7 Money-Management Tips for Freelance Writers

Manage Your Money as a Freelance WriterBy Carol Tice

In case anybody missed it, I was the subject of vilification on WAHM.com last week for daring to mention Demand Studios’ recent disclosure that it loses buckets of money. The discussion on WAHM turned into a long thread full of reasons people love writing for Demand. And the big one is that they pay so fast.

Some posters said they write for mills because of the “enormous” amount of time it takes to get paid by magazines and corporations — up to six months! And also that they felt a lot of uncertainty about whether they would get paid or not — maybe they’d only get a “kill” fee if an article didn’t work out.

I’d like to puncture these myths and say that it really doesn’t take forever to get paid from most of these types of clients. It’s also pretty rare to get stiffed, especially if you have a contract. It’s been a lot of years since I had an article killed, too — good communication with an editor can usually prevent stories going that far awry.

I have a pretty broad variety of clients, from major publications and media conglomerates to businesses large and small, and six weeks is the longest payment timeline I have, and most of my clients pay ranging from instantly on auto-deposit to net 15 days.

Still, I get the sense that needing to wait even two weeks to get paid is an insurmountable obstacle for a lot of freelance writers. So they need to keep writing for mills. They’re kind of stuck. Or as one of the commenters put it, “trapped on the gerbil-wheel of writing for pennies” because mills pay fast.

This brings me to my topic for today: money management. To be able to move up to better-paying clients and ultimately earn more, you’re going to need to be able to manage your cash flow so that you can wait a couple weeks for a check to come. It’s the only way to break the low-pay cycle. Once you build up a stable of better-paying markets, it’ll get easier to deal with a longer wait to payday.

Here are some tips on how to get your finances in order so that you have some savings — or at least access to capital you can dip into to tide you over — and can take on better-paying clients, even if you have to wait 30 days for their check. It may involve some short-term sacrifice, but it’ll be worth it, as having more financial resilience will unleash your ability to work for higher-paying markets.

1. Read Your Money or Your Life. This game-changing book has been around for decades, and it’s still teaching people how to live cheap and retire young while enjoying life to the fullest. The authors will ask you to write down every dime you spend for months, and then evaluate the data. Usually, you can find places to cut your expenses you never dreamed of as a result.

2. Evaluate all your fixed costs. The cable bill, health insurance, cell-phone plans, Internet fees, gym memberships — when’s the last time you compared prices? See if you can find a lower-cost provider. Then start banking the difference.

3. Examine your discretionary spending. I realize many people are living close to the bone these days. But if you’re not, add up how much you spend eating out, renting videos, or whatever your favorite splurges are. Could you not do them, just for a few months? If so, you could end up with a nice bit saved up. Get your family’s buy-in that a little short-term doing without could allow you all to be living better, soon. Then:

4. Create a rainy-day fund. This is one of personal-finance guru Suze Orman’s favorite mantras. We should all have three to six months of living expenses in a savings account. That’s the cushion you can draw from and repay later if a client is a week late paying. Savings equals power — the power to say no to low-paying writing gigs and spend that time finding better-paying clients.

5. Learn to buy cheap. When I did the grocery shopping around here (hubby’s currently the main shopper), I belonged to The Grocery Game, which can save you hundreds a month on the food bill. Clip coupons. Buy your groceries at Walmart, Smart & Final, or whatever discounter is near you. Stop buying junk food. Shop yard sales. Shop chain stores’ sales. At this point, my three kids are fully trained, and are delighted to get used stuff I find on Freecycle or my local community classifieds.

6. Clean up your credit. If you do not have access to low-interest or zero-interest credit-card offers, get a free copy of your credit report and see what’s on there. Then work on cleaning it up — call the agencies if there are errors. Make payments on time. Get a store credit card and slowly pay off your bill to build your track record of making payments. If you can improve your credit rating, you can get a bank credit line for your writing business, or a low-interest or zero-interest credit card offer that will allow you cheap or free access to money if a client is slow paying you. Another strategy: see if your bank will extend you overdraft protection to help smooth out any cash-flow bumps.

7. Manage your payment schedule. Look at when all your big bills are due, and if they’re all coming at once, see if you can shift them around. You can call credit-card companies and ask to change your payment due date. Also, look at each bill’s due date and don’t pay bills until they’re due, keeping cash in your pocket longer. Personally, I got my mortgage set so it pays in two halves twice a month instead of all at once — less difficult than making that nut all in a lump.

Have any more tips for managing money as a freelancer? Leave a comment below and tell us.

This post originally appeared on the WM Freelance Writer’s Connection.

Photo via Flickr user yomanimus

Tagged with: