You've reached the pinnacle of your educational process, you've maybe read my previous blog about getting stuck in the field of music and how to take the necessary next steps to further your career.
The next thing you might be thinking about shortly after the whole "getting your literal act together" thing is probably "how do I make money at this?"... or "how do I purchase capital while pursuing this amazing career?"
Lets start very basic and work our way up... WARNING this is not a "Get Rich Quick" strategy and you WILL NOT have to pay me any money for this information. "Get Rich Quick" is for unicorns and dragons and other things that don't exist.
You MUST have both a SAVINGS and a CHECKING account. This is probably a no-brainer for a lot of you, but you must have legs to stand on in terms of COLLECTING MONEY. That's important right? YES. Here's where things can get fun: You can use your SAVINGS to generate MORE MONEY if you shop smart for a SAVINGS account. Lets do the math on this.
Here's the situation: you begin your career with say $500 (with at least $20,000 in student debt... which sounded like my first couple months out of school). Lets say you've been earning decent money and have been depositing a small percentage of your earnings to your SAVINGS account, monthly. Lets say 15%. As of 3/16/15, Ally Bank (my favorite bank) has an interest savings account with a .99% APR.
SO, you made $2000 this month! Not bad at all!
Lets say you saved 15% ($300) a month over the span of 12 months (1 year). Easily, you earned $24,000 over the span of the year total, bringing your SAVINGS account to $4,100 (if we remember the $500 we started out with). Now, using BankRate.com's Simple Savings Calculator, lets add the .99 interest rate, compounded annually. The new total is $4,121.26. You earned $21.26 this year without doing anything other than placing your money in THAT bank.
You might be skeptical at this point saying "$21.26 barely buys gas to one gig! How will that make a difference?" My answer: Over time. Here is the same formula calculated over the next couple years.
Yearly Totals: Savings Account
You might be saying now "well... that's kind of a lot of money. Remember that your CHECKING account is for immediate money and paying the bills. SAVINGS will come in handy when you buy large things like a HOUSE or a CAR... or a BOAT. I would suggest not to touch savings over time. Keep putting money in and watch it grow.
If you're 18 and doing this, by 38 you'll have amassed $80,158.89 (assuming you're still making only $24,000 a year by then)... which is KILLER by the age of 38.
Feel free to go online to BankRate and use their information to figure out what's best for you and your money.
More Music Money Installments in the near future.
-Adam D Wolfe