Now, if we decide that we must be over-budgeters, then there is a way to use this trait to our advantage. Wealth is having excess income versus expenses. In layman’s terms, we live below our means while producing outrageous revenue.
You see, for most people, lifestyle inflation becomes the silent killer of their wealth. What is lifestyle inflation (sometimes called lifestyle creep)? It is when your income rises and your cost of living rises as well. With a long-term view, this is why most people cannot seem to get ahead, even if they earn $200,000+ a year.
Adopting a lifestyle of minimalism is a great way to keep your expenses level throughout your lifetime. Minimalism is the exact opposite of materialism—which is a way of life in America. But deciding to avoid expensive items and toys is the first step to staying on mission.
Accumulate Your First $100,000
Now, our over-budgeting trait comes into play. If you can keep the same $700 food budget for 3-5 years, you can become rich with the other income. You see, the price of food increases with inflation. So to stay on budget, you will have to become more aware of shopping habits, eating out, and cooking at home.
No, I never said it was going to be easy. Human nature tells us that the more we make, the more we spend. But, we will get to that portion in a bit. Right now, we need to evaluate everything we spend money on.
I have my Marine Corps paychecks broken down into five distributions. That way, I never see what a $140,000 salary looks like. When I get a pay raise, I immediately add the cash to an investment withdrawal. Money unseen, is money saved. However, money will be returning to us.
And here is the fun of over-budgeting, saving, and investing—the money will begin to come back to you in the form of dividends. The money that comes back to you, your dividends, are now yours to spend as you wish. Yes, I give you permission.
Dividends are guilt-free spending, and they will allow you to increase your lifestyle a little. It will be tough to spend money freely, remember you are an over-budgeter, but there will come a time when you want to splurge a little.
My wife and I had to become over-budgeters for two years to pay off debt and build our dividend portfolio. Now we are debt-free and have $180,000 in our dividend accounts. I am only 40 years old, and we have never been happier.
Our dividend portfolio started with earnings of less than a dollar a month. Now, it has reached $500 of purely passive income. Becoming an over-budgeter helped us achieve financial freedom. We still work day jobs, but we can stop and be reasonably comfortable. We would need to continue a few side hustles to keep the high-income to invest.
Also, remember that I will have a military pension, we own three homes, have a dividend portfolio, and have a small book publishing business. All these lead to us being financially free.
Lawsuit, Inheritance, Lottery…Is This How You Plan to Get Rich?
I also always talk about small business ideas that are relatively passive and achievable to the average person (read: me). Things like running a community garden, starting an RV business, a passive Airbnb business, writing an eBook Series or running a property management business.
Becoming rich, to me, isn’t the idea of being great at one aspect of life. It is the sum of being “okay” at many different venues and having a whole life approach to wealth. We usually have one wealth generator; then, we can have a few branches of wealth that assist us in fleshing out our money. Let’s take a look at my life (with my wife).
Work. We both work jobs. The military is my wealth generator, and it has taken care of us for 22 years. I will have a very nice pension when I retire; one most people could only dream of. But, I will not rest on my laurels.
I continue to grind because we cannot leave a military pension to our kids or grandkids. That is why we need to convert our pension money into other forms of passive income.
Standard Employee by Day, Passive Income Hero by Night
Budgeting. We budget very well. We both have our income split into separate accounts for easy investing and spending. We are not too over the top, but we do have a lump sum budgeting method. For example, I know I have $800/month for all my expenses here in Japan. It’s easy and gives me a little freedom.
Investing. I am not the best investor, nor am I. I aim for an 8% return from the stock market. 4% from capital appreciation (price going up) and 4% from dividend income. Simple, straightforward, and achievable. I do not have to follow the highs and lows of the stock market.
Cryptocurrencies. I invest in crypto for passive income. The book “How to DeFi” showed me how many passive income opportunities there are in cryptocurrency. Capital appreciation is just a side-benefit for me. Again, I do not have to follow the ups and downs of the market.
Real Estate. I do not aim to be the best real estate investor, nor do I want several properties to manage. We have three houses, and I just want to maximize the cash flow from each. The book “How to Increase the Net Income of Your Rental Property” has some excellent ideas.
Business. As I listed earlier, there are so many small business opportunities that people should pursue. I don’t want employees or phone calls. I want passive income. That’s why I have been gravitating to writing and publishing books. It’s a very peaceful business model, and I plan to have a good income over three years.
All these things together will make you rich. However, if you cannot budget, then your money will fly away faster than you can count it. There will come a time when you can spend money much more freely.
If Life Gives You Lemons…Make Passive Income Lemonade
My wife and I see this time coming up reasonably soon. In fact, we have already planned a $1,000 dividend spending spree. Also, any money I make from book sales goes to dining out trips for the month.
Again, our cash flow goes money in, budget, maintain low expenses, invest, and spend whatever investment income comes back to your pocket. Your investment income is your discretionary income. If you do not need the cash, reinvest it.
Conclusion. If some of these ideas are foreign to you, please grab some of my books or read the corresponding articles. I aim to keep all my thoughts free. You can read every book I publish in its entirety by just searching the book’s name on my blog.
Some of my latest articles and books are
- “The Woman’s Guide to Investing (book)”
- “Become a Life-Long Learner (book)”
- “Can Grammarly Make You A Better Writer (book)”
- “The Magic of An Automated Business (book)”
Good luck on your journey. Over-budgeting is a great trait; just don’t let it limit your true earning potential. If you have the skills and talent to manage a household, you can run a business just as efficiently. The same talents apply!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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