When you think about pursuing a career in dance, you may dream about performing in a famous opera house or lighting up Broadway—but unfortunately, a dancer’s life isn’t nearly as glam when it comes to the size of your paycheck. Learning to budget and save will help you make the most of your hard-earned dollars. Follow these simple steps to craft a budget that will keep you on track.
Start a paper trail. Gather all your bills, pay stubs and bank statements from the last two months.
Make a list. Jot down all the dates you’ll be paid for the next six months, as well as due dates and amounts due for all of your bills, including rent, car payments, student loan payments and insurance. If your income isn’t fixed and you work from job to job, estimate how much you’ll receive and when for each gig. Since you may not know your total monthly income six months in advance, be very conservative with your estimates.
Plan for less predictable expenditures. Estimate your monthly variable expenses: food, transportation, gas, credit-card bills, electricity, cell phone and other expenses that change from month to month. If you’re unsure about this amount, use your bank and credit card statements from the last six months to add them up, then divide by six for a monthly average.
Solve the puzzle. Determine when you need to pay each bill, so that you’re never late or stuck without enough cash to cover variable expenses. Earmarking money for bills will make you less likely to spend extra earnings. If you make more than planned in a given month, it may be tempting to buy that new dance bag you’ve been eyeing. But it’s wiser to avoid splurges until you have enough money in your savings account to cover three months of expenses.
Stick to an organizational system. Arrange your budget with software programs like Quicken or QuickBooks, which are available at major computer retailers starting at about $30. Microsoft Excel will also help you do the math.
Find an easy side job. If your income is too unpredictable to manage, consider temping or cater-waitering. These flexible jobs will afford you time for class, auditions, rehearsals and performances, while offering the stability of having a better idea how much you’ll receive each month. (For resources, see “Side Jobs” in The Official 2006/2007 Dance Spirit NYC Guide.)
You’re never too young to start building good credit.
Most credit counselors recommend that your ratio of fixed expenses to income be 25 percent. For example, if your monthly income is $1,000, your fixed expenses shouldn’t be more than $250. The remaining $750 can be used for variable expenses like groceries, dance classes and energy bills.
Credit bureaus will examine your debt-to-income ratio when determining your credit score, which affects how much it will cost you to borrow money. Believe it or not, it’s important to start thinking about this at a young age, since the decisions you make now could make it difficult for you to get a credit card or purchase a car later on. If the ratio of your debts to your income gets too high, creditors will worry that you might have a hard time paying your bills, so they might not lend you money.
Terms to Know
Fixed Expenses: Expenses that are the same every month.
Budget: An itemized plan of actual and estimated expenses and the money that will be used to pay them.
Credit Score: A number determined by the three major credit bureaus that represents how responsible a borrower you are. The higher the number, the better. If you pay your bills late, or open too many credit card accounts, the number will go down and it will be much harder for you to do things like borrow additional money, move into an apartment or get loans for a house, condo or car.
Debt-to-Income Ratio: The percentage of your debts to your income, or, the percentage of your income that has to be used to cover the bills you owe. The higher the number, the less money you have for unexpected expenses.
Variable Expenses: Expenses that vary month to month. They may be around a certain amount each month, but can go up or down depending on outside factors.