Thoughts About A Financial Future...

Financial literacy is so important in today’s world because everything is changing at a faster pace. People want to buy the newest technologies or bigger, fancier cars. Yet, not everybody can maintain the level of income needed to purchase these items. Living paycheck to paycheck is the norm, unless you’re an entrepreneur.

               Entrepreneurship seems like a difficult idea to grasp, that only the intelligent and elite can handle. Really, it’s not. You just need a solid idea that is so unique it catches everyone’s eye. Then the money will start coming in. Seems easy, but finding that niche, that missing piece in a specific industry can be tough. It may be nowhere near where your passion’s lie or what you studied in school. The idea needs to be well thought out in order to be successful, emotions aside.

               I never thought I’d be interested in entrepreneurship. I felt like I was a financial dummy. Learning financial literacy was the first step in opening up my eyes to the world of investments and small business. I know I want to make my own business, but I’m still in the planning stages, striving to create a unique enough idea that it’s a worthwhile investment and will create cash.

               The other issue is money. I, like most masters’ students, am broke. It’s hard to create a business with no money. So funds need to be built up. The idea of investing money is the stock market also seemed like a crazy idea that was out of my league, but is an attainable goal. Think about it this way, you have the chance to get paid, just by buying into a company, and watch your money grow. Both my professor and my financial advisor at Charles Schwab have the same advice, buy low, sell high. And hang in there when the market drops because it will always go back up.

               Another way to increase cash is to buy assets. I never knew what an asset was until taking my Entertainment Business Finance class and reading Rich Dad, Poor Dad by Robert Kiyosaki. Asset equals money in my pocket. Who wouldn’t want that? Buy I need to buy something that will do that for me, like stocks, or create some type of business. My financial advisor believes that in the future, people my age will need at least $3 million to live day to day. A person in her 60’s can’t even live off of $50 thousand today.

               All of these financial realities are something to consider. Do you want to live paycheck to paycheck, or do you want to take charge of your financials? I want to take charge and feel I can because I became financially literate.

As I was reading through my RSS Feeds today, I found an article the caught my interest: Indie bosses and experts react to Citigroup’s EMI takeover. This takeover occurred Tuesday, February 1. I researched an article by Billboard.biz to gain background information on the buyout. Basically, Guy Hand, who owns Terra Firma private equity group, bought EMI in 2007 for 4 billion pounds. The debt due to Citigroup (3.4 billion pounds), could not be provided by EMI. So, Citigroup gave them an alternative, “debt-for-equity swap.” This deal decreased the debt by 65%, bringing it down to 1.2 billion pounds with approximately 300 million pounds available in cash. (Billboard Staff, 2011).

So now a bank owns a record label, what’s going to happen? EMI has signed artists such as Lily Allen, Beastie Boys, Lady Antebellum, Katy Perry, Snoop Dogg, and Thirty Seconds To Mars (EMI, 2011). There has been an array of reactions from influential people in the music industry. Alan McGee, former owner of Creation Records commented that, “The problem with Guy Hands buying EMI was that he bought it in 2007, at the height of the market. It’s like buying a house at the wrong time, obviously you’re going to lose money when the market dips” (NME, 2011). Peter Quicke, CEO of Ninja Tune label, felt that “EMI handled the last 10 years of the recession badly” (NME, 2011).

Another speculation, Ben Cardew the news editor of MusicWeek noted, was that Citigroup might break up the company (NME, 2011). Yet nobody can tell for sure what will happen to EMI. A question that came to me, Bob Lefsetz a music industry analyst, commented on: what would happen to the artists? Lefsetz believes that “new acts will be stranded,” but artists who are now involved in the industry will be fine. “If you’re developing, you’re screwed,” Lefsetz said (NME, 2011). Only time can tell what will happen to EMI and the artists it supports.

Resources:

http://www.nme.com/news/various-artists/54801

http://www.billboard.biz/bbbiz/industry/record-labels/citigroup-takes-over-emi-1005017112.story

http://www.emimusic.com/about/history/