This week at the SFF Seven we're MYOB - Minding your own business!
Seriously, we're taking a long look at how we manage the financial side of being an author. There tends to be a wide range of strategies for managing author finances. As all authors are primarily creatives (with the small exception of the widget-makers who hire ghost writers to write for them, which is another kettle of stinky fish), not all possess the inclination to crunch numbers and balance accounts.
In truth, while I think all authors should have a thorough understanding of what they should be earning, not everyone needs to be a financial guru of their own writing career. In truth, the most comfortable place for an author - or perhaps any creative - to be is independent of the need to make money doing it. This, of course, requires either family money (marrying money counts) or a spouse with a great salary and benefits. In these cases, writing money is all "gravy" and I know many authors in this position who don't really track that income.
The major downside of this model is it means traditional publishing has favored those with this privilege and also takes shameless advantage of these authors. There can be a lot of funky tickling of the financials, both from publishing houses and literary agencies. Believe me: I've seen it.
Learn to read your royalty statements and hold those who handle your earnings accountable.
The flip side is if you're like me - someone who is supporting their household with writing income. This is the other extreme, where ALL finances are author finances. I track everything scrupulously, to the point of using mathematical models to predict my future income. That's the thing about writing income: it's super unpredictable. Sales wax and wane, often due to reasons beyond anyone's control. Traditional publishing pays quarterly if you're lucky and semi-annually otherwise. There's almost no way to predict what those checks will look like, so I end up behaving like the privileged writer as above - I treat my trad income as gravy.
Self-publishing income is what allows me to pay the bills with writing. That money comes in monthly and, because I can access my sales dashboards in real time, I can reasonably predict how much money will come in. The downside of self-publishing is that the author fronts the investment. KAK covered a lot of the nitty-gritty of self-publishing costs yesterday. Most self-publishing authors can implement the simple math of outflow vs. inflow. That is, what you pay to produce and market the book should be less than the money you make from it. Where it gets into higher math is managing that income so that you can cover the costs of being alive.
With a salaried job, or even hourly income, the basic budgeting model is to figure your monthly income, subtract your expenses, and the rest is "disposable," meaning you can spend it on stuff you want vs. the stuff you need. But with a fluctuating monthly income, this simply isn't possible.
So, my basic model is to try to keep enough money in savings to pay for two months of expenses should I have zero income in any given month. (Which hopefully will never happen, knock on wood. My backlist is substantial at this point, so the baseline backlist income is relatively steady.) Once I have that in place, I can pay for some of the things that make us happy. This is VERY important. It's tempting to confine oneself only to needs and funnel any "extra" money back into growing the business. This works okay for a while, but it gets soul-crushing over time. We work hard; we must also play hard. Anything else is unsustainable.
As a creative, maintaining your joy in the work is key!
From my initial announcement, you'll see I'm also republishing some of my trad-pubbed books. I did ten books with Carina Press and now have the rights back to all of them. Those royalties came in quarterly, so I'm eager to see how my income on those books changes for me. So far I only have ROGUE'S PAWN up again. Republishing meant paying for covers and formatting, so a bit of investment on my part. Hopefully it will pay off.
As with all businesses, writing for a living requires a lot of hoping for that pay off. Being smart about crunching those numbers provides the reality. A balance of both is best.