A Life of Sporadic Cash Flow
One of the more challenging aspects of being a magazine writer is that your income is likely to be sporadic. You may have month after month of nonstop work — and paychecks — coming your way, only to wake up one morning and realize that you have no assignments on your to-do list for the next several weeks.
This actually is a fairly common occurrence, even among the most successful magazine writers. After all, if you're busy completing assignments, then you're not going to have time to send out as many query letters as you may like.
The thing is, though, if you're not writing, you're not getting paid. And even though your income will fluctuate, your mortgage and credit-card deadlines will not. It's important that you set yourself up financially to pay your bills even if all of your writing jobs dry up from time to time.
Having a Cushion
A lot of financial planners recommend that you have three months' worth of money in the bank at all times, in case of emergencies. That means having enough cash in your savings account to pay three months' worth of your rent or mortgage, car payment, health insurance premiums, food bills, taxes, utilities, and any other regular expenses.
When you're a magazine writer, that advice is good — but it does not take into account “dry spells” when there will be no income at all. For a magazine writer, especially one living on a single income, it's important to have
You don't have to limit yourself to a low-interest rate savings account when putting away money for a rainy day. If you can get a better return on your money by investing in a certificate of deposit, for instance, that might be a good option. They typically pay more interest than a regular account, but you can still access your money in an emergency.
Of course, saving up half year's worth of expenses is no short order, but as you learned in Chapter 2, financial considerations are a major part of deciding to become a magazine writer in the first place. Only you know your personal situation well enough to know exactly how much cash you should have in the bank for emergencies, but if you start out smart — say, with three or four months' worth of savings — then you can add to that nest egg during the months you have lots of assignments. Before you know it, you'll have six months' worth of savings, or even more, in your rainy-day fund.
Remember Your Taxes
Another major financial consideration for magazine writers is quarterly tax payments. When you work for a corporation, your income taxes are deducted from each of your paychecks. However, when you are a magazine writer, you are paid in full — a $1,000 check for a $1,000 assignment — and it is up to you to remember to pay a portion of your estimated taxes every quarter.
It's a smart idea to write quarterly tax payment dates into your work calendar, right alongside your assignment deadlines. That way, you won't be surprised in April, July, September, and January when your payments (possibly in the thousands of dollars) come due to the Internal Revenue Service.
This can be a challenging prospect for writers who have poor money-management skills. Basically, what happens during periods of good work is that your bank account gets very fat, very fast. If you fail to realize that a good percentage of that money is going to have to be paid out to the government later, then you can find yourself spending it — only to come up short when Uncle Sam's bill comes due.
Some magazine writers actually open a second savings account specifically for tax-payment purposes. That way, the money is clearly separated from your regular savings or checking accounts, and you'll know that it is not to be spent on things like clothes, restaurant meals, or the like.
