Three Tips for Creating an Income Stream as a Freelance Writer

A guest post by Dennis E. Hensley, PhD, Director of the Professional Writing Major at Taylor University in Upland, Indiana.

First, establish a guaranteed monthly positive cash flow. Cash flow for freelance articles will be sporadic and unpredictable, but monthly bills will be constant and inflexible. You need to secure some kind of work that will guarantee a set amount of income each month. Perhaps you can teach a continuing education class at a local college’s night school or write a column for a newspaper or magazine or perhaps run a part-time résumé service. You might even want to do what I’ve done: invest some of your royalty earnings in rental real estate which generates monthly rent payments while also providing a tax depreciation deduction. Do whatever you feel most comfortable doing, but never jump into freelance writing full-time without some guarantee of cash flow from some source.

Second, develop some long-term income-producing projects. Instead of churning out one article after another in a frenzied attempt to generate immediate cash flow, allot some of your weekly writing time to writing books. Once a book is written and published it will earn money for you even when you are sleeping, eating lunch, or taking a vacation. This is passive income. You no longer have to do the work, yet the earnings continue. This takes a lot of pressure off you in regard to feeling you have to be pounding the keyboard around the clock.

Third, capitalize on tax shelters. Have your accountant determine the best way to handle expenses. You may wish to depreciate your computer, audio recorder, camera, and other new equipment over five years so that you will always have sizable yearly tax write-offs. Whenever your book royalties are substantial, buy yourself a new printer or some new office furniture or file cabinets and use accelerated depreciation to reduce your present tax bite, should that continue to be an option allowed by the IRS.

By planning in advance for a steady stream of income, you’ll increase your chances of success as a professional freelance writer.

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Adapted from Writing for Profit by Dennis E. Hensley [Thomas Nelson, 1985; revised 2003]. Learn more about the prolific Dr. Hensley’s writing, editing, and public speaking credentials at www.DocHensley.com.

Four Tips on Preparing to Succeed Financially as a Freelance Writer

A guest post by Dennis E. Hensley, PhD, Director of Professional Writing Major at Taylor University in Upland, Indiana.

First, determine your financial role as a writer. Are you writing just for the enjoyment you gain from sharing your views with others, or are you doing it as the sole support of your family? Is writing just something you do for a little extra cash, or is it your true second income? You cannot set a cash goal until you determine how many cash obligations you have.

Second, evaluate your hourly rate. Add up to the total amount of cash you receive for your first three manuscript sales and divide that total by the number of hours it takes you to research, write, type, and submit all that material. This will tell you how much you are worth per hour. If someone wants to hire you, you then will know what to charge.

Third, prepare a budget. Make two lists. One will be a list of the obvious costs you are required to cover in order to stay in business as a writer (online monthly service fees, paper, stamps, computer maintenance). The other list will outline the household expenses you are required to meet (food, rent, clothing, utilities). These lists will give you a clear picture of what your total cash flow needs are per month.

Fourth, set up three business books.

You will need a separate checkbook so that all of your expenses will be legitimately documented by canceled checks should you ever be audited by the Internal Revenue Service.

You will also need a cash disbursements journal so that you can record the date, payee, cash amount, item purchased, and check number for all expenses related to your writing career.

Finally, you will need a cash receipts journal to record all your freelance sales and royalty payments; be sure to note the date the check was issued, its payer, the amount, the check number, and for what manuscript the money was paid.

Taking the time to establish these foundational steps will ensure your financial success as a freelance writer.

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Adapted from Writing for Profit by Dennis E. Hensley [Thomas Nelson, 1985; revised 2003]. Learn more about the prolific Dr. Hensley’s writing, editing, and public speaking credentials at www.DocHensley.com.

Making a Living as a Freelance Writer

A guest post by Dennis E. Hensley, PhD, Director of the Professional Writing major at Taylor University in Upland, Indiana.

During an interview some years ago, I asked singer Johnny Cash, “Is it true you used to make a living by picking cotton?”

Cash scowled. “I made an existence picking cotton,” he corrected me. “No one makes a living picking cotton.”

I sometimes feel that same way when people look at me with amazement and say, “Wow! You make your living entirely from freelance writing, eh?”

Depending on how a career and its cash flow are going at the time, any freelance writer could give a variety of responses to that question. At certain times of the year, such as royalty statement day, a writer is flush with funds. Other times, he or she may only be making an “existence.”

Overall, however, I have survived rather well since turning to freelance writing full-time many years ago. And, through trial and error (read that “fail and terror”), I have become more efficient each year at money management.

My goal has always been to help writers live more comfortably on the money they earn as writers, particularly if their desire is to depend substantially on their writing income for sustenance. In the coming months I’ll share money-management and time-management tips on this blog to help you succeed.

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Adapted from Writing for Profit by Dennis E. Hensley [Thomas Nelson, 1985; revised 2003]. Learn more about the prolific Dr. Hensley’s writing, editing, and public speaking credentials at www.DocHensley.com.