KRIS RUSCH: Writer Finances Versus The Paycheck World
You’d think, after a financial crisis that put millions out of work, cost hundreds of thousands of people their homes, and showed over and over again that even more people got scammed, that Americans would improve their own financial know-how.
I’ve been thinking about this because I’ve watched several friends who are not writers up close and personal lately. A couple of them are extremely good with money. One of them even says that they follow all the rules.
Those rules, by the way, say that you should maintain the best credit score possible and you should never ever pay off your mortgage, because—at least in America—you can use the mortgage tax deduction and it’ll be better for you than…oh, shit. This is where it breaks down for me. Because I have no clue how a tax deduction is better for a person than owning something outright. Especially something like your home. Shelter. The place you live.
But I’ve never had a traditional job (for long) or a traditional attitude (ever).
And therein lies the heart of this blog post.
Because if I had had a traditional attitude toward money, you would not be reading this blog. You would never have heard about me. My career would be over now.
Money management is a crucial part of running your own business, and in the Survival stage, it’s all about cash flow.
Cash flow, for those of you who don’t know (and in the U.S., I’m assuming that’s two-thirds of you reading this blog) is about the way money flows into a business and flows out of it. In a business, cash doesn’t arrive at predictable intervals or in predictable amounts—such as $2,000 every two weeks. Sometimes a business is lucky enough to have a predictable payment cycle (for example, Amazon KDP pays at the end of each month), but not a predictable amount.
Even when a young business has a predictable amount of money headed their way—say, a client who agrees to pay $1,000 every month until a bill is paid off—that client might pay $1,000 one month, and then pay the entire amount the next.
The problem is that the business might have planned for the $1,000 per month, but not the entire payment. That entire payment (let’s call it $4,000) might seem like a windfall, but it isn’t. Instead, it’s money that was expected and should have been used in the succeeding months.
How many writers would parse out that “extra” $3,000 at intervals of $1,000 per month? Not many.