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.
Public Service Announcement
Before the post, I have a confession: I’ve been bad. How bad? Really bad. I’ve let work work take the bulk of my free time. I’ve been away from Balanced Dividends.
However, I did recently complete a multi-month, side hustle-related effort (or at least the primary prerequisite). More to come soon! Now back to the post.
We already covered how I received a personal record of $15,986 passive income in December in a prior 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 = 83.26%
- Side Hustling = 0.03%
- Passive Income = 21.10%
Although not technically zero, I only receive some returns in March for side hustles. I plan to make this a primary focus once work work settles down in the next month over the summer period.
On the passive income front, the third month of each quarter continues to have a stronger showing.
As mentioned last month, compared to December’s passive income, the other two categories are extremely quite weak. This will gradually begin to change as I’m focusing on acquiring additional income producing assets; I’m also hopefully a month or so away from ramping up my new side hustle – more to come soon!
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 for the third time in a row. With my new apartment’s promotional offers coming to an end in December, I had enjoyed my second – and last – free month of rent in December.
On the plus side, my reoccurring expenses remained low even further after some of the one-off higher than usual expenses due to moving related expenses. I also finished reducing a few select areas now that I’m in my new place and settled.
Savings / Investing Rate = 46%
I managed to save and/or invest approximately 46% of my income this month.
Additionally, I still have to remind myself that this represents my NET income. Pre-tax retirement contributions are NOT included, so I saved even more. I’ll need to factor that in somehow in the future.
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. Despite the high savings rate, I don’t feel like I’m “sacrificing” or “not living” by any means. I’m still traveling, going out, and doing things I enjoy.
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. As expected, this month’s savings rate was lower, but I’m finding a balance. A couple of fun trips in March helped.
The last several 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.
I keep reminding myself: 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.
I like the long term approach to increase the passive income %. What is the contingency plan if the overall market tanks and returns drop like a rock?
Thanks.
If the market does drop, I’ll buy more in taxable accounts and stay the course for non-taxable (retirement) accounts.
I’m currently allocating $1000 a month to CDs (slowly building a ladder), so I might also redirect that capital toward buying opportunities.
I would like to continue with the CDs to hit 12 months (currently at 6 – almost 7), but we’ll see. – Mike