Last updated on February 14th, 2023 at 04:54 pm
Income from blogging can be a great way to supplement your income – or even replace it altogether. So once your blog starts making money, what do you do with it? Do you spend it, save it, invest it, or what? I understand how you spend your blogging income is a personal decision, but I will share what I do with mine.
Yes, you can live off your blogging income. Many people make a living from blogging, myself included. When I started making money online, I reinvested most of my money into my business. Last year, I hit six figures blogging (gross income, not net). I reinvested a big chunk into hiring writers for my niche blogs, opened a Solo 401k, and invested quite a bit into my brokerage account.
You can use blogging income for several things, including paying rent, mortgages, bills, or putting food on your table. But investing in yourself and your blog can also make a big difference over time, so I choose to reinvest some of my money into my blog and for my future.
Let’s take a closer look at different ways to use your blog money and why living off the income is not always the best choice. I’m sharing how I spend my blog money, but the advice I share is not financial advice.
Make sure you do your due diligence before you invest your money. I’m no financial expert, but that doesn’t stop me from investing.
Can You Live Off Blog Income?
Depending on how much you make, it is possible to live off blog income. Everyone’s blog profit is different. The amount you make your blog will vary greatly depending on the monetization methods, niche, traffic, etc. If you want to know how to monetize your site, read this post.
That said, regardless of how your blog makes money, you will need to put a portion away to pay taxes at the end of the year.
At the same time, I highly recommend setting aside a portion of your monthly income to save and invest. I’ll discuss this further in the article, so keep reading.
You can also use blogging money for more practical things such as paying bills, rent, or groceries.
The beauty of earning an online income is that you can have the freedom to pick and choose how you spend it. So, now I’ll share how I spend my online profits.
How I Spend My Blogging Income
I’ve learned through hard experiences that money comes and goes, so it’s important to educate yourself on investing and keeping a percentage of your blogging income to continue working for you.
While I can’t and won’t tell you. how to invest or spend your blogging income, I will share the exact steps I use for my blogging income.
Reinvesting Into Your Business
I’m a true believer when it comes to reinvesting in your business. 2022 was the first year that I reinvested a significant portion of my income back into my business. At the time of this writing, I have over five niche sites (way too many, I’m considering selling some this year), and I outsourced most of the content.
To this day, I still write a lot of my content, especially since blogging is my full-time venture. However, there’s no way I could write the content for five blogs without hiring writers.
Reinvesting into my business helped 2022 become my most profitable year to date. So while you don’t have to outsource a lot, if you’re having trouble finding time to write or still hold a full-time job, it may be worth hiring some writers.
Of course, make sure you’re hiring writers that do a good job.
I’ve hired several writers, and unfortunately, there’s not a lot you can do but test out different content services or hire via Upwork until you find writers you’re happy with.
How much you reinvest back into your business is a personal choice. Some people reinvest 100% of their profits, but I’m not one of them.
Instead, I pay myself a monthly salary, invest some into the stock market, and keep a significant balance in my business savings account.
You should always have a nest egg for business expenses; otherwise, how will you pay for your hosting and other expenses and taxes if you have a down month?
Keeping some money in my business fund helps me sleep better. Also, I don’t touch it once I move it from my business checking account to my savings account. I understand that the savings account’s purpose is to fund my taxes and Solo 401k at the end of the year.
Saving & Investing For Retirement
The other big thing I do with my income is invest for retirement.
Unfortunately, I haven’t been diligent in saving for retirement in my early years. But, now that I’m older, I’ve realized the importance of retirement savings and investing.
I currently have a Roth IRA, a Solo 401K, and a regular brokerage account that I contribute to with my blogging income. The Roth was opened in 2019, and I opened the Solo 401k in 2022.
Depending on how much you make will determine how much you can save for retirement. For example, if you’re self-employed, the IRS allows you to put up to $66,000 per year in 2023 in a Solo401k.
Those 50 or over can make the catch-up contribution of an extra $7,500 in 2023.
