If there’s one thing that a would-be author must accept, first of all, it’s that becoming one requires you to be financially prepared.
The term “financially prepared” is more complicated than most people realize. It doesn’t just mean having enough savings to cover your basic living expenses while you write. It also encompasses understanding the ebb and flow of income in this highly competitive industry, managing debts efficiently, investing in self-promotion and marketing, and budgeting for potential out-of-pocket costs, i.e., editing, cover design, and book tours.
Being financially prepared means anticipating lean months, diversifying income streams, and planning strategically for long-term sustainability. That being said, here are some key steps to becoming financially ready to take on the life of a full-time author:
Step 1 – Know your specific needs (we all have different ones, after all).
Begin by calculating your monthly living expenses. It must include rent or mortgage payments, utilities, groceries, transportation, insurance, and other recurring costs. Factor in non-essential expenses such as dining out, memberships, and entertainment. A clear picture of your total monthly outgoings is essential to determining the minimum amount you need to earn.
Next, evaluate your current debts and financial obligations. Are there outstanding credit card balances, student loans, or personal loans to manage? Knowing how much you should allocate monthly towards these payments will help prevent surprises. Don’t forget to include any health-related expenses or savings for retirement when calculating your baseline financial requirements.
Once your basic needs are covered, consider the costs associated with your writing career. It usually includes investing in high-quality editing, cover design, marketing, or attending conferences and workshops. These expenses vary widely, so getting quotes or speaking with other authors to understand potential costs can be helpful.
Step 2 – Prepare for possible income fluctuations.
Writing is often a feast-or-famine profession, with periods of significant earnings interspersed with leaner times. To manage this, establish an emergency fund so you can cover at least four to six months of living expenses. It’ll stabilize during slower months and allow you to focus on your writing without constant financial stress. If possible, try to have multiple income streams, i.e., freelance writing or teaching, to supplement your author’s income.
Freelance writing makes perfect sense as an alternative income source as it allows you to master your writing skills continuously. You get exposed to various writing assignments, whether articles, blog posts, or content creation for businesses, where you gain invaluable experience and boost your versatility as a writer. It’ll translate to improvement in your creative writing craft as well.
Freelance writing likewise broadens your professional network. You collaborate with editors, content managers, and other writers to establish connections that could open doors to further opportunities.
The point is to have multiple income streams to avoid relying solely on book sales. When there are inevitable times of low or no book sales, you’ll still have money coming in from other sources.
Step 3 – Embrace the business side of being an author.
Being a full-time writer also means being a small business owner. As such, you must understand the financial aspects of managing your career. Track your expenses and income for tax purposes; open a split bank account for your writing earnings; consider buying insurance or setting up a retirement plan. Learning about book royalties and understanding contract terms is essential to maximizing profits and avoiding potential scams.
- Tracking Expenses and Income for Tax Purposes – It’s a good idea to keep track of all expenses related to your writing career, including research materials, workshop fees, and travel costs. You may be able to deduct these expenses during tax season.
- Set Up a Bank Account – Having a separate bank account for your writing earnings helps you budget more accurately and makes it more convenient to track income as well as expenses related to your author business.
- Insurance and Retirement Planning – As a self-employed writer, you must consider investing in insurance plans such as health insurance or disability insurance. Likewise, setting up a retirement plan can help secure your financial future.
- Book Royalties and Contract Terms – Before signing any publishing contract, ensure you understand the terms and conditions, especially regarding royalties. Keep track of your book sales and know how much you earn from each sale to ensure you receive fair compensation.
Step 4 – Be strategic in your investments.
Being a full-time author means you decide to invest in yourself. In so doing, you will have to be clever in your investments related to your profession. It’s not just about spending money but making informed decisions to grow your career toward success.
Investing in professional editing makes sense. A well-edited manuscript improves the readability and quality of your work. Hiring a professional editor is certainly pricey, but it’s an investment that pays off in book sales and reader satisfaction.
Put a premium on design and branding. A compelling book cover and a well-designed author website make a significant difference in attracting readers. Many prospective readers judge a book by its cover, and a professionally designed cover sets it apart from countless others. Similarly, a professional author website is a hub for branding, marketing, and sales efforts.
Marketing and promotion are other noteworthy areas in which to invest wisely. Allocate funds for effective marketing strategies, such as social media advertising, email marketing, and promotional giveaways. Attending book fairs and literary events is equally valuable for networking and exposure.
Self-education is another area where investment is essential. Enroll in writing workshops, online courses, or webinars to continually refine your craft. Learn about the latest trends in publishing, marketing tactics, and industry standards. This knowledge will help you adapt and remain competitive.
Being strategic in your investments means evaluating the potential return on each investment and making choices that align with your long-term career goals. Every penny spent should contribute towards building a sustainable and successful writing career.
Step 5 – Rid yourself of debt.
Debt is burdensome and limiting, particularly for full-time writers who may experience fluctuating income levels. When you eliminate debt, you reduce financial pressure and have more flexibility. This freedom allows you to invest more in your writing career and personal growth without worrying about meeting debt obligations.
Debt often comes with high interest rates that quickly accumulate, leading to significantly higher overall costs. For instance, credit card debt or high-interest loans will trap you in a cycle where you pay more interest than you initially borrowed. Redirecting the money spent on interest payments toward savings or investments will benefit your financial health.
Being debt-free increases your disposable income, giving you more resources to allocate toward advancing your writing career. Having extra funds readily available without the looming threat of debt repayments can be enormously advantageous.
Also, managing debt isn’t just about finances but also mental well-being. The stress associated with high debt levels will impact your productivity and creativity. Writers, whose work heavily depends on mental clarity and focus, will likely find it challenging to produce their best work under constant financial stress. Freeing yourself from debt alleviates this pressure, allowing a more favourable atmosphere for creativity and productivity.
Consistency Bears Fruit
Regularly tracking income and expenses, continuously investing in self-education, and steadily promoting your work all contribute to building a sustainable career. Without consistency, well-planned strategies will ultimately falter, leading to missed opportunities and financial instability. Maintaining a steady approach and staying committed to your financial goals create a solid foundation for long-term success. So, if you’re hell-bent on achieving a successful writing career, be strategic and consistent in managing your finances.
