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There are several research studies that point to $75,000 a year where happiness increases no further. The $75,000 is largely derived through day job income given most folks do not have any other income sources. I make an argument that $200,000 is the income level where happiness increases no further due to various tax credit and deduction phaseouts, AMT penalties, income tax targeting and general attitudes towards people making more than $200,000 a year. Here’s an income definition for what is considered rich as well.

So what about online income, especially if working online is just a hobby? Let’s discuss!

THE VARIOUS STAGES OF ONLINE INCOME HAPPINESS

* Anything. If you have a steady day job already, making anything online will probably make you happy because you don’t need the income. Blogging is purely for fun and any income derived is just a bonus. Those 25 cent clicks are awesome!

* $100/month. The $100 figure largely comes from Adsense’s threshold payout. Adsense is the easiest and most common ways for bloggers to make income. I dare say that getting the first Adsense check is one of the most memorable experiences for all budding bloggers. Where were you when you got your first $100 contextual ad check?

* $1,000/month. As soon as you get the first taste of money, you start to think bigger. Instead of taking six months to get your first Adsense check, you figure why not one month instead? You start doing research on lucrative keywords to bump up your contextual advertising income and begin to dabble in affiliate income. Your writing production begins to increase dramatically.

* $3,000/month. Things are humming along and you probably have a pretty popular blog now with over 1,000 pageviews a day give or take. All your hard work is paying off and you start dreaming of whether you could actually quit your job one day to blog full-time. At the very least, you can probably just work part-time offline and online and lead a much easier life. You are giddy as a school girl!

* $5,000/month. You can’t believe you are now making a little more than the national household income via your website! Traffic steadily increases and you are getting affiliate and direct advertisement offers left and right. You’re pinching yourself for your good fortune, not knowing whether this type of income will last given Google updates have regularly slaughtered once high performing sites. Depending on where you are in your career, you start planning your exit from you day job realizing that quitting is not the solution because of the lack of severance, COBRA, and other safety nets. You need as long a runway as possible just in case your good fortunes turn sour.

* $10,000/month. You are absolutely on Cloud 9 with a case of whippets and a bottle of Chateau nuf de Pape! You absolutely cannot believe your luck as you not only do not have to work for anybody anymore, you feel a tremendous sense of pride that you’ve made it not only as a writer, but as a professional blogger and entrepreneur as well. You still wonder when the good times will end, so you continuously try and write high quality Whale Posts, taking nothing for granted. But after six months of consistently making over $10,000 a month from safer income streams, you’re hopeful the good times will last for as long as you are willing to put in the effort. You start thinking why not shoot for more? You’re playing with the house’s money at this point.

* $25,000+/month. Everyday feels like Christmas or your respective version of Christmas. $300,000 a year is more than enough to care for you and a family of four living anywhere in the world. You transfer your happiness to your spouse and children as you’re professionally satisfied, confident, and have more than enough to live. Money tensions, one of the biggest sources of relationship strife begin to melt away as you achieve financial independence. You begin to feel a little guilty and start asking, “Why me and not others?” as so many of your peers who started at the same time or earlier have either faded away or are still struggling. Given your awareness and empathy, you subscribe to the theory of keeping things low key. You also want to keep the haters at bay as you recognize not everybody has your same luck.

* No More. At $300,000 a year in revenue or higher, it gets harder to have enough legitimate expenses and deductions to get the operating income (taxable income) to $200,000 or less. $200,000 operating income on $300,000 in revenue equals a 66% operating margin which is high compared to all businesses, but inline for an online business. For those looking to start a business which has huge operating leverage, online is the way to go.

Note: All the figures above are gross revenue figures. It’s important to compare gross income from a day job to operating income before taxes online to make things as apples to apples as possible. To make things easy just take each figure above and multiply by 70% to get a rough estimate.

IT TAKES LESS ONLINE INCOME TO ACHIEVE EQUAL HAPPINESS

I’m going to argue that earning $1 online is equivalent to earning $1.5 from a day job in terms of satisfaction. When you see the direct results from your efforts, there is no better professional feeling. Online income is also much more gratifying because you can work from anywhere in the world there is internet access. You don’t have to be stuck in a place that’s freezing for half the year with grey skies for all the year. You gain absolute independence to choose the lifestyle you want.

Everybody can be happy at any income. It all depends on your predisposition. If your default setting is to be bitter, then even $100,000/month probably won’t make you happy. If you’re an optimist who tends to be thankful for everything, then I dare say making enough to just subsist wouldn’t take away your happiness.

The question really is how much online income do you think is enough where your happiness meter increases no further? Is there also a point where you start making too much where guilt, expectations, or paralysis takes over because you’re in a different stratosphere? Curious to know everyone’s opinions!

Regards,

Sam