Last year I maxed out my Roth IRA with a contribution of $7,000. This year I plan on maxing it out with the catch-up contribution of $7,500.
The contribution amounts change yearly, so check the IRS website to see what amount applies to you.
Starting An Emergency Fund
I’ve gone through my entire life without having an emergency fund. Not because I never wanted one, but because I never had the money to put aside for one.
Two years ago, I opened up a Goldman Sachs high yield savings account and started funding it every month. Today, I can safely say that if I have an unforeseen emergency, we’ll be fine.
I won’t have to worry about selling my stocks or begging family for money, not that they would give me any.
Starting A Brokerage Account
I’ve been reading many books on finance and decided to open my first brokerage account two years ago. So I opened up my first brokerage account with M1 and started investing in blue-chip companies for dividend income.
Sometimes I have no clue what I’m doing, but then I read the story Ronald Read and realized that anyone can invest in the stock market. The biggest thing I regret is starting so late.
But the only thing I can do is move forward from where I am today. But unfortunately, my family never taught me anything about money except how to get a job cause that’s all they knew.
Last year, when the market started dropping significantly, I opened up a second brokerage account with Fidelity. Again, I chose Fidelity because it’s easier to set limits and get better stock deals.
I know you’re not supposed to try to time the market. However, last year I invested in several growth stocks like TSLA, GOOG, and AMZN. So when I’m buying growth stocks, I want to ensure that I get the best deals.
After all, when I’m ready to cash in on the stocks, I’ll have to sell them. I’ve learned that you make money on growth stocks when you buy. 2022 was a great year to pick up some growth stocks because they went down so much.
So I was buying whenever I could. I invested $36,120.30 last year into my Roth, Solo, and brokerage accounts. I’m waiting for my CPA guy to tell me how much more I can fund my Solo 401k to help me reduce my taxes.
This may sound like quite a bit of money invested in the stock market for a year, but it’s not, especially when I’m starting from 0 (or almost 0) at age 50.
My goal is to reach a net worth of $100k with only investing blogging income. Right now, my net worth is $64.000 after two years of investing with my blog income. So, I still have a ways to go.
Paying Myself A Salary
In 2022 I set up an LLC for my blogging business. This allowed me to separate my business assets from personal income. While it’s not necessary to set up an LLC as soon as you start blogging, I think it’s essential to set up a business bank account.
I waited over three years before setting up my business account. A business bank account makes it extremely easy to keep your business income separate from your personal income.
Having a separate business account makes it so easy to pay yourself a salary and keep track of your finances for taxes. So how much do you pay yourself as a blogger?
That’s one of the great things about being an entrepreneur. You’re the boss and the employee, so you can decide how much to pay yourself.
How much you pay yourself isn’t a big ordeal if you’re a single-member LLC or a sole proprietor. You don’t even have to pay yourself a salary.
This is because the government doesn’t see you as a business entity. Instead, an LLC is seen as a business structure designed to limit your personal liability.
If and when you decide to become an S-corp, you’ll be required to pay yourself a fair salary based on the services you provide. This means you’ll have to search what jobs in a field similar to what you’re doing pay its employees and base your salary around that.
You’ll need to consult a CPA or do your due diligence on the IRS website to determine what’s considered a fair wage.
How Much I Pay Myself
I decided to pay myself $2500 – $3,000 monthly after my business expenses and taxes. That works great for me because I have a very low cost of living, and that amount covers my monthly expenses with a little left over.
I’m fortunate to have a partner who pays a significant portion of our living expenses. So I don’t have to pay myself a considerable salary.
While I pay for some of the smaller bills, I like paying myself a small monthly salary. After all, who wants to work for nothing? I look forward to my payday.
When I transfer the money from my business account to my personal account, the first thing I do is invest 60% of my income into the stock market.
I know that’s a lot of money to invest, but if you’re like me and have waited too long to start investing, you must make some big sacrifices.
If you’re younger, then you’ll be fine investing 10% of your income. If you’re new to investing, I recommend reading “The Richest Man In Babylon” by George Samuel Clason.
