MYOB - How Much Do You Know About Author Finances?

 

ROGUE'S PAWN is out now! This first book in my original Covenant of Thorns trilogy has been re-released with gorgeous new covers. Look for book 2 coming July 26 and book 3 releasing August 16. 

     

Read Excerpt

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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. 

Three Things I Did to Sustain a Full-time Writing Career

The audiobook of BRIGHT FAMILIAR is now available! And GREY MAGIC in audio will be out very soon!! 

This week at the SFF Seven our topic is: Being a full-time writer – is it your dream? How do you pay for life and write, too?

In this instance we're defining "full-time writer" as someone who doesn't have a day job or other paying occupation that competes with writing. Most of us - unless we marry money or inherit a trust fund - continue to work jobs even after our first books are published. Sometimes for a LONG time after that. For myself, I continued to have essentially two careers for just over twenty years after my first publication. 

I worked in environmental consulting while all the while carving out time and energy to write. I kept waiting for my writing income to match my day-job salary - even not figuring in benefits! - and it never got there. Eventually life made the decision for me: my primary project got axed, our team dissolved, and I was laid off with decent severance. 

And, as it was absolutely my dream and my goal, I made the decision to try to have only one career at that point. 

It hasn't been easy! KAK's post from yesterday about being exacting with a budget is super important. This is especially true if, like her, you have only yourself to count on for income. Or if, like me, you are the primary breadwinner for your family. When authors give advice on managing finances as a full-time writer, it behooves you to pay attention to what other financial help they have. It might not be a trust fund, but having a spouse with a steady salary (and benefits!) goes a long way. Other authors live on retirement income or other, similar sources. 

So, how have I done it? 

1) Meticulous budgeting. 

As much as I can, I budget a quarter at a time. Writing income is volatile and, unless you're making buckets of it, you can't count on being able to pay the bills with income from a single month as you can with a regular paycheck. As KAK mentions, you can't figure your disposable income by simply subtracting your expenses from that month's income. You may need that "leftover" money for next month, or the month after. The financial gymnastics require creativity and flexibility.

2) Tracking sales

Data is everything! You can't afford to be only a dreamy creative. You have to wear your business hat and crunch the data from your royalty reports. You have to be ready to be stern with yourself and pay attention to which efforts generate income and which don't. You may find you can't afford those passion projects if your writing is what puts food on the table. OR, that you can afford them only if other projects are paying the bills.

3) Self-Publishing

If writing income is volatile, then income from traditional publishing has the lowest evaporation temperature. It comes, it goes - often on an annual or semi-annual basis. Quarterly is likely the most frequently you'll get paid, and every royalty check is a surprise! Again, unless they're cutting you BIG checks, it likely won't be enough to live on. This is why so many trad-pubbed authors also teach or have other side gigs. Self-publishing provides monthly income. Yes, it fluctuates, but you can also track sales and predict how much money will arrive in two months. Taking the surprise out of the equation helps immensely! You're also not subject to the whims of traditional publishing on a number of levels.

Those are three practices that have helped me manage a career as a full-time writing with essentially no other income. The other, quite obvious step, would be to make buckets of money and never have to think about budgeting again. 

Maybe someday!

Real Information on Author Finances

Our topic at the SFF Seven this week is again eerily timely. We're talking writer finances. How do you budget for uneven income? What’s your biggest expense?

With so many people struggling financially due to the #COVID19 shutdowns, managing money is heavy on many people's minds. It's odd to find myself well-equipped to deal with this because - as a full-time writer with no other income and with a non-salaried spouse who does not provide me with health insurance - I am always juggling the financial balls.

Though many people regard writers as wealthy, most are not. There's a huge spectrum of author incomes, from approaching zero to multi-millions. Various groups use surveys and data-mining to estimate median author incomes - eliciting huge arguments, too - but the short answer is that how much an author makes varies. And it doesn't just vary from author to author, but it varies over an author's career. There are good years and bad, feast and famine, upward trends and downward ones. Even within the course of a year, that income varies.

The bottom line is, if you're relying on writing income to pay the bills, then budgeting is a major challenge. There is no salary, so the standard method of budgeting - knowing your monthly income and keeping expenses below that number - doesn't work. So, what does work?

The simplest and lowest-risk method: many authors who write full time have a stable source of income that does not come from writing - a retirement annuity or a spouse's salary. In this scenario, budgeting can be done according to the reliable income, with income from writing counting as "gravy." Now, the reliable income budget can be pretty bare bones, meaning the gravy is pretty important, but this also allows for a percentage of writing income to go back into the business.

I'd love to be doing it this way! However, I'm not. My husband retired early from his state job, so while he does have a monthly stipend, there's not much left after his health insurance premium. (I self-insure through the ACA.) He's also non-salaried, so his income fluctuates wildly.

So, how do I handle budgeting when in some months I receive 15% of my annual income and in others 2%? (Those are my 2019 numbers.)

Very carefully?

What I'd love to be able to do is budget annually. I'd love to set aside a year's worth of fixed expenses - mortgage, utilities, groceries, etc. (which are, by the way, my biggest expenses) - and pay those ahead or out of an account set aside for that purpose. I've come pretty close to being able to do that, but not as consistently as I'd like. If I ever received good-sized advance - like more than $100K - I'd set it aside for that.

What I usually can do is budget quarterly. At any given time, I like to have enough money to cover projected expenses for the ensuing three months. That way, if what we have in hand looks like it'll dip, I have a few months to try to supplement the income.

One thing that helps hugely with stabilizing income is self-publishing. While an author still can't control sales, the retail platforms pay monthly, which really helps to even out the income. Diversifying income streams as much as possible helps, too.

Of course, keeping expenses low is ideal, but that's true of any budget. So is earning a Whole Bunch of Money!

In the meantime, we do our best to make the ever-shifting ends meet.