As you know, I believe that having diverse income streams is key to being successful with your goals of making a living online. Very soon, I’ll be listing lots of ways to earn money, but today I want to make sure you know how much income you actually need to make, in order to make a living. That figure will be different for everyone. Factors such as where you live and what the standard cost of living is there, how deeply in debt you are, and how many people depend upon your income are just a few of things that makes everyone’s circumstances different.

Knowing how much effort it will take to make $2000/month vs. what it would take to make $6000/month is an important consideration when you consider taking the plunge of working from home (in your pajamas). I often tell people to have realistic expectations, and despite the fact that fortunes can be made, those are not made by everyone. Realistic expectations bring real incomes for real people. Once you know what your realistic needs are, you can match that with plans to achieve the goals.

Let’s take an example. Suppose you need $2000/month to make a living. That could break down in any number of ways, but here’s one possible example:

Four 125×125 Sponsor Ads at $150/month each = $600
Two sponsored reviews/month at $50 each = $100
10 sales of affiliate products/month at $30 each = $300
20 sales of your own info product/month at $50 each = $1000

If you had 5 other income streams besides those, you could get away with fewer sales of each, or be able to charge less, etc. The more revenue streams you have, the less dependent you will be upon any one source. Of course, the more traffic you have, the more you can charge for ad space, so until you have enough traffic to justify the higher prices, you’ll need to make up for that lack of revenue with a different source. You can play with numbers all day long, but until you know precisely what you need to make, the numbers mean very little. Here’s what I mean by that.

For example, how much promotion will you need to do in order to bring in enough traffic to be able to charge what is needed for advertising? Before you can determine how much traffic is needed, or how much promotion is required to obtain that much traffic, you need to know how much you need to earn from sponsors in order to meet your goals. Once you know what your goals are, you can run the math for everything else.

Seeing what’s needed can often be scary, however. Need a lot? That tends to dampen our spirits. But if it seems too great a hurdle, then think in terms of part-time income. Maybe you can’t easily reach the goal of making every dollar you need any time soon. Ok, what if you made half of what you need? Or even 1/4 of what you need? Would that help? Would making just a portion of everything you need make a difference? If so, then make that your goal for now. Determine how much money would make working from home for a short period of time per day worthwhile to you. That now becomes your goal, and you can go from there. That goal can always be expanded later into a full-time living.

I’m not feeling well, so hopefully my rambling makes sense, but if it didn’t, let me just boil it down to the bare essentials. Before you can make any plans on how to earn revenue, you should determine how much revenue you actually need. Once you have the base figure, you can then do the math to determine where that money will come from, and how much effort will be required to get it. Go determine that number, write it down and keep it handy.