WRITING

The 7 Biggest Money Mistakes Writers Make

BY HANNAH GUY • May 20, 2021

The 7 Biggest Money Mistakes Writers Make

There are some wonderful perks that come with being a writer. Freedom to pursue your passions, flexibility, creativity, working from home, and writing the kinds of books that (hopefully) make readers want to crawl inside those worlds and live there forever.

But along with the freedom and creativity come some less happy facets of our world. For some, instability. For others, poverty. More often than not, there’s a major adjustment of expectations. That life we imagined when we were young—filled with launch parties, book signings, fans, and financial security—is not always accessible to everyone.

Often writers and authors don’t always have the information they need to manage their money. Some authors are financial whizzes. Still others have written books on it. But the truth is that this is one profession where money matters can determine our successes, our failures, and sometimes even our futures.

And because of that, we sometimes make mistakes or assumptions that can be damaging. So let’s talk about that “ugly” subject: money. And let’s look at a few key areas where writers can make some big mistakes—and learn how to avoid them.

MISTAKE #1: Assuming everyone is on equal footing

Success and opportunity come to some writers and authors more than others. And while we might be tempted to think that it’s because we’re more talented or work harder, not everyone is on an even playing field. And making that assumption can be not only harmful but hurtful.

The truth is that writers and authors who are also Black, Indigenous, or persons of color don’t have the same opportunities as white writers and authors and often have to work harder to be seen and acknowledged. Diversity is still a struggle in the publishing world, and while movements like Black Lives Matter have opened some doors, issues around representation and diversity within fictional spheres persist, especially in genre fiction.

Those from poor or lower-class backgrounds also start the game at a disadvantage. Not everyone has access to wealth, an alternative source of income, or a spouse or family member who’s providing financial support. Not everyone has the same access to education and career advancement opportunities, let alone mentorships.

“There are a lot of barriers to access for people who come from low-income backgrounds, or maybe less traditional educational backgrounds, or who have had to deal with other types of prejudices in their life,” Manjula Martin tells the Atlantic in “Why More Writers Should Talk About Money.” “If we want that to change, we need to start being honest about how this business actually works.”

So when we talk about money and our experiences with it, it’s important to remember that some writers and authors got a head start, whether due to circumstances, or even timing. And what is easy for some may not be as easy for others. What’s important is that we all work to lift each other up, support the work of other writers and authors—and remember that being financially supported by others is sometimes the one thing that can make or break a writing career.

MISTAKE #2: Unrealistic expectations about income potential

The truth is that, yes, some writers and authors can make a lot of money. A lot. Often, many of us imagined ourselves as bestselling authors with lots of money, a hefty book contract, and film options out the wazoo. But much as in other arts, those levels of success aren’t available to everyone. In fact, the reality is much, much more humble.

When reality hits, it hurts. I can’t tell you how often I’ve watched writers and authors aim big (myself among them) only to hit unforeseen obstacles and disappointments and sometimes become so disillusioned that they lose the joy of the success they do find—simply because it doesn’t match the vision they created years ago.

That’s not to say it can’t happen. Writing and selling books is a lot of work, and many authors have managed not only to support themselves but to find a decent measure of success simply by realizing that a lot of the hard work comes after the book is published.

“There is a place for the romantic in the writer’s life, but there’s a difference between romance and being ignorant,” says Martin. “[Roxane] Gay says that really nicely in her interview where she’s just like, ‘I don’t want to kill the dream of my students by being like, “it’s really hard to make a living!”’ But it’s also the responsibility of older generations of writers to let folks know really what it’s like.”

Ask around and set realistic expectations about the kind of income you can earn, the lifestyle you want, and plan accordingly. Which leads to…

MISTAKE #3: Not planning ahead

Let’s be honest. Life is expensive.

If you’re starting out as a writer or planning to transition from your current job to writing full-time, remember that the key is to plan ahead. Some financial experts suggest ensuring you have three to four months’ worth of savings. I’d venture closer to six.

Don’t have the financial means to create a nice big buffer for yourself? Don’t panic. Try to create alternative streams of revenue, whether that’s a few great side hustles, a part-time gig, contract work, or freelancing. Try to get enough income coming in consistently to be able to budget your living expenses as well as money for taxes, food, entertainment, transportation, and more.

But most important, make sure you have a backup plan.

“Many things can throw off a financial plan,” writes Tonya D. Price in Finance Tips for Writers.” “That small press book contract you signed? It won’t be worth much if the publisher goes bankrupt. Always know what you will do if the money you expect to come in does not make it to your bank account. Your backup plan might be to drop a service that requires a monthly payment. It might be to teach more online classes. It might be to go to work at MacDonald’s [sic], but always have a plan for what you will do if you run out of money. That doesn’t mean you quit writing. You just need a strategy for bringing in enough money to allow you to get back to where you can write full time.”

MISTAKE #4: Not saving for taxes

Depending on your sources of income and where you live, your taxes may vary. A good rule of thumb is to stash away at least 30 percent of your income for tax time.

“Remember you will have to pay taxes on your writing income,” says Price. “If you do not have a tax accountant familiar with deductions for a writing business, make finding one a priority.”

MISTAKE #5: Not tracking your expenses

Setting a budget is important. And so is keeping track of the money you spend in order to write. It’s not just your computer, but also your printer, office supplies, desk, chair, a portion of your internet, and more. It might also include things like editors, designers, advertising, and other services and expenses. Depending where you live, tax rules and deductions can change, so make sure you familiarize yourself with your tax laws, and don’t be afraid to ask for help.

“You’ll be grateful for your thoroughness when you list your deductions during tax season,” writes Joanna Penn in “Money Management for Authors.” “Look for ways to cut back. The fewer expenses you have, the more profit you’ll earn—so instead of investing in a lavish home office or fancy website, reduce spending on office decor (or buy used) and shop for a cheaper (or free) web host.”

MISTAKE #6: Not checking your royalties carefully

Most authors accept their royalty checks at face value, trusting that the folks at their publishing house correctly calculated the final amount. But according to the Authors Guild’s “Claiming the Royalties You Deserve,” savvy authors should double-check the amounts just in case.

“The overall purpose of a royalty audit is to ensure that an author’s royalties have been calculated and paid in accordance with the terms of the publishing agreement. After examining the publisher’s records, the auditor will write a report of her findings — including, if applicable, a calculation of unpaid amounts due to the author. In my experience, royalty underreporting ranges from 10 to 20 percent of an author’s reported earnings.”

MISTAKE #7: Not reading enough books and articles about finance

For many of us, the prospect of reading a book about finance and budgeting is the teeeeniest bit of a snooze. But according to Price, that also means we become vulnerable when it comes to our finances. So along with our delicious fictional indulgences, one of the best things a writer can do about their financial situation is to simply pick up a book on money, and just read it.

“By learning about finance, you gain ideas on how to better manage the money for your writing business,” points out Price. “You also will be inspired to think more about how you will develop as a successful writer. Being the creative that you are, you will soon find yourself coming up with some great ideas of your own how to make money as an artist, and that will allow you to do what you really love—write!”

 

Hannah Guy lives in Toronto and is a professional writer and copywriter who specializes in books, books, and more books. Follow her on Twitter at @hannorg.

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