A couple of people read my Tuesday blog and asked me, “What does a writing budget look like?”
Here’s the basic idea…
1. The author sets a financial goal for the year. It’s got to be something that is livable (if the writer is attempting to make this a full-time job) and reachable (so there’s no setting a goal of “a bazillion dollars”). Let’s say, for someone just moving into full-time writing, the goal is $24,000 per year. Skinny, but a real wage for most writers. So figure out how much you need to earn in a year from your writing.
2. I encourage an author to break that annual figure into monthly chunks — so in our example, the author’s goal is $2000 per month.
3. The next step is to add up what the author expects to earn on the writing they are doing. How much in contracts does she already have? What other writing does she know she’ll be doing and getting paid for? That will help her figure out how much money is coming in, and how much she needs to add. Let’s say an author has a royalty check coming in May, expects to have completion money on a book contract in July, has a couple of self-published books releasing in April and August, and is expecting to sell a project in October. All you have to do is to figure out the amounts and write them onto your writing calendar. Nothing will give an author more clarity than hard numbers written down on a calendar — it’s a way of saying, “I’m making this… so now I need to work to make that.”
4. The obvious thing to do next is to match up dates and amounts. If you know you’re going to be working on a book in March/April/May, you can write down how much you’re making on that project. By looking at your calendar, you’ll see where the holes are that need to be filled with writing projects. And by looking at your budget, you’ll see how much you need to make in order to fill in the gaps.
5. And here’s an important step… The author should shift his or her budget from a monthly system to a quarterly system. So in our $24k-per-year scenario, the authors stops thinking in terms of “$2000-per-month” and starts thinking about “$6000-per-quarter.” That pushes off the immediate, “How-am-I-ever-going-to-survive” worry a bit. Writing income never arrives on a monthly basis anyway, except for checks you earn through self-published books at Amazon. It may take a while to generate the monthly income you need, but it’s certainly fair for a writer to plan for a decent paycheck four times per year. So you move your income into quarterly groupings, lowering the pressure and giving yourself a better big-picture view of your budget. (And this is a plan that full-time authors have been using for years. The government even uses it, which is why it asks you to pay your estimated taxes quarterly. It may take a little while to figure out how to shift some of your living expenses to a quarterly basis, but in the long run it will prove useful.)
6. If you’re self-publishing, determine about how much you expect to earn each month from your self-published books. That extra income is the money that will keep you solvent while you’re working on bigger projects. (And, to be fair, for some authors that will become the core money they earn in this business.) With Amazon paying every month, and with the growth of e-books, there’s no reason you shouldn’t start looking at self-publishing as part of your overall publishing strategy.
7. Create a budget, to match up what comes in and what goes out. The conversation moves to something like this: “I’m going to make $6000 this quarter. It’s going to come from three sources — my completion money, my royalty checks, and those magazine articles I’m completing. And the money is going to go toward…” (and here is where it become important for you to have a monthly budget, because part of having a writing budget is determining where the money goes, not just where it will come from). This allows you to track both income and expenses, which not only gives you the ability to plan, but makes things considerably easier at tax time. Again, a lot of writers and other self-employed people have based their budgets on this model over the years. Thinking quarterly will help you survive as a writer.
I hope this all makes sense. Making a living at writing is a tricky business.
Yeah, this is a lot to choke down in one gulp. Feel free to ask questions if you need me to clarify.