When I received an invitation to address artists on money management at UJ on Saturday, 3 November, I accepted and then took a bit of time reading up on HHP (May his soul rest in peace) and following the news around his sad, untimely passing on. I listened to Chico Twala on eNCA as he said “… the industry contributed to his illness….” I wondered what it is about the industry that could have contributed. So when I started my presentation, I pointed out that I was aware that the industry was perhaps not a nurturing place and I recalled quite a few, young and talented artists that had passed untimely.
By the time I left UJ, I had a very good idea of some of the challenges that artists find themselves in. Actress Zimkhitha Nyoka put it very well when she said as artists, they are freelancers so they cannot afford to get into debt and they need to do everything cash. But as we all know, it is difficult for most of us to buy cars and homes cash.
Tips to help artists manage their unstable incomes;
- Make use of tax-free investments, and ensure that a portion of the investments are offshore to get healthy returns
- Draw a monthly budget, monitor your actual expenses against the budget & ensure you live within your means. Don’t allow the fact that you are famous to make you spend money to please anyone
- It is not easy to qualify for home loans and car loans due to the unstable nature of your income so to improve your credit worthiness, open an investment account where you can invest some of the lumpsum cash you receive & then draw a fixed, monthly income from the account. This should help to make your lumpsums last longer as well. You also need to be conservative with your home and car purchases to minimise the risk of default & ensure you get a good rate of interest by using a mortgage originator
- Have a flexible RA & put a small amount such as R400 monthly and put lumpsums when you can so you can get tax deductions & RAs are the best especially for people with unstable incomes because creditors cannot attach them
- While endowment policies charge tax at 30%, they are useful because they have an insolvency protection
- To avoid the situation of living from hand to mouth & being buried by the fans, ensure you manage your budget well and you have risk cover
The above is also relevant for all other people with unstable incomes e.g. sports people who have a relatively short career, enterpreneurs like myself who don’t have a fixed incomes, etc…
There are a lot of challenges in the industry and hopefully, the Department of Arts & Culture will intervene before we lose other young artists untimely.