For many, receiving a $1 million is a holy grail of sorts. In the music industry, however, that doesn’t go very far. Allow me to show you how, for an artist, seven-figure payday actually works out to be far less:
+$1,000,000 in income:
-$150,000 for talent managers (standard 15% fee)
-$100,000 for agents (standard 10% fee)
-$50,000 for business managers (standard 5% fee)
-$50,000 for entertainment attorneys (standard 5% fee)
-$200,000 for various production expenses (20% fee)
Once you total these basic deductions, you’re left with $450,000. Subtract taxes (running anywhere from 30-40%) from this and you quickly see the further erosion of that initial $1 million, which now nets you about $50-150,000. That’s still a decent sum of money, but nowhere near the amount we started with; virtually $850,000 evaporates off the top.
Over three-quarters of that $1 million is gone before we purchase the cars and homes for moms, the clothes for friends, our own personal items (luxury and otherwise) and even the “10%” tithe to the church. This example shows why it is so important to watch our spending and make every dollar count, no matter how much we’re earning. The question for many is how? Well, here are a few of my personal suggestions:
- Be smart and live for yourself and your family. Don’t to live to show-off and live up to the expectations of what an artist is “supposed” to be. I’m a rapper, actor, and producer, and I like to lead a nice lifestyle, help my family, and enjoy myself, but you’re not going to see me buying a new car every time I have a hit single or movie. People are counting on me to stay on top now that I’ve been blessed enough to make it, and I’m never going to let them, or myself down.
- Hire a top business manager. You need someone that makes sure every cent you earn actually finds its way into your account; and that every one of those cents is accounted for correctly. I know that doing things properly now—with the help of my business manager Adam Yorkshire—is what is going to ensure my financial independence for the rest of my life.
- Educate yourself on your financial matters. Just as important as having a good business manager, is having the knowledge to stay on top of your financial matters. No one should care more about or know more about your finances than you.
- Have a financial mentor. There’s nothing more empowering than being around those who are more experienced than you. Toward this goal, having a mentor—someone detached from your financial success—is crucial in order to “watch those who watch your money.”
In the end, I know who I am. I thank God for the ability to make an amazing living doing what I love, and I know myself enough to know that I need not fall into the common cycle of living beyond my means. Too many young artists—and people of color in general—get their shot, and feel they need to conform to the lifestyles they see portrayed in music videos and on TV. They spend their money on buying an image, instead of hiring the right people, and stashing some away for a rainy day. When you really think about, someone in the entertainment industry is really no different than anyone else working a regular 9-to-5 or running their own business aside from the numbers being be a bit bigger. It’s important for any business owner, or worker, to make smart decisions and spend their money in the right places and on the right people.
If you’re a fan of hip-hop be sure to check out the new coffee table book, Hip Hop, A Cultural Odyssey. To purchase your copy of Hip Hop, A Cultural Odyssey click here and every 10 books sold will result in a copy being donated to a HBCU library.