Money Mindset Hacks for Indie Authors
The idea of the “starving artist” has severely damaged a lot of authors throughout history. Worming its way into the public zeitgeist, it has influenced us to think it’s not only okay, but advantageous, to be bad with money if you’re creative. It’s a common opinion that writers need to experience hardship to create great work. And if you tweak your creations to reach a bigger audience, you’re a sell-out. You see it all the time; music fans talk about how they prefer unknown musicians because “the charts” are terrible. Likewise, jealous writers criticise ”formulaic” bestsellers, claiming the moral high ground because their “real writing” doesn’t make them money.
For some, it’s the envy talking, but many believe it. Hamstrung by a poor mindset — in both senses of the word — they can’t imagine publishing a breakout book series while writing what they love, never mind achieve it. They believe an author needs extreme luck or to betray their artistic vision to make it happen. What they don’t realise is that they carry a burden of psychological baggage concerning money that keeps them from reaching their potential. If only they adopted a few simple mindset hacks, they could think more like a bestselling author and take actions to help them turn their writing into a lucrative business, without having to compromise on quality.
If you’re sceptical, that makes sense. After all, our beliefs dictate our actions, our actions create our reality and our reality cements our beliefs. And, having experienced struggles, you’re likely stuck in a loop. However, think differently and you can break that cycle. Have you ever wondered how some authors consistently make money despite switching genres and business models? Do their serial successes stem from extraordinary luck? Some, perhaps. But many simply carry a successful mindset that empowers them to create wealth wherever they settle. Using tips from today’s article, you too can rewire your outlook to help you build financial success as an author.
Track Your Money
One effective hack you can use to start building a productive money mindset is paying attention to your money. Indeed, authors who keep a handle on their finances are more likely to succeed. Do you have a bank account specifically dedicated to your author business? If not, create one. Doing so will help you more easily separate your book income and expenses from your personal transactions. Likewise, do you keep tabs on your monthly income and expenses? How much do you spend on ads and how much you do you make from each retailer? In a 2003 letter to company shareholder, Warren Buffet, arguably the world’s most successful investor, once said:
“You only learn who has been swimming naked when the tide goes out.”
The quote alludes to some entrepreneurs who ignore their cashflow and borrow more than they earn to grow. Being sloppy is fine if you only play with small sums — and it seems okay when your business is skyrocketing with revenue outpacing the debt snowball you’re rolling behind it to grow faster. It becomes dangerous, though, when your debt repayments grow beyond the point at which you can personally cover a sudden sales dip. Track your revenue, profit margins, direct debits and interest rates, and not only will you be able to scale more profitably, but you will also be able to keep swimming without getting caught naked if the tide disappears.
True overnight success is rare. For most authors, their earning potential grows on an exponential curve with a long tail. Say an author releases two books a year. Their annual royalties might look something like this:
Year 1 (2 Books) = $500
Year 2 (4 Books) = $1,500
Year 3 (6 Books) = $5,000
Year 4 (8 Books) = $10,000
Year 5 (10 Books) = $20,000
For years, they have to work for little financial reward. Then, as each book compounds their success, they approach a point of critical mass. Then everything changes. The early years are tough. In the midst of them, it feels like you’re working for nothing. But if you can delay gratification and think long term, with no reward in sight, you’re more likely to keep going long enough reach a tipping point.
This phenomenon isn’t exclusive to authors, either. Indeed, according to a blog post by habit expert James Clear, researchers working on a 1960’s Stanford experiment tested five-year-old subjects. During the test, they offered them treats and promised a double helping if they could resist eating for 15 minutes. Across the board, those who could delay gratification went on to score higher on health, happiness and income surveys 40 years later. What this tells us is that being able to delay gratification greatly increases your chances of seeing financial success. You need to be able to focus on long-term potential and resist more concrete short-term rewards.
Learn to Earn
Time and effort aren’t the only factors that compound your income. So do skills. For example, imagine you publish a book with no applicable experience. Your debut might require 200 hours of total effort, get a handful of reviews, with a 3-star average rating, and sell 20 copies in a year. Learn how to structure a more marketable book, though, and you can get a 4-star average and attract 500 sales for the same level of effort. Now add Facebook ads experience and you can boost your book to 5,000 sales in a year. Discover how to mobilise your fans with emails on top and you can launch books with a 4.5-star average and sell 15,000 in the same timeframe.
Working in this way means adopting a lifelong learner’s mindset, but the rewards are worth the effort, especially if you’re self-employed. After all, as your own boss, there is no upper limit to your income. No manager to cap your salary. If you want to increase your income, you can just keep stacking skills, with each one compounding your previous success. Admittedly, you might have to take a short-term earnings cut as you learn a new skill, but it’s worth it at every level. Even JK Rowling, who is worth $1 billion, could have multiplied her net worth seven-fold had she learned to create her own movies and build a system for employees to manage on her behalf.
Value Your Audience
Thinking of money as something you can only earn by working more hours will hold you back as an author. Plus, it’s not true. We’ve already established that you can multiply your income by compounding your skills and producing more income-generating books over time. The reality is that humans earn by generating value, either on a fixed rate, or using scalable models like the ones we’ve explored. It’s important to know, though, that adding time, more books and skills will only get you so far. Some audiences have a capped total value and, if you want to go bigger, you must find a bigger audience. That’s the only way to keep scaling the value you create.
As successful entrepreneur and New York Times bestselling author of Abundance Peter H. Diamandis has explained, “The best way to become a billionaire is to help a billion people.” The more readers you reach, the more value you provide. And working smarter doesn’t always mean becoming smarter. In many cases, you don’t need to upskill. You can simply create a product or service that more people want, then use scalable, automated systems to sell it en masse, thereby creating value at a greater scale. As an author, that might mean switching from writing horror to paranormal romance and selling 50,000 books for the same effort you used to sell 500.
Maximise What You Keep
Finance writer George S. Clason popularised the idea of paying yourself first in seminal book the The Richest Man in Babylon. The idea, stemming from the Babylonians, who were once the most prosperous people on Earth, centres around the idea of saving a percentage of your income and only spending what’s left afterwards. That way, you can limit your spending and grow your net worth exponentially as a result. This thought model equips you with less reckless habits that help you maximise what you keep to create a financial safety net, which is always prudent. A similar idiom, that might resonate more with you, however, is:
“Turnover is vanity, profit is sanity, cash is reality.”
We’ve all seen Book Report figures from bestselling authors that report six- and even seven-figure earnings. They may have even tempted you to scale your own marketing efforts to precarious levels to compete. What some authors sharing such figures don’t reveal, though, is that their $500,000 in annual revenue is purely a vanity metric. The higher their revenue climbs, the thinner their margins become as they reach less finely targeted audiences. Yes, they sell a lot of books, but they might only make $40,000 profit. Wouldn’t you rather turn over $200,000 and make $80,000 profit so you have sufficient cash-flow to cover disasters? Aim to maximise the money you keep and you won’t necessarily look successful but you’ll be more successful over the long term.
If you haven’t grown up among wealth or you’ve spent your whole adult life working for an hourly rate and internalised that starving artists produce higher-quality work, then developing your money mindset won’t be easy. Learn to challenge your limiting beliefs, though, and you can smash whatever financial glass ceiling currently holds you down and scale your business to heights that most authors will never encounter.
Grab Your SPF Freebies!
Sign up to receive your SPF starter package, which includes a free 3 part video series on getting started with FB ads, and inspirational and educational weekly emails.