Author career · Craft · publishing

Pub Finances #1: How to Budget as a Full-time writer/freelancer

Hi all! We’re starting a new series! We saw all the conversations about how there is a lack of transparency in publishing. And while we think there are some great resources already out there, publishing is ever changing and it can’t hurt to have more people sharing their stories! So we started a Pub Finance series where we talk about all things money and how it pertains to being a writer and author careers. You can find the other posts here.


I recently started working as a freelancer/full-time writer this year. So first I want to say that being a writer is not the same as being employed by a company. If you are a writer who has sold your book you are a contractor/free-lancer for that publisher. That means you get no regular salary and no benefits (e.g. health insurance). Therefore, if writing is your full-time job then that means you are a full-time freelancer/self-employed. Here’s a great article about being a freelancer that is very applicable to anyone considering becoming a full-time writer.

It was a hard decision to make because I was raised to always have my eye on my finances and my budget. So when I thought about not having a traditional 9-to-5 the biggest part of that equation was the financial stability of not having a regular paycheck. In order to see if I could do that (mental health and anxiety aside), I made spreadsheets. (Fun fact: I love spreadsheets, I make them for literally everything).

The most important thing is to understand 3 things:

And to understand what you can do without and what you should never ignore.

Where you should spend your money:
  • Cost of living
    • Rent
    • Utilities
    • Auto and transportation
    • Food
    • Household necessities (like toilet paper and dish soap)
  • Taxes. For me this came out to roughly 27% of my total income, but I’d suggest you set aside at least 30% for taxes (according to our tax post you should actually anticipate up to 35%). But if you want a better estimate, here is a free income tax calculator.
  • Health Insurance. You really should NOT be opting out of health insurance, out of pocket expenses are far more costly than utilizing preventative services to avoid any illnesses. I used to work in medicine so I have a lot of thoughts and feelings on this topic. (You are able to sign up for the health exchange in your state–more commonly known as Obamacare–once you give up whatever insurance you had via your full-time job. You just have to have a letter from your employer or old insurance company stating when your benefits ended. Alternatively, you can sign up during open enrollment which is usually in November-December. Also note that some states subsidize health insurance if you can prove you make below a certain amount of income)
  • Dental Insurance. Fun Kat anecdote: for the first time in my whole life I don’t have dental insurance and of course now is the time I have an impacted tooth that had to be extracted. It was….very costly out of pocket. (Never again!)
  • Loans/paying off debt. If you can you should budget more than the minimum for this. There’s a whole other post–or posts–that can be about how loans are more expensive to pay off the less you pay per month because of horrible interest rates/APR, but that’s just getting too much into it for this post
  • Savings and retirement. Okay, so I am putting this here with the caveat that if your budget is super tight this would probably have to be the first thing to go. It’s a fact that contributing to your retirement fund earlier in life is better because it makes your money work for you. If you put only $10 per month in your retirement starting in your 20s it’ll make more of an effect on your retirement fund than if you put $100s in your account in your 40s. So (if you can) just start off early even if it’s just a small amount. (If you want to figure out how much you need to retire on here’s a retirement calculator)
Where you could spend your money
  • This includes things that will help you make a higher income as a freelancer, so:
  • Marketing. One could argue that marketing is what helps sell books, which is what helps you keep writing. So, it’s definitely something you could consider spending some of your advance on, but tread lightly here! The reality is that not every author can afford to pay for their own promo and marketing with their advance alone. So, while you could be spending some of your advance on this, it’s not something you always should if you have other more important expenses. (A free alternative is the publicity part of marketing-and-publicity. Using social media, blogs, and interactions with fans via the internet)
  • Travel for book events. Pretty much the same mindset as Marketing. You could spend your advance on this if you have the luxury, but it’s not always possible and if it comes down to it, you have to pay your primary bills before you spend your advance on travel.
What you want to spend your money on:
  • Professional Author photos. You should definitely have some cute high-res photos to have on your book jacket and website. But that can actually be accomplished with the newest Android phones and iPhones. They have really good cameras, and if you have a friend who is good at taking nice pics then you’re all set. (advice: take the photos during the golden hours of sunset or sunrise because it’s really good for photos)
  • Author website. If you have a URL and or then you can make an author website for free and it can look pretty nice. Don’t spend your money on this if you don’t have it.
  • Book Swag. The unfortunate reality is that book swag has no statistical correlation with selling books. So it’s definitely an add-on that’s a luxury and should be done as a thank you to your readers and not as an marketing tool.
  • Giveaways. The same as with book swag, giveaways don’t really have a proven correlation to book sales. (though there is a good argument that it gets people reading and talking and therefore could affect sales in that sense, but there are a lot of ifs and maybes involved in there).
  • Literally anything else. Vacations. Gifts for friends. Shopping in general. Fun entertainment-type things including going out to eat. Fancy stationary (it gets expensive!).

Okay, so now that you have your list (with small tweaks to fit your own lifestyle). Make a spreadsheet and add your monthly expenses beside each of them. My suggestion is that you add a little padding for incidentals (I call mine, misc/emergency funds)

Here are some equations for you to use to figure out if you can write full time or work freelance full time:

Monthly expenses x 12 = minimum necessary yearly income (or net income)

net income/0.70 = minimum necessary yearly income before taxes (or gross income)

gross income/0.85 = how much your minimum total book advance check should be (every year) before agent takes their 15%*

*so for this I mean this is how much you should be getting out of your total advance each year. So not the total advance amount as it is paid in sections. If you need $45,000/year to live then that’s how much you should be getting in checks for one fiscal year (which likely means you need an advance of closer to $90,000 per a book since it often takes 18 months to 2 years for a book to come out once it’s sold).

A final bit of advice from personal experience. Figuring out if your freelance/writing income can sustain your lifestyle, you need to be aware of the volatile nature of publishing and how there are no guarantees that you will regularly sell books. Therefore, before you quit your day job I’d suggest having at least three accounts set up: an emergency fund (for short-term incidentals that you can’t anticipate like healthcare bills), a retirement fund, and a long-term savings account (so that you have padding. I’d suggest you have at least 1 year of cost-of-living expenses saved up before you send in your resignation letter)

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