A long but great question this morning from Hortense the Prepared (Yet Confused). Hortense writes:
I’m a writer who likes to be prepared for the worst-case scenario, the best-case scenario, and as many scenarios in between as is possible. So, I find it a bit frustrating at times that I cannot see, analyze, and plan for every detail of what happens after a writer sells his or her first book. This all leads up to my new favorite question for authors: What would you consider good investments for part or all of your first advance?
I’ve heard some interesting answers so far — everything from a professional web site to a really good ergonomic chair, along with such practical reminders as to put 1/3 aside for taxes, pay off as much of any bad debt as possible, never be without health care, and don’t forget the agent’s fee.
But something tells me an agent might offer slightly different advice than a writer.
Is this an area where you offer advice to clients? What would you do, if you didn’t need the money for immediate and crucial living expenses? Any pros and cons you can offer on setting money aside for such things as accountants, web sites, logos, copies to give away to book-related connections, conference expenses, travel…?
I understand writing is a business, and yet it’s a little hard to tell which typical business expenses apply, and which don’t.
Thanks for opening up this topic of conversation, HtP! It’s not one that is often covered, and I’d love to share my thoughts. First of all — it is, unfortunately a very small percentage of authors who can count on an advance as anything other than a windfall — that is, a bonus payment on top of their day job, which they use to pay expenses. The other thing to remember is that an advance isn’t just instantly handed down the second you sell a book — it often comes after a long contract negotiation, and if you’re dealing with a big publishing house, even has to go through channels there. I once heard a check was in Piscataway — true story.
So I wouldn’t recommend that you count on your advance to pay the rent, buy groceries, make that car payment, etc. At least not at first. So what could you do with it? You provide some great suggestions yourself — put it towards building a great website (or hiring someone to do that for you), upgrade your writing device (new computer, new pens, new notebooks — whatever works for you), buy yourself something special, whether that’s that ergonomic chair or a necklace you’ve been salivating over. Or, as you said — be practical and safe, and put a chunk aside for taxes, paying off bad debt, health care, or savings.
So what can I add? Consider using the money to hire an accountant or financial planner who can tell you EXACTLY what you should put away for taxes or other expenses, and take their advice as to how much of the advance is available to you for “extras” — that swank new computer, chair, or website. The biggest investment you can make in your writing career is time, and that doesn’t cost much. If you’re posting regularly and frequently updating your website, you may not need a expensive new design. If your current computer does everything you need it to, and isn’t fast enough or swank enough to allow you to browse at lightning fast speeds or play the hot new videogame — then you get to put that time you’re now browsing or playing to use writing.
I’d love to tell you to save money to travel to conferences, but there’s a good chance, if you’ve made that sale, you’re already socking that cash away to polish your writing style at workshops and such. And when you get big enough — they’ll pay you to come.
I hope that answers some of your questions, HtP! The only other thing I would add is a caveat that my work is specifically as your literary agent, helping to place your book in the hands of the people who will publish it. I’m not a money manager or financial planner, and if the above truly are your concerns, the very best advice I can give you is to hire someone who’s only job it is to advise your on your money. That’s what they’re there for. Good luck!