Finances & Forecasting: Part One

For many authors, finance and forecasting can be terrifying. PHS Editor, Christy Kate McKenzie, talks us through the ins and outs of balancing your books…

It’s time to talk about money. I know what you are thinking, this topic was probably better suited for the horrors of October and Halloween, but I think I’ve saved the best for last. Seriously.

Before we delve deep into the scary world of Income and Expenditures and pull out the crystal ball to do a little forecasting, let’s talk about one of my biggest pet peeves...

For love or money?

I work in a university that is well-known for its research excellence; a reputation forged by a brilliant staff of academics on the cutting edge of their fields. They are devoted to their science and very quick to announce that if it was all about money they would never have gone into research.

I know more than a few writers of the same mind set. They are quick to proclaim that writing is for the love of writing, not for the money. Now, I’m not going to say this is a bad thing… at least not entirely. I do write for the love of writing. Let’s face it. Writing is a tough job—if you didn’t love it you wouldn’t bother—but for me (and I suspect at least a few others) it isn’t only about love of the craft.

In addition to being a writer, I am also a business manager and a mother. And as much as I hate the phrase… time really is money. I earn half of the budget that supports my family and every day I watch what I spend. I also work flexibly to accommodate childcare. Which also means that after the monsters are in bed I can often be found at my desk working on things I couldn’t finish during the day. That plus early mornings of getting two kids ready and off to school can leave very little (if any) time for writing. Anyone else in this boat?

It doesn’t seem like a big deal until you think of the money you put into writing.

Time to pull out your notebook and get to work. If we were developing a traditional business plan, we would be looking at two areas when it comes to finances—income and expenditure. We are going to start with the dirty word—expenditure.


Expenditure refers to every penny you spend. Now, if you are trying to make a living out of writing (which is hard to do these days), you will need to include what we call a Survival Budget. A Survival Budget includes every expense that you need to get by month to month. We aren’t including your Starbucks habit (although, I admit, I do consider Starbucks a writing expense) in this, just the basic needs for survival—rent, food, electric, water, childcare…

For our purposes, we aren’t going to look at the expenses that make up your Survival Budget. We are going to presume that you have those covered already. Instead we are going to focus in on the expenses that are a direct result of your writing. Make a list in your notebook of all of your writing expenses.

Some obvious ones will come to mind immediately. Do you have a website? Do you pay for hosting or for your domain name? Do you get professional head shots? How often? If you self-publish, how much do you spend on editing, covers, advertising…?

I bet you’re starting to realise that writing isn’t a free hobby or side hustle. Here’s another worn out cliché for you—it takes money to make money (groan).

What about the one-off costs that you rarely think about? Been to any conferences lately? Paid for any courses? Are you a member of any organisations who charge yearly dues? Have you bought a new computer? I’m a fan of Bluetooth keyboards for my iPad and I find I go through roughly one of those a year. What if you dictate to a recorder—does it use batteries?

This is why we can’t all write ‘just for the love of writing’. These expenses take money out of my full-time income. They don’t fit into my Survival Budget, but if I want to make a career out of my writing and earn even enough to reduce my hours at work (I dream of a four-day work week so I have a day to write), they need to factor into my household budget.


On the surface, this is an easy one. In my ‘real job’ the income we collect each month comes mainly from rental—of commercial property or of event space. If I owned a bookstore, my income may come from sales of books and author events. Income refers to any money that comes in from your business.

Here’s the kicker, though. When we are looking at a business plan for your writing career, you must only consider money that comes in as part of THAT business, for example, advances or royalties on novels or stories sold, affiliate income from your blog, or speakers fees if you are paid to speak at events. You absolutely cannot count any income that is not a direct result of your business as a writer—so the wages you receive as a nurse or engineer do not count. The wages from your ‘real job’ should be taking care of your Survival Budget.

Take a moment now to record any regular income you receive from your writing. If you have a decent amount coming in, well done! If not, hang in there. We can’t all be JK or Nora and even their writing careers took time to build—neither wrote a book and was famous the next day! Writing is often a long game, with most authors only making a decent profit once they have a substantial back list built up.

Balancing Your Books

Our end goal is to make sure that income from writing covers expenditures from writing. That way, your writing can go make to being a free—and maybe even profitable—endeavour.

In your notebook, add together all of the expenditure—the easiest way to do this is to look at your expenditure over the year since some expenses (membership fees, domain names, etc.) are only paid once a year. Be careful, though, to add the correct amount for monthly expenses. If your web hosting costs £120 per year, but they charge you a fee for paying monthly of £2 per month, the total for the year isn’t £120, it’s £144.

Now add together your income for a year. How does it match up with your expenditure? Are you breaking even? Have you made a profit? Or are you still in the red?

The goal here is to at a minimum break even. That way any money you put towards your writing career doesn’t take away from the income you use to support yourself or your family. Making a profit is incredible, but let’s make it easy by concentrating on breaking even. If you are already breaking even, you can start to add some of your Survival Budget expenses into the mix and see what type of income you will need to quit your day job! Ah, what a lovely dream…

Back to reality.

Now that you know how much you need to make each year to break even (your total expenditure), it can be helpful to divide that by 12 months to get an idea of how much your need to bring in each month to hit your target. Be aware as you map it out, though, that if a conference is in July, you will need to budget for that over five or six months to ensure it is paid for on time, rather than over 12 months.


What you have just done is lay the foundation for your financial forecasts. A financial forecast is simply an estimate of what your Income and Expenditure will be in the coming years. Most businesses like to do either a 3 or 5 year forecast.

In a way, forecasting is a bit like consulting a crystal ball. After all, how do you know how many books

you will sell 5 years from now? You may have gone crazy from all of these numbers by then! I understand. I’m not a numbers girl either (my degree is literature and language). I just happen to be good at spending money so I had to learn to be good at making it as well!

Let’s look at your forecast for the next year. You know how much you need to make year on year based on your figures from last year, but you also need to look at any additional expenses that may arise. Inflation means that there is a fairly good chance that many of the services you use may go up. Perhaps you will get the opportunity to attend a conference abroad. These are the types of things you need to be thinking about.

Take some time to consider how you would like to grow your writing career—do you want to attend more events? Invest in social media marketing? Self-publish more books?

I’ll be back in January not only to help you forecast for the next year and beyond, but also to help you increase and diversify your income so you can meet your financial goals.

Christy is an aspiring author, fairy tale fanatic, peanut butter connoisseur, and wannabe mermaid. For more information about her and her writing, check out her website and follow her on Facebook, Twitter, Pinterest and Instagram.

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