It took me 15 years to build a portfolio that generates over $175,000 a year in income. It took only four years to build the same income blogging. Why?
1) Low barriers to entry. Depending on where and when you buy, you need $1 – $2M in capital to generate $50,000 in net operating income with property here in San Francisco. It takes at least $1M in capital to generate $23,000 a year in dividend income from the S&P 500 index. With both asset classes, you can also lose principal. With blogging, it costs as little as $5/month for a hosting account and $18/year to register a domain name. If things don’t work out, all you’ve lost is your time and a minimal amount of money.
2) Enormous demand curve. Financial Samurai can theoretically reach three billion people online through search engines, word of mouth, organic promotion, and advertising. If that happens, I’ll be worth billions and I’ll take each of you out to a steak dinner! However, in real estate, you can only lock in one set of tenants and raise the rent once a year. In the stock market, you are a passive investor with no control over dividend payouts or other strategic management decisions. With a retail store, you can only capture your neighborhood traffic. The internet is growing in usage and size every day.
3) Operating leverage. Because costs are generally fixed (hosting and domain registration), operating profits soar the more traffic and revenue you get. It’s not uncommon to earn 70%+ operating profit margins as a professional blogger, depending on how much you pay yourself. Very few businesses can compare.
Now that I’ve convinced you pro blogging is the best profession on Earth, perhaps you’re interested in knowing how much you can actually make? Before we get to the money, let me first highlight the types of people most suitable for succeeding as a professional blogger.
The People Most Suitable For Pro Blogging
1) Creatives who enjoy writing. There’s no getting around the fact that you must love to write. You don’t have to be a good writer, you just need to enjoy writing as much as you enjoy eating a juicy double cheeseburger with garlic cheese fries. After a day of not writing, I get this insatiable need to be left alone for at least a couple hours to write. There’s always something interesting going on, and if I don’t write, I feel like I’ll explode. You could always hire a ghost writer or staff writers to do your work, but you’ll lose the soul of your site.
2) Creatives who enjoy interacting with others. One of my favorite joys is bantering with intelligent people who have an opinion on the topics I write about. I have a strong desire to learn about as many perspectives as possible. For those who wish they could live multiple lives to experience more of the world, blogging comes very close to vicarious living. There’s a great online community that is generally very supportive. If you used to have a pen pal, used to BBS, or enjoy meeting unique people, blogging is for you.
3) Creatives with an entrepreneurial spirit. There’s a huge difference between being a freelance writer, a journalist, and a pro blogger. A freelance writer gets paid per article and is always looking for the next assignment. A journalist covers a beat and is paid by an employer. A blogger gets paid nothing per article, and must think long term to earn advertising and partnership revenue. The pro blogger is the Chief Marketing Officer, Chief Financial Officer, Chief Designer, and Chief Executive Officer. As a true entrepreneur, you wouldn’t have it any other way because you are in control of your destiny. You eat what you kill. And there’s nothing more rewarding than nurturing something from nothing.
4) People who always want the freedom to choose. Most people are unhappy with their jobs because they’re limited in what they can do. They’ve got a boss whom they might like, but resent being told what to do. They might have unqualified micromanagers who drive them crazy. Or, they might work at a company who produces a product or service that adds no meaningful value to the world. When you have the freedom to choose, even if you choose wrong, you feel much happier. In many ways, the feeling of being a blogger is very much like the feeling of having financial freedom.
5) People who believe they have the power to affect positive change. Every single professional blogger I know started their site because they were unhappy about something in their lives. I started Financial Samurai during the depths of the financial crisis because I was worried and confused. My net worth took a 35% beating, but I believed I could pull myself out of the doldrums and help others who were suffering rebuild their wealth. Since 2009, hundreds of thousands, if not millions of people have been able to improve their financial well-being by reading a simple personal finance site. My own wealth is much greater due to careful analysis and accountability online.
How Much Can You Make Blogging?
The people who make the most amount of money blogging tend to be those who got into blogging because they predominantly enjoy writing and connecting with people and then figure out the business side of things. The people who make the least amount blogging tend to be the ones who primarily blog to make money. Their content has no spirit, which means their content hardly gets read or shared.
