Over recent years, and especially since COVID more and more people are making money online and this includes those people that are full time and the many Kiwis now working online as a part-time gig or side hustle.
When we are talking about digital creators we are talking about people that create:
- videos for YouTube, TikTok, Instagram and more
- podcasts or audio content
- eBooks and content people can download
- educational and other online courses
- Instagram stories, reels, and guides
- gaming and live streaming
- online music and art
- plus blogging
There are literally thousands of Kiwis that make money online these days.
Most of these are digital creators who have something that they’ve created that attracts people to their websites, their YouTube channels or podcasts, and from that they’re either selling their own products or using affiliate marketing to sell other people’s products. And often, if they have built a good following, they will be earning money from advertising too.
In the past, it has been very difficult to get the banks to recognise this income. As it was coming from overseas and many people in the banking industry thought it was a fad and pretty unreliable. The fact is, from the many people that we’ve seen that make money online, the income generated is actually very reliable. And once you get started, it can increase exponentially.
Of course, there are plenty of people that do a little bit online and make a little bit of extra money. But there are also those that make a very good full-time income from being online. Sometimes it’s actually hard to grasp the types of incomes that can be earned online, purely because of the exposure to a worldwide market. And with digital product, there’s no shipping issues or time spent in sales, as people just automatically download the information required themselves after paying for it. Or the advertising revenue can be generated purely by the numbers of people that visit your channel or website.
One of the restrictions that the bank have placed is that the income from the digital content needs to make up more than 10% of the customer’s total household income after tax for it to be used in the affordability assessments for the finance. That means if your household was earning $100,000, then your online content needs to have an income of more than $10,000. That is often a little bit of a challenge for people that have just started. But as advisors, we’ve seen plenty of people that are earning $20,000 to $50,000 from doing things online. And of course, we have some pretty serious people that are making in excess of a million dollars a year.
Also, when we submit a finance application and want to use the online income, it does need to be supported like any other self-employed person’s income with financial statements prepared from an accountant for a minimum of one year, but the preference is for two years.
