My article “To Be Truly Free: You’ll Need $20,000/Month in Passive Income” is consistently one of my most read articles. People love to debate that they can live on much less money than this.
Okay, I’ll bite. I can admit that I can live an extraordinary life at $8,000/month of passive income. I already have three homes that I can use to combat inflation, and I have a military pension coming my way. For the most part, I am good.
Then why do I keep touting this massive $20,000 number? Because this is what my family will need. This is what the world requires. This is just the beginning of what my bloodline requires to exist comfortably for the next 100 years.
Retirement Planning for the Average Person 3
Budget vs. Fixed Income. The crux of everyone’s argument is knowing the difference between living on a budget and a fixed income. Luckily, I wrote an article simply titled “Budget vs. Fixed Income.”
Living in a home with no mortgage, my wife and I can live super-comfortably under $5,000/month. With a mortgage, let’s call it $7,000. That is with us traveling, taking trips, and eating out whenever we want.
We are not huge spenders, and I keep a super tight budget. You may even call me an over-budgeter. So, why do I need $20,000? Because a budget and fixed income are different.
A fixed income is your upper cash flow limit—it is your total income. When you work for 30 years at the school district to earn a $2,500/month retirement, that is your fixed income. You can then add $3,000 for social security and $1,000 from your 401K. Your total fixed income is $6,500/month.
Build a High-Yield Emergency Fund
The confusion lies in the fact that most people’s budgets and fixed incomes are the same. In fact, they have always lived this way. They spent every cent of cash flow that entered their homes. Heck, they spent more by using credit cards.
What is wealth? Wealth is having excess income vs. expenses. The difference between your income and expenses is called cash flow. When you have cash flow and assets, you are wealthy.
If you are struggling to understand the concept of cash flow, please read a few Robert Kiyosaki books. I recommend the following:
- “Rich Dad, Poor Dad”
- “Rich Dad’s Cashflow Quadrant”
- “Rich Dad’s Guide to Investing”
- “Retire Young, Retire Rich”
- “Before You Quit Your Job”
- “Unfair Advantage”
Back to my $20,000. Read those books to become proficient in cash flow, assets, liabilities, and income statements. So, now my financial independence number of $20,000/month will make more sense.
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My wife and I can live comfortably off of $7,000, but we will be making at least $20,000/month in passive income. We will have $13,000/month of cash flow, making us wealthy. And that is just the start of what we will achieve.
Our income will increase each year from the many assets we built over the years. Let’s review some of our assets and how they will keep growing with time.
- Military Retirement. The military pension will increase every year depending on the cost-of-living adjustments.
- Roth IRA. Each year our Roth IRA will grow tax-free along with the stock market.
- Dividends. Our income and dividend growth portfolio increase every year because of reinvesting and dividend raises from the companies.
- Real Estate. Rents go up every year!
- Book Royalties. The more books I publish (for free), the more income I make.
- Website. I gain more traction within Google Search, my Facebook Group, and affiliate marketing each year. More traction equals more money.
Much more than $20,000. I plan on making much more than $20,000/month in the long run. This is just my first major financial goal. I set this amount because this will allow my wife and I to live overseas in Turkey, traveling back and forth to see our kids and grandkids.
Artificial Love in the Metaverse
I plan to keep writing forever and slowly grow my publishing business. I can do all of this from my laptop. That is why I am preparing today for passive income tomorrow. But do I need this much cash flow?
You’ll need a lot of money in life. Do people understand how much life costs? Your kids will need a lot of money moving forward. Their chances of buying a home without you are extremely low.
On top of a home, they will need college, a wedding, and money for their kids. Conversely, you can say, “they can pay for everything themselves.”
That is one way to look at it, but is everyone playing on a level playing field? Do parents who can help financially support their kids give them an advantage? The answer is a resounding yes.
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If you believe your kids will do as we did, work a job for 30 years, get a pension, buy a home in the suburbs, and live comfortably, you’re dead wrong.
The world shifted to a “gig economy” and “multiple streams of income” lifestyle. This means that your kid will need to be a plumber, a Youtuber, and understand dividends, just to have a chance.
If you don’t understand blogging, the Metaverse, real estate, leverage, debt, etc., how can you help your kids achieve success? Don’t focus on the $20,000 number as an amount of income. Think of this number as a scoreboard to how well you understand financial education.
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I don’t need $20,000/month for myself. As a family, that is just the starting point for us to prosper. Why would I choose to live for less money? I have read the books, done the work, and followed the principles; now, it is time to cash in my chips.
Conclusion. Life is full of surprises, both good and bad. Murphy’s law states that what can go wrong will go wrong. Do you want to have the money to handle these untimely events? I do.
So, the title of this article should be $30,000 or $40,000/month of passive income because that is where we are heading. I am not going to stop making money ever. Making money is a function of the mind, not the body.
Real Estate Investing in Your 50s
You have to decide if you are willing to settle for the status quo or grind for freedom. Those are your only two options. Most people choose to settle. They say things like, “I can live on $5,000/month.” That means I don’t want to learn how to do more or challenge myself to achieve higher.
I have an unlimited ceiling to my success because I am a grinder. I want my wife to live without stress. I want my kids to have the pressure of success because it builds character—not financial stress. I want them to stress while growing a YouTube channel or building a business. Not about paying for their rent.
What do you truly want in life? Only you can achieve the goals you set for yourself. If you set the bar low, you’ll reach your goals every time. But it won’t give you the happiness you desire.
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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. All Right Reserved Military Family Investing
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