Category: Money

Hey everyone! Welcome back to the next instalment in my blog series Mastering Money for Writers. As discussed in my original post, we’ve been focussing on the topic of taxes (something that many of my writer friends have asked me about).

So today, I’ll be discussing what writers could claim as a tax deduction. Let me start with a few disclaimers. What I’ll be sharing below are just ideas and possibilities. At the end of the day, you still need to confirm with your accountant what will hold up in the eyes of the taxman.

The key principle I hope to get across is a huge mindset shift I experienced in my own life—so much could actually be claimed! So I hope by the end of this post, you’ll find your mind thinking more creatively about this topic.

Let’s now begin discussing one category at a time:

Dear fellow writers. It’s great to have you back for another topic in my blog series Mastering Money for Writers. The previous months, I discussed the dreaded B-word (Budgeting). The focus of the next few posts will be the dreaded T-word—Taxes.

I wanted to begin by sharing something I’ve realised since frequenting the ATO (Australian Taxation Office) website. This realisation has sparked a shift in my mindset and consequently my approach when taxes are concerned.

Guess what? You’ve made it to the last post in this topic!

If you landed on this page and don’t know much about this blog series “Mastering Money for Writers”, I recommend starting from the Introduction or at least Part 1 before continuing.

Because by now you should know the following:

1. Your Lowest Monthly Income
2. Your Total Critical Monthly Expenses
3. Your Total Discretionary Monthly Expenses
4. The meaning of Cashflow & why Pay Yourself a Salary
5. Why you should start filling your Water Bucket 

Hopefully some months, you’re still going to have money left over. You may not believe me now but there is something about being in the mindset that you’re in control—life rewards you by giving you more abundance. It’s almost as if it knows you’ve now got the tools to handle more wealth. That you’ll have a greater respect for the money coming your way, no longer consuming it without consciousness that more often than not ends up being wasteful.

Let’s now discuss these final steps.

Chapter 6: Pay Your Debts, Build Your Dream Fund, and/or Invest the rest

What you do with the surplus money you will have depends on your personal circumstances.

Pay Your Debts

If you have debts (credit card, personal & car loans, money owed to others, etc), it’s logical to attack this before you even think about things like investing. Because the nature of interest-ridden debts especially is, every single day, your unpaid debt is growing, which in effect is making you poorer and poorer. Banks and lenders use language to make it feel like it’s such a small amount and thus not a big deal as long as you make your minimum payments. But when you look at and understand the Maths, you might find yourself feeling sick… I’ll give you an example:

Congratulations on making it this far! We are on the last leg now.

If you landed on this page and don’t know much about this blog series “Mastering Money for Writers”, I recommend starting from the Introduction or at least Part 1 before continuing.

Because by now you should know the following:

1. Your Lowest Monthly Income
2. Your Total Critical Monthly Expenses
3. Your Total Discretionary Monthly Expenses
4. The meaning of Cashflow & why Pay Yourself a Salary

Let’s discuss what to do with some of the money that is (hopefully) left over.

Chapter 5: Start filling your Water Bucket

Like I’ve mentioned in past posts, the language used in money can impact how you feel and thus the actions you take. This category of money is also described by many names, the most common being an “Emergency Fund”. In one of my most favourite personal finance books ever, “The Barefoot Investor”, Scott Pape calls this pool of money the “Mojo Account”.

I’ve chosen the name “Water Bucket” because, the purpose of this fund is to put out the unexpected fires that are unfortunately just part of life. So this is money to cover only emergencies like (God forbid) a car accident, household and car repairs, medical expenses and other emergency bills.

Welcome back! If you landed on this page and don’t know much about this blog series “Mastering Money for Writers”, I recommend starting from the Introduction or at least Part 1 before continuing.

Because by now you should have the following figures:

1. Your Lowest Monthly Income
2. Your Total Critical Monthly Expenses
3. Your Total Discretionary Monthly Expenses

Now get your spreadsheet ready (if you’re a Plotter) or a pen and paper (if you’re a Pantser) so we can analyse what we’ve got and learn some new terminology.

Chapter 4: Understanding cashflow & paying yourself a salary

First, put the figures we’ve worked out into your spreadsheet or as a list on your sheet of paper. Here’s an example:

In Business, the term Cashflow refers to “the net amount of cash and cash-equivalents being transferred into and out of a business.” (Investopedia) 

What does this really mean and why is it important?