In general, you can make anywhere from 1-10 cents a pageview. In other words, if you have 100,000 pageviews a month, you can make $1,000 – $10,000 a month. The range is wide because your earnings depend on your audience demographic. If your entire audience is under 18 years old because you write about cats for teens, then you probably aren’t going to make as much money as someone who writes about retirement planning for Baby Boomers. That said, there are plenty of examples of entertainment sites and YouTube channels that cater to a younger demographic that make millions.
Given the national household income is around $50,000 – $60,000 a year, simple math states that if you can generate 50,000 – 500,000 a month in pageviews, you’ll be able to quit your job and support a median family in your underwear through your writing endeavors. But of course, you should know by now that it’s never a good idea to quit your job without having a livable income stream on the side. Always negotiate a severance through a layoff so you can have a long enough financial runway before your site’s traffic and income become large enough.
Ever wonder why many professional bloggers hail from the Midwest, the South, the Pacific Northwest, Colorado, Texas or international cities like Chiang Mai or Manila? Lower cost of living! It’s much easier to be a pro blogger if you live in an inexpensive area. Only a fool would try to blog for a living from San Francisco, Manhattan, London, Paris, or Hong Kong. If you find such fool, follow them, because they beat some insurmountable odds and probably have something worth reading.
Here’s is a chart of a typical personal finance blogger. Notice the various types of online income streams plus various consulting and side gigs that result from blogging. The figures are not mine, but a blogging mentee I’ve been coaching for the past three years.
Key Points From The Chart
* This blogger makes more money from consulting than from blogging. Once you become a recognizable brand in your niche, corporations will contact you for your online marketing, content marketing, and writing expertise. Individuals will reach out for your specific advice as well if you put up a consulting page. I’ve had steady corporate consulting income since November 2013, with many more opportunities I’ve declined. Corporate freelance opportunities are the biggest X Factor I did not anticipate when I left my day job in 2012. But it makes sense. Many professional athletes make more from corporate sponsors than they do from tournament winnings or NBA salaries.
* The key to generating sustainable online income is to find affiliate partnerships for products you use and love. If you can provide a 1-2 combo of providing value added content that answers an important question while also providing an actionable product to use, you’ve got yourself a home run. Every single product I highlight on FS is either free or will save readers time and money. I don’t write about credit cards, even though the payout is high because consumer debt is dangerous, expensive, and destructive to one’s financial progress. All you need is really one or two credit cards to get free points, insurance, and carry.
* There’s nothing better than selling your own product that you’ve spent your heart and soul to create. You are the product expert, which makes selling easy. I know my severance negotiation book works because I’m still getting paid out four years later. Not only have several dozen people written in to thank me for the resource, I’ve consulted with several dozen more people about breaking free from their jobs with money in their pockets. Your product can and will act like a lead generator for any consulting services you might want to provide. It’s a lot of work, but helping people with a specific problem 1X1 is tremendously rewarding.
* $151,200 in blogging income and $337,200 in total income might sound unachievable, but I can assure you the large majority of blogs who generate 300,000 – 500,000 page views a month like in this example earn a similar amount. You’re making more than bankers, techies, lawyers, politicians, doctors, journalists, and company executives. Yet nobody has any idea because blogging is not taught in school and gets very little respect as a profession. Your key is to generate as much traffic as possible by writing as much interesting and helpful content as possible. Sadly, great content doesn’t sell itself. Those who are the most self-promotional often get the most traffic, even if their content isn’t as good.
Transitioning Into Blogging
When I left my job in 2012, my online media company was generating around $6,000 a month, which is not that much if you have a $4,300 a month mortgage. But, with my established passive income stream of roughly $7,000 a month and a severance check that was over six figures, I had little pressure to try and monetize this site. If I did, I’m pretty sure the articles would be much less interesting because I’d probably have focused on writing a whole bunch of credit card review posts.
Unless you’ve been able to negotiate an enormous severance package, I don’t recommend anybody just leave their job to try and become a professional blogger. Based on my experience, and the experience of dozens of other professional bloggers I know, it takes a minimum of one year to make any sort of meaningful income on a consistent basis ($1,000/month), or more like two years.
Given it’ll probably take you two years to earn enough to pay your mortgage or rent, I strongly suggest everybody start a site while working a full-time job. Nobody is going to deny you the freedom to write your own personal journal online due to the First Amendment. And if you feel they will, simply write with a pen-name. Obviously never write about your employer, share inside information, or denounce people you work with. Be positive and focus on a different niche.
