Signing your first record deal can be extremely exciting. You are likely feeling accomplished and proud of yourself, rightfully so. All of your hard work has finally paid off and attracted the eye of a music label that wants to invest in you. With your new recording contract comes an advance, a lump sum of money paid to artists upfront by record labels.
Many musicians use these f1unds to work on new music. Others go ball out in the Gucci store, and whatever jewelry store is nearby. While it is ultimately your choice of what you want to use the money for, you must be smart. All record labels issue advances with the expectation that they will recoup that money plus some.
Today, we’ll give you a few things to consider once you receive your advance money and how to spend it wisely.
Let the label pay for as much as possible
Some record labels will continue paying for features, studio time, music videos, etc., even after giving up an advance. Some labels expect you to use your advance to cover this. Therefore, you must always know what your contract says and how much the label is obligated to invest in your career.
If the label is still willing to pick up the tab even after giving you an upfront payment, then you’re in a great position. This gives you the opportunity to use your money at your leisure.
Always keep in mind that life will not always go as planned. You may be dropped from the record label. You may have an influx of unexpected expenses. Saving some of your advance money can ensure that you are taken care of in the event of a crisis.
Don’t go crazy on materialistic goods. That will come with time. If your advance is $50,000, it is not smart to purchase a $30,000 necklace.
Always remember that Uncle Sam will collect on any funds you make. Therefore, make sure you have a good understanding of taxes. If this is not your forte, reach out to a tax expert to help you understand how much you will be paying and when.
Your label advance can change your life, but it can also be spent rather quickly if you are not careful. Always be smart with your spending, and don’t be so eager to make large purchases that won’t add any value to your career. Our Music Funding Program can teach you more about money management and funding. Join today!