Note: I’m not a financial advisor and can’t speak to your specific situation. This post is only intended to share some of the things I’ve learned and personally experienced as an author. Please consult a trained professional when making financial decisions or handling your taxes.

Hi friends! Along with setting new writing goals for the coming year, I always spend a little time in January going over my business finances from the previous year (hello, tax prep) and starting a new spreadsheet to keep track of my earnings and expenses. It’s hard to believe that 2022 marks my fourth year of earning money for my writing! #lifegoals

I was also very excited to find, when I totaled my earnings from last year, that for the first time my writing income reached five figures. Onward and upward! Like many things that remain shrouded in mystery about traditional publishing, I’ve found that not too many traditionally published authors talk about the financial side of the writing life. Self-published authors tend to be much more up front about their earnings (whether lamenting their anonymity or celebrating their success). Maybe it’s because like many other aspects of traditional publishing, it’s taboo to talk about how much one’s advance is or what one earns in royalties.

Sorry, I’m going to follow the crowd on this one and keep the specific details private, but I would like to talk in generalities that will hopefully give you the right expectations if you’re seeking to be traditionally published. Don’t get me wrong—it’s an amazing feeling to get paid for my writing, and I love having the extra income to spend on things my family might not otherwise be able to afford. But, if you’re thinking one book contract is going to provide your escape route from that drudgery of a day job, think again. For most traditionally published authors, it’ll be a while till that day comes.

(If it ever does. Sorry to bust your bubble, but you’ve got to be realistic if you’re going to stick with this writing thing.)

Show me the money

Last year in 2021, I had one book release (Buried Evidence, an adult romantic suspense written as Kellie VanHorn), and my agent sold five of my books (four more romantic suspense books and my YA thriller coming out in 2023). I received an advance for Buried Evidence in 2020, so I won’t be paid a royalty payment on that book until it earns out the advance. The book sold well and will earn out, but it released last summer and because of the way royalty payments are structured with big publishers, I won’t actually be paid until the next quarter.

How about those other five books? Surely those advances must mean I’m rolling in cash? LOL, you guys are funny. The way advances work depends on the publisher, but typically they’re paid out in two or more installments. In the case of my four books sold to Harlequin, I received the full advance for book one paid in two installments (upon signing and then upon acceptance of the full manuscript). Because the other three books are scheduled over the next three years, I only received a small portion of the advance on each of them. The rest will be paid out in two installments again, once for the proposal and once for the full manuscript.

We sold the YA to a different Big Five publisher (momentary pause to squeal in excitement), and they pay the advance in four installments: on signing, on acceptance of first draft, on acceptance of final manuscript, and on publication. When you consider I signed the contract this past summer (2021) and it won’t be published until summer of 2023, we’re looking at spreading that advance out over three calendar years. And unless (until…) the book earns out, I won’t be paid anything for royalties.

Wait, how does that work…?

Let’s put this in perspective with some numbers. Imagine you hit it big. Your YA book goes to auction and you sign a one-book contract for a hefty advance, say $100,000, paid over four installments. Go you! That’s enough for a decent annual salary, isn’t it?? Hold up, don’t quit your day job yet. Remember how contracts work?

For starters, your awesome agent who sold this book for you has to get paid (that’s 15% well spent, I’d say). When you sign the contract, your first $25,000 gets split, $21,250 going to you and $3750 to your agent.

Well, $21,250 is still a lot of money! Yes, yes, it is, and Uncle Sam wants his share. Depending on your other earnings, you’ll probably owe about 15% in federal income tax. But wait, since you’re self-employed as an author, you’ll need to file a Schedule C and pay self-employment tax too, which will be about another 15%. So let’s subtract 30% or $6375 for taxes, leaving you with $14,875.

Yay, you got paid for your writing! Now you’ll get to work doing the first round of revisions so that your first draft gets accepted, then more revisions to get to acceptance of the complete manuscript. Then you’ll wait for publication. If your payments get spread evenly over two years, that’s $14,875 x 2 = $29,750 for each year, or an income of just under $2500 per month. Depending on where you live, how many people are in your family, and what your expenses are like, that *might* be enough to eke out a romanticized “poor artist” living for a year. But not if you’re paying for your own medical insurance or childcare. Or pouring money back into marketing your new book.

And remember, this advance is a one-time gig. You won’t get paid anything else for this book until you’ve earned back that $100,000 in royalties (not in sales based on sticker price, but in your 8-12% cut per sold copy as negotiated in the contract), and the payment schedule for most publishers means that even if your book does well right away, you won’t see that money until several months after publication. If you want another big, income-sized chunk of cash, you’ll need to sign a new contact with a big advance.

Now for the real bummer—most advances are not six figures. I know those are the ones we all notice in deal announcements, but most books do not go to auction and yield six or seven figure advances. It’s much more common to get an advance of less than $10,000, and some smaller publishing houses might not offer any advance at all.

So what’s my point, other than to make you feel depressed? Set realistic expectations and financial goals. Wanting to write full-time is an awesome goal, but you’re going to need other streams of income besides the books. Even most self-published authors look to multiple streams of income to be full-time writers (such as speaking, offering writing courses, and selling nonfiction books). When you do get an offer with an advance, don’t rush out and buy a boat or a brand-new car the next weekend. Pay attention to how your money will be paid and where it will need to be allocated (agent, taxes), so you can plan ahead for the best way to save or spend it. (And bear in mind, contracts contain clauses to protect the publisher in case you fail to deliver an acceptable manuscript—meaning there’s a chance, however small, that you might end up needing to pay that advance money back. Eek.)

Well…how do you do it?

How do I afford to write without a day job? Well, technically I do have a day job, it just pays worse than being an author. LOL. (I’m a stay-at-home, former homeschool mom with three “big” kids in school now and one preschooler under my daily charge.) I’ll be honest, I’ve always considered it a privilege to be able to stay home with my kids, made possible by my husband’s career as a college professor. We make sacrifices to live on one income, though, and one of the perks of earning money from my writing is having a little extra to play around with now. It’s kind of fun to plop down on the new sectional couch in the basement and think, “Thank you, Buried Evidence!”

Like me, you’ll probably have to start out with your writing as a part-time job, working it around whatever you do during the day. With enough financial planning, additional streams of revenue, and a little luck (book contracts and sales are never guaranteed, unless you’re James Patterson, and then you don’t need my financial advice), you might be able to quit that day job eventually. I’ll be over here rooting you on!