Writing Your Own Paycheck – Financial Tips for Freelance Writers

*Collaborative post

 

Freelance writing can be a great introduction to self-employment. If you love to write and don’t mind being a mercenary wordsmith, freelancing can be a great side-channel to profit off of your passion. And if you are ambitious, talented, and more than a little lucky, freelance writing can become a full-time career. 

Bloggers, students, and amateur freelancers often struggle with the business side of things as they turn a hobby into a paycheck. It’s a hard transition no matter how much you prepare, but these recommendations will help you navigate the financials of freelancing.  

 

Don’t Price Your Writing by the Hour 

A major mistake most freelancers make is billing their clients by the hour for freelance work. If you quote clients by the hour, it is easy to undervalue the time and effort you put into an article. Many businesses will also try to get more for less, insisting they aren’t satisfied with your hourly output in an attempt to get their writing done below market rates. 

If you want to turn a profit as a freelance writer, one of the most important steps is to begin quoting clients by the project. This often requires you to change your rate sheet.  

An amateur’s hourly rate sheet might look something like this: 

• Product Descriptions: $25/hr 
• Copy editing: $40/hr 
• Ghost Writing: $60/hr 
• General Content $65/hr 
• Professional (Medical/Legal) $120/hr 

When you open negotiations with a rate-sheet like this, it gives way too much information to the potential client; information that they could use to try to lowball you or simply to micromanage your project. A client being billed this way can reasonably expect strict hourly accountability, the kind of restriction many freelancers leave in-house writing positions to avoid. 

 

Use a Project-Based Rate Sheet 

Instead, your rate sheet should list prices by project. Make it clear that these are estimates, and special requirements by the client might require you to charge more. Here is an example of a professional freelancer’s rate sheet, by project: 

• Short Product Description: $10 per item.
• Copy editing: $8 per page.
• Copy writing: $250 per 1000 words. 
• General Writing: $300 per 1000 Words 
• Professional Content (Law, Medicine, Finance) $500 per 1000 words. 

When you write your rate sheet this way, you can start each project knowing exactly how much budget you have to work with. These prices are just generalised placeholders. At the start, you may be able to request half these rates, while a writer with an established reputation may be in a position to not even talk with a client who has a budget under $3000 for their content – and could send personalised proposals. Tools like Qwilr are pretty good if you need a template for a business proposal with things like interactive quotes as well, useful when you have extra services that can be included or excluded.

 

Don’t Forget to Save and Invest 

One of the biggest mistakes many freelance writers make is neglecting personal savings and investments. Since you are not working at a company with group life insurance and medical insurance policies, you will need to purchase life insurance through an agent and a health insurance policy on the open market. If you leave an employer to freelance, you also need to make sure any term life insurance is properly ported or converted to a new plan. 

 

Retirement savings are also important. Many people working as staff writers use a company-matched 401(K) retirement plan both to prepare for the future and to reduce their overall tax bill. If you write part-time, this really won’t be a concern. But if you want to make the transition to a professional freelancer, you will need to look into options to prepare for retirement. 

 

Speaking of reducing income taxes, freelance writers also need to play the role of a part-time accountant. At the end of the year, you will have to pay income tax on your freelance earnings. You can also deduct your business expenses to reduce some of your tax burdens. While free tax-preparation programs make the actual calculations easy to do, you will still need full and accurate records of your expenses and profits to enter into a tax prep program. 

Be Smart With Your Time 

Freelancing isn’t easy work. If anything, expect to work harder and longer than most in-house writers, at least until you’ve graduated from pen-for-hire to established writer. If you think freelancing means sipping margaritas as you type by the pool, you won’t be in business for long. 

 

If you’re not writing, you’re not getting paid. That’s the reality of freelancing.  

To make a profit, you need to divide your time between finding clients and turning out content. Take too long for either one, and you’re going to have trouble paying the bills.  

One major part of your time management is finding a way to track how much time you spend on each project. You should be able to start your workday knowing that you need to get, say, 3000 words written for 4 different clients, and be able to track how much time you spend on each account. If you consistently run over your estimated budget, you are under-quoting the project and likely working for free. 

One of the benefits of freelancing is a liberal workflow. You don’t need to be at a desk from 9 to 5, as long as you find a way to stay on top of your projects. You don’t need to go overboard–a spreadsheet and a kitchen timer should be more than enough.  

Flexible workflow is fine. A sloppy workflow is not; content needs to be delivered on time and under budget to make a profit as a freelancer. Enjoy the freedom of action, but don’t make the mistake of thinking that freelancing means freedom from action. 

 

Set a Realistic Budget 

As a freelance writer, you can never count on a stable or reliable income. With the independence of freelancing comes the stress of self-employment. Your next paycheck is never guaranteed. Early on in your freelancing career, it is important to network within your niche to find projects and clients. Even if a magazine or website isn’t actively looking for content, you can plant the seeds of a relationship for future projects, and hopefully earn referral work as well. 

The demand for writers in any given niche fluctuates throughout the year. Before you commit to full-time freelancing, you need to have a budget that will cover your lean months. You may have a month where you make $5000 penning advertorials for a Madison Avenue retailer followed by a month where you struggle to break $800 writing for mommy blogs and a local lumber company. You don’t have to live like a college student, but expect to live within modest means for the first few years. You’ll either make it as a writer or decide to pursue other career options, but living frugally will make sure you don’t go bankrupt in the process. 

What does this mean for you as a freelance writer? Well, most importantly, don’t treat your monthly income as a steady income, even if it is stable for a few months in a row. It is best to test the waters as a freelancer with a reliable income to fall back on-whether that’s a supporting partner or a full-time-job. If you can develop the client base to become a full-time freelancer, you should be able to work out your expected yearly income, and budget that per month. 

 

Get Smart and Get Writing! 

You now have the know-how to make writing your full-time career. Start implementing these tips into your writing routine and with enough patience and practice, this goal is most certainly achievable.  

Veronica Baxter is a freelance writer and legal assistant operating out of the greater Philadelphia area.