Consider the two years as an incubation period with little downside risk for whether you can really keep up your writing schedule. See if you enjoy the process. To me, progress is addicting. Your upside is very rarely capped on the internet since the demand curve is so large.
Write What You Know And Feel Strongly About
After spending 13 years working in Equities/Investment Banking and getting my MBA, it’s been very easy to write about investing in the public markets. Ironically, I didn’t write much about investing until after I left my job in 2012 because I didn’t want to risk blowing myself up at work if there was some sort of conflict of interest. Instead, I wrote a lot about real estate investing and being a landlord instead.
When you write from experience, writing becomes so much easier. You don’t have to do as much research or make things up as you go along. You can draw from real life examples to share your advice. Writing from experience also gives you a lot more authority than if someone wrote through pontification.
Today, it’s not enough to just report the news and interview a few sources. Consumers want to also hear your opinion of the news or subject matter. Part of the reason why the journalism industry is getting decimated is because journalists can’t throw in their own personal analysis for fear of being biased. But news is a commodity thanks to a plethora of ways to consume news e.g. Twitter. Therefore, you must have an opinion, backed with enlightening analysis for you to thrive.
Anybody reading Financial Samurai for at least a month knows that I’m very opinionated about certain topics. For example, I don’t think anybody should contribute to a Roth IRA before maxing out their 401(k) first. I think the reason why so many of us are spoiled or clueless about money is because we haven’t suffered enough or seen true suffering by people from around the world. I think getting a 30-year mortgage is a waste of money because interest rates will likely be low for the rest of our lives. You may disagree with my views, but I provide some very thorough analysis as to why I think the way I do based on experience. A journalist rarely does the same because their specialty is in reporting not the actual underlying topic they are reporting about.
Only when you write based on experience and strong interest will you be able to maintain a consistent production schedule. Not only will you be able to write consistently, you’ll also be able to write more affectionately. “No tears in the writer, no tears in the reader,” as one saying goes. Readers can tell when you’re “shipping it in” or putting everything you got in your craft.
As your site grows, you’ll attract more and more “tourists” who will judge you based on one piece of writing and never return again. Even if only 0.1% of your 100,000 readers hate you, that’s still 100 people who will try and make you feel bad. You’ll have the grammar police issuing citations even though they never write anything. You’ll have people insulting you on your site and elsewhere even if they don’t know your whole story. Others will demand you answer their every question or write about a topic they care about, even if they haven’t paid you a penny. You must grow a thick skin and embrace those who dissent. Once you start getting nasty comments or hate mail, you know you’ve arrived!
Leverage The Internet For Everything
At age 38, I’m fortunate enough to clearly remember what life was like before the internet. Life is so much better now. The amount of free and useful information online is amazing. What used to take 10 hours to write might only take two hours now thanks to the ease of finding resources. It used to take days to get written correspondence delivered or a stock confirmation. Now communication and trade confirmations are instant.
The internet is making having to work in an office obsolete. Instead of going to a bank one by one to compare the latest mortgage rates, you can just go to one site and have a menu to compare from. The same goes for finding life insurance, car insurance, homes, tracking your net worth, etc.
Changing the way we work is obviously one of the hardest things to change. It’s so engrained that we must go to college and find a good paying job. Yes, do both of those things. But at the same time, create your slice of heaven online. Build your brand online while you still have benefits and a steady income. Start a website about something you’re really passionate about. Even if your site doesn’t generate a full-time income stream, it may generate enough where you can leave a job you’re only doing because of the pay and work somewhere else more interesting.
If a technology donkey like me can start a WordPress.org site and connect the site to a hosting company, so can you. If you can’t, hire someone to do it for you. Becoming a professional blogger takes time. You’ve got to last long enough to see the flowers bloom. But once you’ve been around for at least a year, you’ll notice good things start to happen. Start small and slowly build your way up towards something great. You’ll never know if you don’t try.
Readers, anybody out there thinking of becoming a professional blogger? Why not leverage the internet to provide yourself a financial and mental boost? Even if you don’t make a lot of money from your site, you can potentially make a lot of money as a consultant. What’s the biggest hurdle you face in starting your own website?