not saving enough
As a fledging professional dancer, I was advised by a Broadway dance captain to always save 10 percent of what I earned, including unemployment. If you don’t earn enough to save from each check, bank your windfalls, like tax refunds, inheritances and gifts. If you aren’t financially prepared, every trip to the dentist or unexpected vet bill will put you in the red. This takes focus away from your dance career.
If you are fortunate enough to land a high paying job, invest that money. “The Simple Path to Wealth” by J L Collins, provides a clear and easily executed roadmap to successful long-term investing.
5.Never buying a place to live
In New York and Los Angeles, most dancers rent rather than own property due to the extremely high cost of real estate. However, what seems like a terrific deal can later become a nightmare as your rent continues to increase.
If you’d like to purchase a home, but prices in your current market are too high, Edoga suggests considering outlying markets where you might later retire. Finding a modest, rentable fixer-upper can pay off handsomely when you’re older. Keep an eye out for things like access to public transportation, inexpensive grocery stores, and a living space that is energy efficient.
6.Not planning for retirement
According to Dave Ramsey, planning for retirement is what makes the difference between being happy or miserable. Even while you pursue your performing career, you need to set goals for the last part of your life. Write down how much it will cost you to live when you are a senior, and make a plan for how to make it happen. Little changes, done over time, will make life comfortable in your later years.