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. You’ll be surprised how much some pro bloggers make!
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!
Once you make enough money online, I’d use a free financial tool like Personal Capital to manage your finances.
START A MONEY MAKING BLOG
It’s been around six years since I started Financial Samurai and Yakezie and I’m actually earning a good passive and active income stream online now. The online income stream has allowed me to pursue other more interesting things, such as consulting for various financial tech startups, traveling around the world, and spending more time with family.
I never thought I’d be able to quit my job in 2012 just three years after starting Financial Samurai. But by starting one financial crisis day in 2009, Financial Samurai actually makes more than my entire passive income total that took 15 years to build. If you enjoy writing, creating, connecting with people online, and enjoying more freedom, see how you can set up a WordPress blog in 15 minutes with Bluehost. You never know where the journey will take you in 2015 and beyond!
Regards,
Sam
I did not start for the money and thought having enough to cover operating costs (including internet connection and laptop, so about $100/month) would be awesome. Then as the blog grew I wanted more because the work required behind the scenes was not fun blogging time and I wanted to either be compensated for that time or be able to afford outsourcing. While $2-$5K/month is easily achievable with a bit of work, getting over that amount with only one blog and only you working on it as a side hobby seems pretty hard. I don’t want to take my blog to more than a fun personal hobby so am happy in the $2-$5K range.
How long and how much work does it take to achieve a level of $2-5k per month?
I reached it after 6 months, 3 of them blogging “in the dark”, i.e. with virtually no contacts with other bloggers. If you network like crazy and are an SEO pro you can probably do it in a few months, if it is just a hobby blog I would say 12 months, but it is hard to put a number there since it all depends on how hard you work on promoting your blog and putting up good content.
No matter what I make, I could always find use for more money–if not for our family, then for the charities we support. I can’t imagine NOT being additionally happy sponsoring a few more AIDS orphans than we are now.
I remember my first Adsense check. That was an awesome feeling because I had doubts I would ever get paid for a long time. I am blogging on the side right now so my approach is slow and steady wins the race. I don’t want to burn out but I also want to build more revenue over time.
I blog for fun, so I’m still at the point where anything I make is a bonus and brings a smile to my face. I’d like to get to a point where I’m bringing in an adsense check or more every month, but I’ve still got a ways to go for that.
I don’t see myself ever making thousands/month from blogging. It’s something I enjoy doing on the side and I don’t know that I’d continue to enjoy it if I started to put in the work that it takes to get to that level. Who knows though, I never thought I’d get the traffic I do now. So I guess anything is possible.
Always remember that anything is possible. You will surprise yourself if you keep at it.
I am firmly entrenched in the “anything” phase right now. I do however, have plans to at least get to the $1,000 per month category. As for total income, I’m shooting for the six figure club right now, after that who knows!
Income is awesome, but if it isn’t growing you start to wonder if you’re doing something wrong!
True. And then once you make the adjustments to see the growth again, you’ll feel great b/c it’s a directly result of your efforts!
I’ve just reached the $100/month phase myself. Freelancing is another route to making that first $100/month. My various freelance efforts are starting to pick up steam and $100/month from that alone should be happening very soon.
To answer your question, $3k/month would probably be my number. At that number, my wife could afford to make the transfer she wants to do but comes at a 58% pay cut, and I would still have money to pay off my debts and fund my retirement.
I think it is a log scale and you define it pretty well. To achieve the next level it is exponentially higher amounts of money.
Going from $100 to $1,000 is a huge milestone and opens up possibilities – paying off debt, more spending money, etc.
Jumping to $5,000 a month maybe gives you the ability to quit your job.
$10,000 or more allows for quitting your job and vacations you may not have been able to take before
But as you get higher, it takes more to get more satisfaction – taking a vacation vs. flying first class vs. taking a private jet. The next level of satisfaction just takes more and more money.
Indeed, which is why anything more than $200,000 in operating income, $300,000 in online revenue doesn’t provide that much happiness anymore imo. What level do you think would make you no more happy?
I’m saying that there is no level that caps out happiness, it just takes more and more to get to the next level of happiness.
I’ll be happy with with $8,000 a month – this would allow me to achieve some of my goals (one of these being not having to have a job if I don’t want to). However, I am finding that this is hard to achieve with one blog and growing it so much as a small hobby/side hustle may turn out to be the wrong strategy. Question is: putting all into building up one blog or developing another blog.
I’d test out building another blog using all you’ve learned from building the previous blog. Work on it for 1 year and see how it goes. If it doesn’t go, then focus back on the bigger site.
I will be happy with anything between “Anything ans $100 a month” if that income is regular. Currently I make a few bucks from advertising, but it is very irregular.
[…] gratifying than building something from nothing and watching it grow. You can even make a healthy six figure income online if you get big […]
I am just shooting for operating costs within a year. Then, take it from there. My version of happiness is dabbling in many different things, so a successful blog would be a piece of many moving parts.
Covering operating costs is a great goal to have.
My initial goal is to cover costs to run the website. Once I get to that level, I can leave it up in perpetuity as a self sustaining entity. My hope is to one day do this full-time so I can be mobile. Traveling the country while making an income on my own terms sounds like a dream.
Nice list. I think the only one you missed was $28,000 a year, or $2,333.33 a month. That puts you in the rock-star category! http://www.theonion.com/video/social-media-rock-star-makes-28000-per-year,32302/
Yep. Too bad it’s not a real example. If it was a real example, that would be awesome!
Hi Sam
This is a good post for marking the milestones with money-making blogs. Like a lot of others here, my blog is first a labour of love – why else would I be crazy enough to spend the hours and hours I do on it without benefit? However, I do have a eyeball on monetizing it in a strategic way – it might take me longer to get there but I’ll be happy with what I’m putting out there.
