ave you ever met that artiste who is often portrayed on TV and in movies—you know, the one who will never sell out? The one who believes in art above everything else? The one who would rather starve than compromise her work?

I haven’t. Between colleagues, conferences, and classmates, I’ve never met a writer who accepts the “starving” part of the starving artist equation. That’s the good news.

The bad news is, despite this, I have met some writers who have not mastered the businesswoman part of this art. While they’re not starving yet, they’re not managing their finances in a proactive manner. Sometimes they concentrate a little too much on the art, and not enough on the sales. Or, sometimes they simply haven’t been introduced to all the nuances of the business yet.

For example, at a recent conference, I met a fellow freelance writer during a break. Since it’s almost that time of year, I said something about quarterly taxes. All I got in return was a blank stare. At the same conference, a self-published novelist who sat next to me at lunch admitted she’d overbought copies of her novel because “it was cheaper to buy them up front.” Although she’s ready for that magical day when Oprah calls, until then, the storage fees are draining her, and her books aren’t moving.

While I hope she does hit it big one day, I know this is definitely not the time to be loose with your cash. Proactive planning and sound decision-making are essential for your writing career and your wallet.

As a writer, money management should be on your short list today, so that you’re not starving tomorrow. Here are five fatal money mistakes writers make, and how you can avoid them. Being smart about your money today will underscore tomorrow’s successes.

“As soon as you put pen to paper, you need to start adding up your ink.”

Neglectful Record Keeping

Even if you’re a start-up novelist, you need to note what money is going into and coming out of your pocket for this venture. This can be as simple as a chart on Microsoft Word, or as involved as a completely separate software program. Don’t plan to make a dime for another year or so? It doesn’t matter! As soon as you put pen to paper, you need to start adding up your ink.

I stress this to readers and students from the very beginning. Yes, we all need to pay the IRS eventually, but no one wants to overpay them. Every cent you spend on your novel, poems, or freelancing should be recorded and turned over to your tax preparer at the end of the year. This will likely result in you paying less taxes.

Freelancer Lisa Pietsch learned that lesson. “When I first started writing I didn't keep records of my expenses and I didn't take advantage of the Schedule C deductions at tax time. I ended up paying far more than I should have.” Eventually Pietsch came under the tutelage of a patient soul at H&R Block, and her detailed records have since saved her some serious cash.

On the other hand, if you’ve made a buck, be sure to record that, too. Note your newfound riches in your preferred accounting software, and keep your pay stub.

Of course, this brings you up against another set of challenges. For some of us, organization and time-management are just not our strong suits, and adding another to-do is difficult. Many writers I know use the off time between Christmas and New Year’s day to set up their chart or spreadsheet, so it’s ready to go once the income and expenses start rolling in.

You may want to bring receipts and paycheck stubs directly to your writing area and place them on top of your keyboard as soon as you get them. That way, you are forced to enter them into your spreadsheet before you answer emails or start writing. After entering them into a database, place the expenses and income paperwork into separate folders, baskets, or envelopes. Keep them in date order by always placing new ones behind the old ones. Voila! No massive paperwork to prepare come tax time. Simply print your spreadsheet, grab your records, and go!

Esteban Tapia is an accountant who has handled small business taxes for years (and is this writer’s husband). “Most accountants will charge you for the additional time spent organizing your receipts and papers. Save yourself some money by going in prepared.”

Lesson Learned: Keeping records is like putting money into your pocket.

“Instead of one tax day, most U.S.-based freelancers are required to estimate and pay taxes on the 15th of January, April, July, and November.”

Tax Follies

Tax time brings up another set of challenges, doesn’t it?

From the very beginning, you need to establish the purpose of your writing. Are you writing as a business, or as a hobbyist? Do you plan to make a profit? Does the income help pay your household bills? Writers who consider themselves hobbyists fall under different tax rules than those who attempt to turn a profit with their writing. One glaring example is that hobbyists are not allowed to take the business deductions discussed above. Yet, the IRS sure does require they pay taxes on the income earned from that same hobby!

“You should always check with a tax accountant, but in general, you want to be able to deduct any expenses that you incur, even if this means you have to step up your writing efforts and leave the hobbyist designation behind,” Tapia says.

Another interesting policy is that writers who consider themselves self-employed contractors or who have formed small businesses are required to pay federal taxes four times a year—not just on April 15th! Instead of one tax day, most U.S.-based freelancers are required to estimate and pay taxes on the 15th of January, April, July, and November.

