One of the greatest and most common fears that people have when they choose to quit their day jobs and pursue their online careers full time is that their new online businesses will not be able to fully replace their old income. They’ve grown accustomed to a certain standard of living by making a certain amount of money each year. And make no mistake, unless you are exceptionally lucky, you’re probably going to take a pay cut for the first few months, if not for the first year or more.
Naturally, the hope and expectation is that your online business will continue to grow and eventually your online income will surpass when you were once earning at your day job. Meanwhile, you might be able to work fewer hours and get to enjoy the dot com lifestyle with all the time and location freedom that it can afford.
Money Is Relative
But here’s the thing. You should never think about your annual income in absolute terms. It’s all relative and you have to consider all the other factors that come into play. Remember when I talked about how to scale your online business? Working insane hours in order to earn more money might not be worth it. Working fewer hours for less money can provide a far more fulfilling lifestyle, one where you get to spend more time with your family and with traveling the world.
It’s all relative. Something that far too many people overlook is that the very nature of working for yourself from the comfort of your home office is far more cost-effective than the traditional job of a salaryman. I’ve been at this for a decade and I can tell you that I literally save thousands of dollars every year by the very virtue of working from home.
A Money Laundering Scheme
I just got back from picking up a pair of pants from the dry cleaners. I have a wedding to go this weekend, so I wanted to make sure everything was ready to go. The total bill for a single pair of trousers came to just over eight dollars. I don’t normally wear dress pants and dress shirts, since I work from home. It’s far more likely that you’ll find me in shorts (in the summer) or in sweatpants (in the winter) with a t-shirt.
Back when I still had a regular office job, I had to take my clothes to the dry cleaners on a fairly regular basis. Back then, my local dry cleaner charged about five dollars for a pair of pants. Even if I only laundered two pair of pants each week, over the course of a year, I’d spend over $500 on dry cleaning alone, not to mention the additional cost of having an office-appropriate wardrobe. At today’s pricing, I’d be spending over $800 on dry cleaning each year.
The Drive to Succeed
This goes far beyond the simple cost of clothing and dry cleaning, of course. Since I work from home and have constant access to my Wi-Fi, I am able to take on a less expensive monthly plan for my smartphone. Since I work from home and don’t have to deal with a daily commute, my transportation costs have diminished significantly. My wife and I used to have separate cars, but now we just share the one because we don’t need a second vehicle.
A tank of gas in Vancouver is currently about $50, which let’s say lasts a week. Annual auto insurance on our vehicle is about $1,400. Over the course of a year, that means we’d be spending $4,000. And that’s all before we factor in the additional costs of depreciation and maintenance.
Since I operate my own business out of my own home office, I am able to write off certain expenses too. I write off a portion of my mortgage interest, my home insurance, my utility bills, and so on. These net me additional savings come income tax season.
The specifics of your situation will surely differ from mine, but the same fundamental principle still applies. If you’re working from home as an entrepreneur, you don’t actually need to earn as much as you do at your regular day job. You can earn thousands less, enjoy your same standard of living, and reap all the benefits of the dot com lifestyle too. It’s all about perspective.