Sarah Gates on writing for money and how to make your bank account blossom alongside your word count.

Let’s be honest: writing doesn’t tend to pay well, unless you’re JK Rowling or E.L. James. It’s likely you’re not earning enough to pay off those very expensive creative writing degrees. So when you do make money from articles on websites, short stories in literary magazines and maybe even a novel, it’s important to be financially savvy.

Here’s what you need to know about money and writing:

Have a contract!

I cannot say this enough: you must, must have a contract for any arrangement with your writing. Without one, any editor, client, publisher or agent can take advantage of you and your work. Have you agreed on who has copyright? When and where they can publish your work? How much will you be paid? What happens if one of you want to back out? This needs to be in writing. In a worst case scenario (if they refuse to pay, or credit you as the writer, or use your work for a purpose you haven’t agreed to), just having an email chain that outlines your arrangement can be enough.

But I’d strongly recommend having a cohesive, written contract. I use one from the Clever Copywriting School and adapt it to the circumstance—whether it’s a copywriting client, workshop for a high school, or something else entirely. Some of the most important clauses (and the ones you should keep an eye on) are:

- Copyright and distribution: You should always maintain copyright of your writing, but you’ll grant an exclusive or non-exclusive license for an editor/publication to publish your work. This speaks to whether you can republish your writing or add it to your website, as well as what the other person can do with your work.

- Payment: How much are you paid and when? For freelance clients, my contract outlines that for jobs quoted at less than $300, I am paid upfront and I will only start working upon payment. This saves me from chasing up or waiting on smaller payments, where it’s not worth using a debt collector if they don’t cough up. For larger jobs, I ask for a 50% deposit—again, just in case a client goes MIA. At least I’ve been paid something. I also have added fees built into the contract so that if the client misses the payment deadline, I can charge extra—thus covering the fees of any debt collectors I might need to use. For some publications, this isn’t something you negotiate, but it is for most clients.

- Sunset clause: When does the project end? What happens if the other person doesn’t approve/accept the work? You’ll need to call it quits at some point. Plan for the worst-case scenario.

- Regional and type: For books, make sure you’re clear about regional rights (worldwide versus region specific) and the type of right you’re conveying (print versus ebook, film and TV, audio, etc). If the publisher doesn’t do translations or sell foreign rights, you might not want to transfer these. Same goes for audio, film and TV.

Demand decent pay

Too many writers work for free or abysmally low rates. Don’t fall into this trap. There are plenty of well paid jobs out there—you just need to find them. If you’re on sites like Upwork, don’t get caught up in the ‘race to the bottom’ culture where writers place bids that get lower and lower until the end payment is nowhere near adequate compensation. Do your research and know what your work is worth. Google is your friend. The Young Australian Writers Facebook group is a great resource for asking questions, and it is home to some epic spreadsheets of opportunities, jobs and publications and their rates.

On that note, be open about money with your fellow writers. That way you’ll know when you’re undercharging or being ripped off—and you’ll be able to help other writers who are being exploited and don’t know what their work is worth. Plus you’ll be able to address any pay gap between genders. If I know that a publication is paying my male colleagues at a higher rate, I have the ability to negotiate a higher payment or contact an advocacy organisation like MEAA.

Don’t forget that you can give yourself a pay rise at any time. Tell your freelance clients that your prices are going up, provide higher quotes, pitch to publications that pay more, negotiate a better contract with your publisher/agent… It’s your career. Take control and ask for what you’re worth.

Pay your super

If you’re a self-employed writer, don’t forget to contribute to your super! You don’t want to wake up in your old age and realise you can never retire. It’s probably best to contribute at least the standard 9.5% and if you’re earning less than $36,813 per year, you could be eligible for a government super contribution. Check MoneySmart for the latest information around super and tax, explained in a way that’s easy to understand.

Don’t forget about tax

When you’re making money from your writing, it’s easy to forget about tax time. Remember to keep a record of your income throughout the financial year and set some aside for when the Australian Tax Office (ATO) comes knocking. You can use their PAYG instalment calculator to work out how much you’ll need.

I always like to use a tax accountant, to make sure I’m doing it right and getting every benefit possible. It might be a small upfront cost, but it’s tax deductible and your deductions carry over for several years if you’re not above the taxable threshold just yet.

If you’re publishing in a country other than Australia, you may also have to worry about international taxes. Don’t forget to check for any treaties Australia has to minimise these costs. Tax from the United States of America (USA) is a common one for self-published authors using sites like Amazon and Smashwords. They’ll try to slug you 30% if you don’t supply the right tax form (Form W-8 BEN) or your Australian Business Number (ABN), which drops it down to a much more palatable 5%.

Save

Living paycheck-to-paycheck is no fun, especially when your paychecks are the erratic drips and drabs you get as a freelance writer. So, make sure you’re living below your means and saving money. Have an emergency fund in case something happens and you’re unable to write for a period. Once that’s in place, make sure you’re building towards your financial future—whether you’re saving for a home, investing in shares, or just growing your super and bank accounts. Be smart about your bank accounts and super (low fees, high interest), be wary of credit card debt, get the best deals for your necessities (water and electricity, internet, phone), cancel any subscriptions you’re not actually using… I highly recommend The Barefoot Investor by Scott Pape for all your financial basics—although you’ll have to adapt some of his advice to the irregularities of being a writer.