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Determine Your Freelance Writing Fees - 2

Savings, Retirement, Vacation, Sick Time, Health Insurance and Taxes

You're Entitled

As a freelance writer, you're responsible for your total financial picture... everything from day-to-day expenses through retirement and taxes. Don't be surprised if you hardly know how to think about all of this. Freelance writers are creative and creatives aren't necessarily good at keeping track of money and planning. If you're like most of us, it will take time, maybe even several years to get your financial house truly in order. But you'll never get it done if you don't start.

Savings for Freelance Writers

 The goal is six months expenses in savings. That's the amount recommended by experts for self-employed folks, and freelance writers are definitely self-employed.

Assuming you've tracked your spending for a month or two, you know what your expenses actually are. Just multiply that by six for your initial savings goal. Chances are you're no where near this amount... yet. It's a goal. One of the best ways to begin to build savings is to discipline yourself to put at least 10% of every single check into savings. Open a savings account at the bank where you deposit your check and every single time you put money in your checking account, put 10% of that in your savings. Don't worry that you could get better interest elsewhere, just build the savings account.

You may also want to set up a special savings account for your taxes and self-employment insurance. The general guideline here is 30% of your income.

Retirement and Freelance Writers

Freelance writers tend to work until they literally can't. If we're lucky, we end up with enough royalties to add to our retirement. Our self-employment taxes will fund some social security payments. You can find out how much social security will pay you at their site. Don't obsess over retirement, but as your savings begins to build, start exploring. Check with your bank about IRAs and solo 401ks and other retirement savings/investment plans.

Vacations and Freelance Writers

Not only are you entitled to vacations, you need them. One of the great things about freelancing is you can set your own schedule. This means you can take mini-vacations and/or plan for a month or more away. You may even be able to write some or all of certain vacations as business expenses, and earn some of the cost through writing about your ventures

But to take vacations, you've got to plan for them, and that includes planning for the money you'll need to take them.

Sick Time and Freelance Writers

People who work for others in regular jobs often get paid for sick time. As freelance writers, we don't. This is one reason for the recommendation for six month's worth of savings... it gives you a way to cover yourself if you're unable to work for more than a day or two. You may also want to investigate disability insurance or other income protection plan.

Health Insurance for Freelance Writers

If you're in the United States, you know we've got major problems with health and medical insurance. If you've got a spouse, you may be able to get your health insurance that way. Joining a group, like those provided through the National Writers Union, the Authors Guild, Media Bistro and others is one way to make health insurance more affordable. Some states also offer catastrophic health insurance in one form or another. Medical savings plans are another option. Investigate thoroughly before you buy, there are also scams and near scams out there.

Taxes for Freelance Writers

In general, there are two forms of taxes that freelance writers need to be aware of - taxes on income and self-employment taxes which funds your social security. The general guideline is 30% of your income to cover both, but you'll need to work with a tax professional to determine exactly what you should expect. Remember, you've got legitimate business expenses and, if you're tracking your income and expenses regularly, you'll be in good shape.

When you really look at all of this you'll discover that, when you also plan to pay for your vacation, sick time, retirement, savings, health insurance and taxes, it's a big hunk of money. Using these figures you can begin to set realistic fees.

Write well and often!

Anne Wayman, Ghostwriter

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