For a lot of writers, including me, the most important goal is to write full time.
That may mean earning the bulk of your income through writing so you don't need to do anything else or earning income in several ways but devoting most of your working hours to writing.
Either way, there are some stumbling blocks almost every full-time writer encounters relating to emotional, financial, and physical well-being.
Answering the questions below before you shift to full-time writing can help ensure happiness in your writing life:
- How much do you need to earn?
- Where will you get health insurance?
- How will you maintain your emotional and mental health?
- Where will you write?
- How will you care for your body?
- What habits will ensure you achieve your writing goals?
Today I'll talk about income.
Ups, Downs, And How Much Money You Need
Income from writing is generally more up and down than a regular job.
Even if you've been self-employed in another field for years, as I was, relying more on your writing income means shifts in the publishing world–from royalty rates to Amazon algorithms–will have a greater effect on your bottom line.
Knowing from the start how much you realistically need to earn and how you'll earn it can help you weather the storms.
Before we go ahead, a quick disclaimer:
I am not a financial adviser, and this article is not meant to advise you about your personal circumstances. The information below is based on my own experience and information I gathered for my personal situation. You should turn to a personal financial adviser for specific advice tailored to your life.
Creating A Spending Plan
I like the idea of a spending plan rather than a budget.
A budget sounds limiting and makes me focus on what I “can't” spend. A spending plan sounds more realistic and positive. You need to spend money to live, and it's a plan for doing that.
There are tons of free worksheets and calculators online to help you figure out what you spend. I like Vanguard's Retirement Expenses Worksheet. While you're not retiring, you are making a shift (or hoping to), and many of the money issues are similar.
You can also find books in the library, bookstores, or online about budgeting. (I like Suze Orman's books, including the 9 Steps to Financial Freedom.)
Here's what helped me most when creating a monthly spending plan:
- Track what you actually spend for 2-4 weeks.
Not what you hope to spend, but what you truly spent, including expenses you don't expect to have every week like birthday gifts or car repairs.
- If you use credit cards, your credit card company may offer you a list of what you spent the year before by category.
If you use an accounting program, you can run your own list. Both are good to compare to what you track and fill in gaps.
- In your plan for the future, remember to include unexpected one-time expenses and average them out per month.
Home or car repairs, doctor or emergency room visits, family member emergencies, or traveling for (and/or standing up in) a friend's wedding are all expenses you don't expect to have every month, but you'll almost certainly have one or more of them every year. Ignoring them while planning will leave you constantly short of funds.
- Leave funds for non-necessary things you enjoy.
Much as you love writing, most of us need more than sitting in a room writing all day to feel happy. You may not mind spending a little less on some things, but it'll be next to impossible to stick to a spending plan that cuts back on everything you do for fun.
- Think about your future.
Depending where you are in life, you also need to consider planning for retirement.
Yes, you can hope, as I do, that your books will keep making you money as long as you live. But it's possible they won't.
Continuing–or starting–to put away money for retirement, even if it's in small amounts, matters. If it's something you're not doing now anyway and you'd rather be writing than working at your current job, you may want to make the switch regardless. That's a personal decision.
But be sure you make a choice rather than let the issue go completely. Think about when and how you'll move toward a place where you can put something aside for your future.
Consider what you may need or want to pay for someone else.
If you have dependents, you'll need to consider your spending relating to them. If you don't, there may still be amounts you give to others. Do you help pay expenses for an aging parent? Donate to charity? Send your nieces holiday gifts? Take friends out for their birthdays?
Remember to include these things in your spending plan. If you plan to cut back, imagine how you'll feel about that and be realistic about whether you'll do it or not.
Tracking The Money
Knowing where your money comes from is essential to planning your full-time writing life. Let's call it your Income Plan.
Make a list, chart, or spreadsheet of your current sources of income, whether you have one or many. Include all amounts high and low.
If you have a savings account that earned $10 last year or you get $2 a month from listing your ebooks on Kobo, list it. You may be able to increase those amounts in the future, so you want to have them in mind.
Remember to subtract business expenses from your business income.
If last month you earned $1,000 in royalties on three books, but you spent $500 total on advertising, paying your email list provider, and a new cover, you only have $500 of those royalties that can go toward expenses. List $500, not $1,000.
Taxes will further reduce what you keep in your pocket.
If you didn't include income taxes in your spending plan, make a guess based on the last few years how much of your income you'll need to pay in taxes and subtract it.
If you're leaving a job to write full-time, leave the income from that job off your Income Plan.
Now let's look at the future.
Planning For The Future
Unless you are independently wealthy, are already earning a large income writing, or have a partner who earns enough to cover expenses and then some, the income from you Income Plan may very well not yet cover your the expenses in your Spending Plan.
That means switching to writing full time will require educated guesses at how much you'll increase your writing income or other sources of income once you have more time to write. While all of us hope that our writing income will increase the more time we devote, there are a lots of market factors out of our control that can affect that or make it take more time than expected, so don't assume that if you double your writing time in the first year you'll also double your income.
But first, look at your best case scenario.
Consider how much more you are likely to write and what you realistically hope to earn. It'll inspire you and help you move forward.
Second, consider the worst case scenario and decide how you'll deal with it. For writers, that usually means you quit your job and your writing income either doesn't increase or it goes down.
If you have a plan for what you'll do if that happens, it will ease your mind and help you focus on writing rather than panicking over money.
Some questions to ask yourself when creating that plan:
- Are there additional or different types of writing you could do that might earn you more money?
- How quickly can you get a new (non-writing) job if you need to?
- Is there freelance work you can do that will help pay your bills?
- Do you have savings that you've set aside to use while you build your writing career and will you feel comfortable seeing your account balance go down if you spend it?
- Can you decrease your spending in specific ways and still be happy? (For instance, could you downsize your home, find cheaper transportation, or grocery shop at less expensive stores?)
The answers to these questions will be different for everyone, and you may think of alternative ways to cover your expenses if your writing income doesn't meet your expectations. But whatever your personal questions and answers are, thinking about them will help you decide when and whether to switch to writing full time.
Until next Friday, when I'll talk about a key issue for any self-employed person: health insurance—