What a minefield! Of course, knowing these rules ahead of time will save you a lot of juggling later, which is why writer and editor Trisha Woolridge recommends preparing ahead of time. “The best advice I can offer to a new writer is to talk to an accountant or tax person immediately. Don't wait until tax season. If I had known a quarter of what I learned the first time, I would have made better decisions initially. It may be an initial expense to consult with an accountant for your writing business, but it pays itself back many-fold.”

Lesson Learned: Visit a tax-preparer early in your venture.

“Mixing business and personal is not a good idea...”

Running Up Debt

The “D” word seems to be a bad word in most circles these days, and the same is true for writers and editors. Message boards are replete with desperate stories of crashed hard drives or expensive subsidy packages. Is credit the answer?

“You don’t want to use personal credit to purchase items for your writing business,” Tapia says. “For one, it makes it difficult to defend the deduction as a business expense. You also want to establish credit in your company’s name, if applicable. Mixing business and personal is not a good idea in this case.” 

Travel and conference opportunities also factor into the debt question. How do you balance the need to promote and network with the expenses that often come from those things? Sci-Fi author Ann Wilkes had to deal with this question when her book, Awesome Lavratt, was published. “There are only so many sci-fi conventions in my area. So do you pay for the airfare to go to another convention where you will only sell a handful of books? I enjoy the conventions and make all kinds of helpful contacts and meet wonderful people whom I continue to stay in touch with. But I stay reasonably close to home and find cheap flights online.”

The bottom line is to plan your debt wisely. Think twice before you incur debt to promote your book or push your writing, then think again!

Lesson Learned: Not all debt is bad—just most of it.

“Whether you publish traditionally, through a subsidy publisher, or self-publish, there will be expenses associated with printing and promotion.”

Publishing Expenses

In addition to the travel question, Wilkes also had to deal with other publishing expenses. Whether you publish traditionally, through a subsidy publisher, or self-publish, there will be expenses associated with printing and promotion. Even though Wilkes published traditionally, she was able to order copies for conventions and conferences through the printer. “I sold quite a few books when the first edition came out. Because I'm a sucker for a discount, I increased my next order with the printer. Well, once all your friends have bought your book, if you're an unknown, things slow down. Also, I thought that I would sell way more at conventions than I did.”

Michelle Reynoso, who published with a subsidy publisher, ran into many unanticipated publishing expenses for her book Do You?.

“I budgeted for the publishing package, but didn't anticipate the extra costs that came up when I needed layout work or wanted changes made to the format. I also didn't budget for marketing collateral, traveling costs to promote the book, advertising, etc.”

Tapia says, “Treating your novel like a business from the get-go will keep your focus on the bottom line. It’s fine to concentrate on the writing before it’s published, but if you want to sell copies and make a few bucks, then you have to switch gears and approach it as a business venture.”

Lesson Learned: Research, establish a budget, and then stick to it.

“Chances are that your novel won’t make you rich, or that your lucrative copywriting client won’t stick around forever.”

Failing to Diversify

Although this particular practice is often talked about in freelance writing circles, it can definitely be generalized to all writers. For example, I talked about the stereotypical artiste above. What about the struggling novelist, who insists that her novel is the answer to all her financial prayers? Have you seen writers play this role in real life? Have you played this role in real life?

Chances are that your novel won’t make you rich, or that your lucrative copywriting client won’t stick around forever. Unfortunate things happen, and they can happen quite suddenly, like they did for freelance writer and editor Laura Nathan. “I had a freelance gig with a big media company for more than a year that required me to work daily. It was part-time, about 20 hours a week, and though I did some other freelance work, I thought of it as my primary job. I thought it would always be there, so I didn't hustle as much as I should have to find other work and other types of writing. When they terminated all of their freelancers, I was at a total loss. I had no backup plan. I talked as if I was unemployed, yet I wasn't eligible for unemployment.”

In order to mitigate the gambles that the writing life naturally presents to us, it is in our best interest to keep a steady stream of diversified projects.

Lesson Learned: Different clients in different genres will give you different (and more) paychecks!

Let’s just admit it:  life is easier when your finances are in line. Taking care of your finances is part of being a professional. Learn these lessons from your fellow writers so you’ll never have to call yourself a starving artist.

Allena Tapia is a freelance writer and editor, and owns her own firm, GardenWall Publications: www.gardenwallpublications.com.

She has contracts with Sharpe Reference, the New York Times’ About.com, and is a longtime contributor to Latino Leaders magazine. She teaches a class on freelance writing through Lansing Community College in Lansing, Michigan, and plans to retire to Mexico on the proceeds from her first novel.