If you are not working a salaried job as a writer, it’s not the easiest thing to put your finances in order because your income fluctuates. Most writers make money like business people, but they don’t often have the structure of a business person.
Therefore, it’s not uncommon to find writers whose finances are in disarray because they lack the skill to put their accounts in order. In that case, even though they are making a lot of money, there’s nothing to show because there is no organisation.
Money is important; that unanimous agreement. So, if your account is not in order, it can affect other areas of your life, no matter how much you make. Luckily, you can prevent this by planning out your earnings and expenses.
This is why financial tips for writers are necessary. With these money tips, you will have peace of mind and be able to focus on your writing without distractions.
Read on to learn how to manage your cash flow.
10 Financial Tips for Writers
1. Budgeting
The importance of budgeting in getting one’s finances right cannot be overemphasised. You need a budget to guide your spending because, without a benchmark, you can overspend.
To avoid this, note how much you earn weekly or monthly and your daily expenses. You can set up a system for this or use digital tools. Make your budget realistic and try to follow through.
Separate your business finances from your funds to accurately capture your income and expenses. This is crucial for writers with some form of business structure that attracts expenses. If you don’t organize these two, you will shortchange yourself.
An understanding of your financial power will help you achieve your financial goals.
2. Diversifying Income Streams
If there are ways you can create more streams of income, you should do so. This will increase your revenue and help you mitigate financial risks.
If you’re an employed writer, you can consider freelancing as a side hustle. Freelance writers can seek out more clients or offer different services. For instance, if you’re very good at editing, you can be a content creator and an editor.
Besides, you can make passive income by writing e-books, doing affiliate marketing, and earning royalties.
Likewise, you can offer writing workshops or classes to teach others how to write or more on a specific kind of writing such as copywriting.
3. Negotiate Contracts
You can ask for a pay raise if you believe you deserve one; you never know the outcome. Because many writings have no direct measure of financial appreciation, writers can be underpaid.
So, consider renegotiating your rates. Though contracts are legally binding, it is not illegal to renegotiate terms.
But you will have to research to know the industry standards to avoid going completely overboard.
Also Read: Copywriting and Content Writing: Major Similarities
4. Saving for Taxes
Irrespective of where you live or work, you’ll have tax obligations. Fully employed people will have this sorted out through their employer. For freelance writers, it can be tricky.
In this case, you must set aside a percentage of your income for taxes. You’ll need to keep track of all your income and expenses for this purpose; you can use tax software for this. This also applies to writers with side gigs.
You can also employ a tax advisor to help handle the taxes.
Also, find out if there are available tax-deductible expenses for writers, like home office expenses or professional membership.
5. Investing in Professional Development
All professionals need development, as do you, but it can cost a pretty sum, which means you should have them included in your budget. They could be conferences or workshops that you wish to attend.
It could also be online courses or webinars for skill improvement, a writers’ group, or an association. Whichever one you choose, it’s best to determine and plan the cost beforehand.
6. Save! Save! Save!
I say this thrice for emphasis. Writing can be lucrative if you hit the jackpot. And when you do, you might be tempted to start overspending.
I am not one to tell you not to increase your expenses when you make more; you definitely should. In fact, it’s practically impossible not to unless you’re a miser.
However, you also need to be discreet. A 50% increase in lifestyle is too much, at least not at the beginning.
Prioritise saving, investing, a retirement plan and the necessary insurance plans before you feel comfortable splurging greatly.
For a start, when your income increases, increase your savings and not your spending.
But whatever you are making, save a part of it, no matter how small.
7. Build an Emergency Fund
This is essential for everyone who wants to plan for unforeseen circumstances like sudden job losses, illness, and income fluctuations.
A reserve fund will help ease any financial emergency, and this is one of the most overlooked financial tips for writers. This is typically money that will cover all your expenses for about 3 to 6 months in case of any emergency.
Saving this can be easy, but the difficult part is not spending it. That’s why keeping your emergency funds in a separate account is advisable. It must be used for unexpected expenses only.
8. Manage Debt
The best advice regarding debt is to avoid incurring as much debt as possible.
Personally, I have an issue with taking loans for luxury; they should only be taken for necessities. That’s why I am not a fan of credit cards.
But if you must take loans, you can manage your debts by prioritising high-interest debts. It will reduce the compounding cost and your overall debt.
More importantly, for every loan you take, have a feasible repayment plan for it.
9. Planning for Retirement
The path to wealth is through earning, saving, and investing. As a writer, there are several ways to do this. Your retirement savings are one of them. If you’re a freelance writer, you must open a retirement account and contribute regularly to your savings.
Apart from your pension, you can save and build your investment portfolio. These include investing in stocks, bonds, or real estate to grow wealth.
Don’t get discouraged by this list, thinking it requires a lot of money; all you really need is a lot of commitment. Invest whatever amount you can wisely to gain financial prosperity.
10. Review and Adjust the Financial Plan
Your plans are not set in stone; you can modify them anytime you want. It is okay to review your income and expenses regularly to capture any changes. But you must be true to yourself.
An honest review will show you if you are wasteful or need to earn more. It will also help your investment plans and enable you to adjust your financial goals.
Bask in your Writing Fortune
Taking control of your finances is vital to have a successful writing career. These financial tips for writers will help you manage your cash flow.
As a result, you’ll be able to make informed financial decisions and ensure your financial well-being.
Also Read: 8 Soft Skills to Have as a Content Writer
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