And no, in case you're wondering, I don't happen to think that "success" is the be-all and end-all of writing. In fact, I happen to think it can be a trap, because we're never going to be satisfied by this world. For most of us, we simply want the time and energy to be able to actually write down the stories we have in our heads, and the opportunity to share them with others. BUT…at the same time, most of the people I represent are either full-time writers or moving toward being full-time writers. So I think from a business standpoint, there is the sense that they need to figure out how they can make a decent living from this writing gig. So I tend to focus on the economics of a career plan.
Step Two is to set a financial goal for the year. It's got to be something that is both livable (assuming you are a full-time writer) and reachable (so there's no setting a figure of "a million dollars this year"). Let's say, for someone just moving into full-time writing, they set a goal of $24,000 a year. Skinny, but a real wage. If you're farther along in your career, maybe the goal is $48,000 for the year. (I don't have up-to-date figures, but I know that in 2004, the average annual income for a full-time writer was only $31,000. If you're doing better than that, you should be filled with gratitude.)
Step Three is to figure out a real-world budget for yourself. What does it cost to live for a year? I'm always surprised at the number of organized and creative artists who basically don't know where their money goes, or what it costs to live each month. It's going to prove very tough to determine a writing salary if you don't know what your monthly costs are. So if you have that information, get it out. If you don't, sit down with your checkbook and figure out how much you need each month for housing, utilities, food, insurance, car payment, gas, retirement, taxes, tithe, etc. If your monthly expenditures exceed your financial goal for the year, something has to change — either you need to make more money or you need to cut expenses. For all the financial advice you can get from books and experts, it still comes down to those two choices: You can either make more, or you can spend less. The goal here is to create a budget that matches your financial goal. (This is why most authors are married to someone with a "real job.")
In Step Four you break down your annual financial goal into monthly sections — the writer who needs to earn $24k per year will need to average $2000 per month. The writer looking to make $48k will need to average $4000 per month. It's important that you have that figure in mind, since most Americans live on a monthly budget and pay their bills every 30 days.
Step Five: I always remind authors of the MacGregor Formula for full time writing: 24m(s) + 4b = RJ
You've probably heard me talk about this before, but I'll translate: the writer needs to have the next 24 months of book contracts, and they need to add up to a regular salary [that's the 24m(s) part].
The writer also needs to have four books earning him or her income [books already earned out -- the 4b portion of the equation].
If they have those two aspects, they have a real job [RJ].
Still with me? So the author has figured out what a realistic annual salary is, Then he or she has has written it all down so that there is a two-year plan.
Now comes the hard part — in Step Six, you have to start adding up what you expect to earn on the writing you're doing, marking down the times you expect it to arrive. That's called a budgeting calendar, and it helps you figure out what you have coming in and what you might need to add. Let's say an author is expecting a royalty check in May, and has a book due in July. She expects a signing check in October, another royalty check due in November, and if she can complete her other contract in time, another payment due in December. So she simply takes out a calendar and writes down the dates and expected income. Once she has filled in all the numbers on the calendar, the author will have a pretty good feeling for how much she's going to make and when she's going to make it.
In Step Seven, the author shifts his or her budget from a monthly system to a quarterly system. So in our $24k per year scenario, the author stops thinking in terms of "I need to earn $2000 this month," and starts thinking in terms of "I need to earn $6000 per quarter." The $48k-per-year author stops thinking about making $4000 per month and starts thinking about making $12,000 per quarter. That takes the immediate, "how-are-we-going-to-survive" pressure off. Writing income just doesn't arrive on a monthly basis; but it's very fair to assume a full-time writer can expect to earn a decent paycheck four times per year. So move your income into quarterly groups, lowering the pressure on yourself, and give yourself a better big-picture view of your budget. (And if you're reading this far, you should know that several authors have found this one step to be life-changing. No kidding.)
he conversation then becomes something like this: "I'm going to make $6000 this quarter. It's going to come from these three sources: my completion money, my royalty check, and those magazine articles I'm completing. And the money is going to go toward…" [again, part of having a budget is determining where the $$$ goes, not just how it comes in].
Are you still with me? I'm just trying to help the authors I represent see that we can create a realistic plan for making a living at this writing stuff, but it takes some planning. And no, not everybody needs this from their agent. Some authors just need a guy who can negotiate contracts, or who has the relationships with editors to sell books. And that's fine — if you don't need this information, feel free to ignore it.
And no, this doesn't always work. Unforeseen events can occur that foul up our plans. We can be too aggressive. Or we can get lazy and only get halfway done. But in the real world, this is what I think an author has to do if he or she is going to think about creating a writing budget and actually making a living at all of this.