What Taylor Swift Can Teach Us About Personal Finance

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By Shelley Murasko

 

The U.S. economy may have just been saved by a 33-year-old pop star from small-town Pennsylvania. Don’t believe it? Check out some of these recent headlines about music icon Taylor Swift:

 

·         “The Federal Reserve Says Taylor Swift’s Eras Tour Boosted the Economy” (CBS News)

·         “Taylor Swift Is the Economic Stimulus Package” (Wall Street Journal)

·         “Taylor Swift, Beyoncé Juice Third Quarter GDP” (Fox Business)

 

The 11-time Grammy winner has taken the world by storm, proven by the fact that her net worth has eclipsed the billion-dollar mark. Her recent global tour has raked in $780 million, which provided a much needed boost to the U.S. economy over this past summer. In fact, Bloomberg estimates her tour has added $4.6 billion to the U.S. GDP once you consider other Eras Tour-related revenue like hotels, cars, flights, restaurants, and other beneficiaries of the tour travel.

 

Recently named “Time Person of the Year,” Swift has crossed over genres and countless style choices while shaping her place as a music icon. Whether or not you’re a fan of the popular entertainer, there’s much to learn from her success.

 

Start Your Personal Finance Education at a Young Age

 

Given her ability to sing, play multiple instruments, and compose music, you might assume that Swift grew up in a musical household. Interestingly, both of her parents have ties to the financial industry. Her father is a financial advisor for Merrill Lynch and her mother was formerly a mutual fund marketing executive.

 

Perhaps this is why they carefully chose a name for her with a business career in mind. Besides having a natural preference for the name Taylor, Swift’s mom specifically chose that name so her daughter might be less disadvantaged by gender.

 

In a 2011 YouTube® interview found at this link: YouTube Presents Taylor Swift, Swift explained that her business sense developed at a young age. At age 8, her career goals differed vastly from her friends who wanted to be astronauts and ballerinas. Her dream? She wanted to be a financial advisor like her dad.5

 

Fast forward to today, and Swift says that she continues to follow her father’s financial advice: “Save your money.”5

 

Be Creative with Your Business Dealings

 

Swift made her fortune from several business-savvy decisions. One of these was re-recording and releasing old albums after the master rights were sold by her original record label, Big Machine Records. This allowed her to regain control of her work while reducing the value of the original albums.

 

It’s common for artists to sell their music rights to a big music label. Those who go down this path, however, are forever limited by the music label’s decisions. Fortunately for Swift, she found a creative way around her past legal agreements.

 

As soon as her career-limiting 2005 deal with Big Machine Records expired, she switched labels to Universal’s Republic Records. Big Machine owns the original recordings, or masters, of her first six albums, as is typical with many recording deals. However, nothing was stopping Swift from re-recording her first songs, except for the risk that her fans might not be interested in downloading the old music.

 

Fortunately for Swift, she received an overwhelming show of support from fans. Fearless (Taylor's Version), Swift's first re-released album, receives an estimated $758,430 in royalties each month, according to recent Spotify data. Since the 2008 remake was re-released in April 2021, it's received 2,559,699,855 streams, adding up to an estimated $20,477,599 in royalties.6

 

Cut out the Middlemen

 

Swift wisely found a way to re-package her record-breaking Eras concert tour by making a movie out of it through a direct partnership with AMC Entertainment. For those kids who couldn’t make it to the actual concerts, they could catch the excitement through a local theater.

 

Rather than going with the traditional model of paying a major studio to distribute the film, Swift partnered directly with AMC Entertainment. This enabled her to take home 57% of sales.2 While production of the film cost her $15 million, it grossed well over $100 million thanks to a release during the barren fall movie season.

 

Power of a Tribe

 

Swift was one of the first musicians to dig deep into the use of social media to build a brand and fanbase. Her strategic use of Instagram, Twitter, and Tumblr in the 2000s allowed her to communicate one-on-one with her fans.

 

During her 1989 Era Tour, Swift started hosting groups of “Swifties” at her many houses around the globe. There, they got to interact with her as if they were close friends.

 

What really seals the deal with her fans is how genuinely Swift approaches these relationships. She knows that her success lives and dies by the Swifties, and she seems truly grateful for their support.

She has even helped some of her fans financially by donating money to cover their academic loans, medical bills, rent, and other expenses.

 

The rest is history. Over half of U.S. adults identify as Taylor Swift fans, and about half of the fans identify as Swifties.

 

Be Diversified

 

It’s no secret that Swift makes a very comfortable living through her music. But that’s not her only source of income. She also has a stake in her own merchandise, concerts, movies, real estate (valued at $150 million), and other businesses.

 

For example, Swift’s first major purchase of a three-bedroom penthouse near Nashville, Tennessee’s historic Music Row district followed the success of her first country album Fearless at age 19. At the time, her Nashville condo was worth $1.99 million. Today, local real estate agents place her Nashville holding between $4 and $6 million. Her current real estate portfolio also includes property in New York City, Beverly Hills, and Watch Hill, Rhode Island.

 

According to an article in Women’s Health3, Swift has branched out to several business ventures ­— from holiday ornaments to cruise liners. Ticket prices for her future cruise expedition, which runs through Marvelous Mouse Travels, averages between $1,500 to $2,000 per attendee. In fact, the middle tier ticket priced at $1,851 is already sold out.

 

A Giving Spirit

 

Swift’s purchase habits prove that she knows how to spend money, but she also knows how to give back.

 

When hundreds of Swifties camped out overnight in August 2019 to catch the "You Need to Calm Down" singer's Good Morning America performance, Swift made sure none of them went hungry. She ordered 30 pizzas to be delivered to the line of fans outside New York City's Central Park, handed out by members of her team — including her dad!4

 

Recently, Swift made sure her staff members were greatly rewarded for their work on the 2023 Eras Tour. The superstar distributed more than $50 million of her own money in bonuses to hundreds of support staff for her record-breaking tour along with handwritten notes. The trucking tour staff was most shocked when each trucker went home from an employee meeting with a $100,000 bonus check.

 

Swift has also pledged funds to local food banks, relief organizations, cancer patients, and survivors of sexual assault.

 

Not only does her generosity extend across charities and employees, but she also receives a hefty tax deduction for her efforts.  

 

Avoid “Too Good to Be True” Investments

 

Reportedly, Taylor Swift was asked to participate in the FTX cryptocurrency exchange swindle that took millions from several celebrities, including Tom Brady and Shaquille O’Neill.

 

She avoided involvement in this sham by asking one simple question: “Can you assure me that these assets are registered securities?”

 

Swift’s question about unregistered securities was remarkably prescient, given that we’re now seeing aggressive regulatory crackdowns on the various crypto exchanges. 

 

You don’t have to be completely up-to-speed on the risk of every single type of investment. In Swift’s case, however, asking challenging and critical questions probably led her and her team in the right direction to avoid this catastrophe.

 

Don’t Be Afraid to Be the Breadwinner

 

Of course, none of us know exactly where Swift’s relationship with Kansas City Chiefs running back Travis Kelce is headed. If they continue along their current path, it would not be surprising to find the two in a relationship where Swift is the breadwinner with her current net worth set at $1.1 billion while the football star has accrued $30 million.

 

Swift writes many song lyrics about love and relationships, but making sure she doesn’t outearn her significant other is clearly not one of them.

 

While not everyone loves Swift’s music, there’s a lot we can learn from her financial practices. In addition, her Eras Tour is a demonstration of the huge consumer spending power that still exists in this high interest rate economy. If you’re a fan of Swift’s music, you might also be thrilled at the idea of such a large fanbase coming together to financially support a cause they strongly believe in.

 

 

1. Taylor, Candace. (March 16, 2023). “Taylor Swift’s Real Estate Empire Is Worth More Than $150 Million.” Wall Street Journal. Accessed 12/9/2023.

2. Louis, Serah. (Nov. 26, 2023). "Taylor Swift is being called a 'great economist' as she embraces billionaire status with her smash Eras tour — here are 3 big lessons you can learn from her ‘masterful’ money moves.” Yahoo Finance. Accessed 12/9/2023.

3. Evans, Olivia. (Nov. 17, 2023). “What Is Taylor Swift’s Net Worth In 2023? Eras Tour, Film, Merch.” Women’s Health. Accessed 12/9/2023.

4. Dodd, Sophie. (Nov. 15, 2023). “All About Taylor Swift's Parents, Scott and Andrea Swift.” People. Accessed on 12/9/2023.

5. Skinner, Liz. (Sep. 11, 2011). “Swift's dad a broker." Investment News. Accessed 12/9/2023.

6. Arger, Alex. (Aug. 17, 2023). “This is how much money Taylor Swift makes from her re-recorded albums.” KSBY Channel 6. Accessed 12/11/2023.