When you write for a living, you give up a few things—one of them is a steady paycheck. In the modern and global marketplace that is freelance writing and authorship, the worth of words is often determined by what someone will pay you to create them, not what you would like to charge.

That isn’t always true. You can find good-paying clients, make a living as a freelancer, and work really hard on marketing and promotions to boost your book sales. All those things will take time, patience, and investment. Be prepared, at least for awhile, to work tons of hours and struggle for financial stability.

Create a budget. Set financial goals. Here’s how you can do that when month to month, quarter to quarter, you are not sure what is coming in when.

Set Up Your Emergency Fund

This is the very first goal you should have. How much should you have in your emergency fund? In theory, your goal should be to have the minimum amount you need to cover your expenses for three months in savings. So if your mortgage, utilities, and transportation costs are $4,000 a month, you need around $12,000 in your emergency fund.

As freelancers, use the amount you need to cover your expenses as a benchmark for your goal rather than three times the amount you make because one amount varies, the other does not. This leads to the next financial goal.

Pay Yourself a Salary

Even if you are a sole proprietor, you have set up an LLC, right? This not only protects your personal assets in case of a lawsuit or other catastrophe but also offers you a way to pay yourself, keeping your business and personal assets separate.

Your goal should be to get to the place where you have a payroll account, preferably an interest bearing checking account, and only pay yourself a certain salary from it every month. That way if you have a lean month, your expenses are still covered, and if you have a fat month, that money can help you when times are lean.

You should have a both a floor or minimum balance you will keep in your payroll account along with a maximum amount you will keep. Once you reach the maximum, the excess should go into an investment account or used to pay yourself a bonus, or even if you are consistently doing well, give yourself a raise.

Pay off Debt

This is often a tough one, because as we are getting started we tend to live on credit when times are lean, but you should seek to eliminate debt in as many areas as you can in your life. That being said, all debt is not bad debt.

As a general rule, any debt where you are paying under 7% interest is okay. Since most mortgages fall into that category along with some car loans, they are what could be labeled as good debt. These loans are also secured loans, where property is collateral. Therefore the loan would not be a total loss if disaster struck.

Unsecured credit, such as credit lines or credit cards, should be avoided whenever possible and paid off as quickly as feasible. These lines of credit range in interest rates from 12% at the most benign to almost 30% at the high end. You can pay these off in a number of ways:

  • Make extra payments on the principle
  • Switch to bi-weekly payments
  • Make double payments when you are able

All of these have a dramatic effect on reducing debt faster. The less debt you have, the better your credit score. The exception is the use of secured credit cards, which work in similar ways to a debit card but get reported to credit agencies like a credit card. If used properly, these can help increase your credit score while protecting you from risk.

Once you have paid off debt, you need to take the next logical step.


Most writers don’t really plan on retiring in a traditional sense, but there will come a point in your life where you will not want to write quite as much, or in the same way, and you may even have physical or mental issues that keep you from working even if you want to.

So invest, and start as early as possible. The first step is to open an IRA and contribute as much as you are able each year, just as if you were employed by a company.

The second area you should invest in is real estate, starting with your own home. As a freelancer, the challenge is often proving steady income to a lender, so they are convinced you can pay your mortgage. This is another argument for having a company and paying yourself a salary. Proving fiscal stability is much easier when you can show a steady stream of earnings.

In many cases, writers struggle when they are first starting out, and living on credit catches up to them. You need to work on your credit score while you are saving and paying off debt so you can have the minimum score you need to qualify for a mortgage. Usually this is in the area of 580, although to get a lower interest rate and a loan where you don’t have to put quite as much money down, your score should be even better.

Once you have invested in a retirement account and your own home, you can choose how to best diversify the rest of your investments, from stocks, bonds, and mutual funds to more real estate. Investment property and low to medium risk mutual funds are some of the best places for your money to grow and are as sure an investment as you can make besides the very low, but guaranteed interest rates offered by savings accounts and CDs.

What should your financial goals be in the short term? Take each of these areas on in small increments. It’s okay to build your emergency fund while investing in your retirement and even starting to work on paying off debt at the same time but be sure your focus is in the order above.

None of us ever wants tragedy to strike, and as writers, we never really want to stop working, but we need to financially hope for the best and prepare for the worst. Setting financial goals is not only essential for your future, it will also provide you with peace of mind. One fewer thing to worry about when you’re writing is never a bad thing.

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