At the end of each month, I’d previously posted passive income & portfolio updates. I’ll continue to do this again soon. But some readers have also asked for details on income & expenses. This series will explore this area each month going forward.
We already covered how I received a personal record of $15,986 passive income in December in a recent post. To be clear, this month will be anomaly due to the year-end distributions from various funds I hold.
In all posts, I do try to be as transparent possible; however, as a personal preference, I usually do not disclose every single detail or precise numbers. Where possible, for example, percentages are preferable; they help tell a theme or demonstrate correlations and/or cause & effects.
Nonetheless, certain areas will still contain the exact details.
Income
My primary source of income comes from my day or 9-5 (more like 8-6) job. On the journey to averaging $1000 a month in passive income, the biggest factor is how much you save. Yes, time and returns play large parts, but how much you save carries the most weight.
Like most Americans, my primary income still comes from earned wages – not investment income. Overtime, like the rest of the US economy, this is gradually starting to change. Not only in terms of income bracket, but sources of income as well.
In the long-term, turning that income into assets which can produce additional income is key.
This Month’s Results
Here is a breakdown of this month’s income. Figures are based on net (post-tax) income.
- 9-5 (8-6) Day Job = 94.44%
- Side Hustling = 2.32%
- Passive Income = 3.24%
Although passive income came in at a pathetic 3.24% this month, I had to remind myself that it’s not December! Last month, I also actually earned the most ever since starting new side hustles.
As mentioned last month, compared to December’s passive income, the other two categories look quite weak. This will gradually begin to change.
Expenses
Perhaps not surprisingly, most Americans’ top 3 expenses are housing, transportation, and food.
Focusing on these areas that carry the most weight, one could make a positive – or negative – impact on his or her expenses and ability to save.
This Month’s Results
Here is a breakdown of this month’s expenses.
I had to pay a full month’s rent finally. With my new apartment’s promotional offers coming to an end in December, I had enjoyed my second – and last – free month of rent.
On the plus side, my reoccurring expenses came down a bit after some of the one-off higher than usual expenses due to moving related expenses.
I also nearly finished reducing a few select areas now that I’m in my new place and settled.
In a positive way, gifts and charity experienced a high-point in December which continued slightly into January. I’m also considering an additional charity to set-up a reoccurring donation.
Savings / Investing Rate = 28%
I managed to save and/or invest approximately 28% of my income.
At first, I was disappointed with this amount compared to December’s 92% (61% without passive income). However, again, the two key factors for January vs December:
- I had to pay rent; and,
- I received annual distributions.
But then I smiled. I forgot that this 28% savings / investing rate represents my NET income. Pre-tax retirement contributions are not included. I’ll need to factor that in somehow next month.
Overall, the continued focus on side hustles and other passive income efforts will gradually contribute to an improved savings and investing rate.
Clearly, lifestyle approach also plays a significant part.
Related: Side Hustling: The Fruition of (Potential) Frustration
Ways to Increase (or Decrease) Savings Capacity
We previously explored the 3 Balanced Dividends lifestyle approaches that can impact your ability to save and invest:
- (1) All-In Approach
- (2) Moderate Approach
- (3) Screw The World Approach
For a long time, I’d been in Moderate Approach, sometimes tipping into the Screw the World Approach.
Now I’m focusing on the Moderate Approach but with certain days or periods of time reflecting the All-In Approach.
Selecting which lifestyle approach to consider is a personal choice. There is no best answer.
With many things in life, you’ll likely fluctuate or modify as you learn and live.
Looking Back – and More Importantly – Ahead
I’m very happy with my progress. Despite a high(er) savings rate than in the past, I also don’t feel like I’m “sacrificing” today for tomorrow.
The last few months have brought about a whirlwind of change. As things continue to settle down, I’m excited to focus on things meaningful to me: relationships and well-being.
Personal finance, as well as fitness, just provide the foundation.
Readers, how are you attempting to focus on what’s important to you? Do you believe increasing your income and/or reducing your expenses can lead to happiness in the other, more important areas of your life? What are your thoughts?
Related:
15 Years Later: 5 Things I Wish I Knew Sooner
Backstreet Boys!? Pre-2019 Goals & Planning
Post-March Madness: 5 (Plus) Ways To Find Balance
Our favorite free financial tool is Personal Capital. We use it to track our net worth, manage our spending & savings, and to monitor our investments. It’s simple and free to use.
Thank you for inspiring post. I want to try some apps that you list in the Side Hustling page. Will you plan to write Side Hustling income every month?
Thanks for your comment and for reading.
On the Side Hustle income, yes – I do plan to go into further details of these efforts.
At the moment, I’d say the most active results are coming from the surveys, but they’re very slow.
The best paying I’ve found is Rover for dog sitting; however, I’m not always available so the results are sometimes slower.
I’m also working on an additional side hustle gig that will likely be the most consistent that I do. More to come soon.
Thanks again for reading. – Mike
A wealth of information in a single post. Thanks for sharing Mike!