It’s a great book I wish I had read when I was younger.
Why You Shouldn’t Spend All Your Blogging Income
Regardless of how much you’re making online, the one thing you should know is that blogging income is unstable. Last year was great, and my RPMs were terrific.
This year, the RPMs have dropped like crazy. Unfortunately, most of my blogging income comes from ads and affiliates. So, I’ve noticed a massive income drop compared to 2022.
In fact, I can see a huge difference in the amount of income just this month alone. I’m hoping that the RPMs start to climb during the second quarter, but unfortunately, we can’t control that.
The only thing I can control is how much content I write. So, I’ve been working hard on growing my niche sites instead of focusing on the low RPMs.
Below are the two reasons I choose not to live off all my blogging income.
As a blogger, we’re susceptible to the constant Google Algorithms. I’ve been online in some form or another since the Panda update back in 2011. I’ve noticed that Google updates are more frequent and more extreme these days.
One minute you’ll see a considerable spike in traffic, and the next minute, you’re not getting any traffic. Even if you’re doing everything right, you’re not immune from the Google Algorithm changes.
The only thing you can do is, make sure you’re doing everything correctly.
If your website gets hit, there’s a good chance the traffic will come back on the next update. I’ve had one site get hit by an update, and unfortunately, the traffic has never returned to where it was before the update.
I don’t build backlinks or use AI for any of my sites. Well, I do use AI, but when I use Jasper, I make sure that I rewrite the content so I’m not just copying and pasting what Jasper writes.
While I’m a huge believer that blogging is not dead and will be around for a long time. There’s no guarantee that your blog will always make the same amount yearly. Yes, it’s possible to increase your income, but it’s also possible that you’ll have a bad year.
So, investing in the stock market helps me keep growing my income, regardless of how well my blog is doing. Of course, I know that investing in the stock market is a risk, but so is blogging.
According to CNBC, a million new millionaires were created last year just by investing in stocks and crypto. So, you can’t go wrong if you’re investing in good reliable stocks or mutual funds.
The Importance of Diversification
I highly recommend that you diversify your income sources as soon as possible. Don’t rely on one source of income. That way, if one form of income declines, you still have other forms of income to fall back on.
Since I started investing in dividend stocks two years ago, I now have a passive income stream that pays me $91.90 monthly. Unlike the blog, my dividend income is truly passive. I don’t have to do anything for it.
I have automatic reinvestment set up on M1 and the dividends automatically reinvest to keep growing my portfolio. If you’ve been thinking about joining M1, here’s my referral link. When you join through my link, we both get $100 to invest. I’d like to say thank you in advance for joining through my link, it helps support this blog, so I can share valuable information.
That doesn’t sound like much, but these are completely passive income sources that require no effort on my part. Unlike my blog, where if I leave it alone for a while, it eventually will start to die.
The main point is, don’t rely solely on your blog as your only form of income. If you want to achieve financial freedom, you need multiple streams of income or at least a plan to diversify.
Not Wanting to Blog
While I love blogging right now, there may come a day when I no longer want to blog. I’ve been blogging and doing some form of online business for more than a decade. At some point, I may find myself wanting to take a break.
If I spend all my blogging income today, that means that I won’t be able to take a break or quit later. Saving a portion of your blogging income is no different than people with traditional jobs saving a percentage of their income for the day they want to retire.
I know that blogging is a lot easier than working a 9-5. However, I like knowing that one day I’ll be able to use my investments to support myself and my family if I decide to shut down my blog or do something different.
So, even though blogging is a great way to make money online, it’s crucial to invest some of your income for the future.
It may be hard to think about retirement today, but you’ll thank yourself later for making the decision today.
Yes, some bloggers live off their income, and I’m one of them. That said, saving and investing some of your income is essential, just like you would if you had a traditional job.
Diversifying and investing in other passive income sources can help you achieve financial freedom faster while providing a buffer in case something happens to your blog income.
It’s always important to remember that the blogging industry is vulnerable to algorithm changes, and no one knows what will happen in the future, especially with the development of AI.
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