Cheers
Lindsey
Howdy Lindsey, don’t ever feel bad that you want to monetize your site btw. I know it’s an issue for a lot of people. You’ve put in tons of effort, you should be rewarded. Very simple as that!
I’d say $1,000 a month steady, and I’d be happy. Of course, if I want to reach FI much earlier, I’d shoot for more. Also, I haven’t implemented adsense yet. I hear it doesn’t really pay out very well…?
Adsense isn’t that great.. they say it’s a poor man’s income. But, it’s easy and fun to practice with. Some do better than others.
I have had adsense for a couple of month and was really excited about the income at first but then the real payout (after they remove what they consider fake clicks, or whatever they do these days) was about 1/3 of what it said all month, and I am considering taking it down, visually it takes a lot of space and doesn’t bring enough to justify the visual pollution.
I got kicked off adsense awhile back and am happy not to have the intrusive ads front and center. (I’m sure I’d feel differently if I had been making a bundle instead of a trickle off adsense)
I’ll be very happy with $3,000/month in steady income. I think it takes a lot more than 1,000 pageviews/month though. I don’t know, one you get to one level, you want more. $10,000/month would be crazy though. How many people can do that?
I guess it depends on the content and type of advertisement. But, you’re probably right for more than 1,000 pageviews a month.
$10,000 per site is definitely not easy, but I think if one adds all the income from all activities online, it’s much more common than you think.
Sam, this is quite an interesting article. With 2 day jobs and a blog, it’s tough for me to think of the blog as a huge money maker. My main goal is to get some compensation for the time I put in, and as I’m at the later stages of my working life, I really want to help others learn from my financial success. I’m really focusing on giving back as I’ve had a long run in the wealth building arena.
I an currently in the 1st category (anything). I am working to get to the $1000 level.
I would love to taste the $25K per month extra income, I could be happy with a lot less! More importantly, I get a lot of satisfaction from writing particularly through feedback. The money would be a nice bonus.
My blogging income has been a huge fluctuation – primarily because my level of dedication fluctuates so drastically. I have been a part of a few of your categories. The anything category was the most fun. I was blogging my face off. I then remember when I received $100/month. Believe it or not, I have been blogging for 3 years now and I have never looked into adsense. I know I’m missing some easy income. For whatever reason, I don’t like the way ads look on a website. About a year ago, I hit the $1000/month club and it felt glorious. That was also the point when I told family and friends what I created. I suppose this is my happiness level. This figure has dropped since, but I’m rededicating myself. All of the money from the blog is still sitting in a checking account as I figure out how best to honor my mother.
I completely understand the link between effort and compensation. When I put in more time with the blog, there are greater rewards. Not only financially, but with comments and page views. I guess like anything else, there’s a pretty strong correlation between effort and results.
Congrats on hitting the $1K/month club! I’m sure you’ll put all the money to good use whatever you decide in the end.
My goal is to make $2,000 a month from online activities. This may include advertising from my blog, or other side hustle series like staff writing. I don’t want to quit my job. At this point I want additional income to accomplish some of my goals.
I agree it’s too early to quit your job as well. The first couple years after college are a wonderland of opportunity where you can learn so much. I’d probably keep working for 5 years even if your online income surpasses your offline income.
I am just getting started but would be ecstatic with $1000 to $2000 a month in online income. If you add that amount to what my current job pays, I think we could live very comfortably at about the $1600 per month mark. It would give us an additional $800.00 per paycheck.
This is something that I’ve been thinking about a lot lately! $25K a month would be awesome. Great post.
OMG, $25k from blogging! I would be happy and maybe get crazy if it ever happens to me! Is it even realistically possible to reach this amount a month?
Do you know anyone who actually makes this incredible cash a month? I want to introduce such person to my wife who thinks I am crazy sitting every night behind to computer blogging and tell “… see, it pays doing it…”
You probably know at least a dozen folks who garner more than 25K/month in revenue online. Like in the offline world, there is much more money than people think. But after reaching a certain level, people disappear to avoid attention.
I’m also interested in adding more wealth building books to my line up. I think people like to pick up a book from someone they “know”. If my meals would cook themselves and the clothes would hang themselves up, I’d have plenty of time. Oh yea, and I got kicked off of adsense awhile ago and am not that keen on too much advertising.
Sounds good Babara. Looking forward to checking out your book empire! I’m too tired after my first book to write another for a long time.. which is odd, since I write everyday online.
I got kicked off adsense before I had made a dollar. No income for me even though I have been working very hard for about 6 months. I have applied to an adsense alternative and would be thrilled if my costs were covered.
I average just over 150 views per day and I know that I need to get that number up before I can be profitable. I am trying to learn as much as I can.
I think the biggest goal is to just make money to see that it is possible. When I first started it was just to blog and then I got my first affiliate sale and boom I was like I can actually get paid. I agree with one of the comments Sam made in that a lot of people are making good to great money online but try to stay under the radar.
First off, I’m printing off this page right now. There are so many awesome points and suggestions in the comments section.
I will be happy to be in the $2,000-3,000 per month range. I live an incredibly frugal lifestyle and have so many passive forms of small income that the diversity really helps if one or the other dry up.
When I started out, all I focused on was getting Adsense. Now, I don’t even put Adsense on my blog. I could care less. The majority of my money is made through Amazon and affiliate sales. I’m currently putting the finishing touches on my series of Kindle books in the hopes of diversifying my online income.
[…] tremendously, then perhaps one day we can focus on our blogs full-time. I’ve written about How Much Income Do You Need To Make Online To Be Happy with some various good feedback from all of you.The trick is getting to the income happiness goal […]
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