Life is expensive. This is a difficult concept for most people to understand. To stay ahead in the world, you must keep increasing your income annually.
The good part is that your assets can do most of the work for you. The bad part is you’ll need to acquire your assets first.
I wrote part one of this article in December 2021. In that month, I received $2883 in passive income. Last month, April 2023, I received $4,428.
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It wasn’t easy to obtain and maintain these assets, but it’s with the additional pain to ensure my wealth grows with inflation.
Income vs. net worth. Most people look toward their net worth to show they are growing financially. However, net worth truly doesn’t mean much if it doesn’t produce income.
The world runs on income, and you will need a lot of it. And once you slow down your spending habits, it’ll be time for your kids to go off to college, get married, and have children—it never ends.
When your house increases in value, it doesn’t do much for you. Therefore, let’s explore how we can keep our income growing ahead of inflation.
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Your W-2 employment. Your employment income will not keep up with inflation. Sure, you can keep jumping jobs, but eventually you’ll end up somewhere you hate.
No, to keep your revenue growing, you’ll need to become an insider. This means you need to control the assets and the income.
Once you become an insider, you decide how much something costs, rents for, or when to reinvest for more income.
Your money system (dividends). The most important lesson today is to start building your money system. Your money system (dividends) ensures you will continue to grow ahead of inflation.
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There are a few different ways to invest for dividends (index funds, dividend growth, and income investing). Each has its own unique spin on how to generate revenue.
I use all three methods, but truly love income investing. Income investing is all about math, and learning economics (boring stuff for most).
The more dividend you reinvest, the faster your income will grow. However, I like to use some of my dividends to cover life’s daily needs. It’s fun to spend on things without guilt.
In December 2021 my dividend income was $884 and last month it was $1,322. It’s important to note that December is usually much higher than most months because of special dividends. So it doesn’t represent the average month.
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Increase your rents. Many people love the idea of having a rental property, but cannot get over the prospect of becoming a landlord.
To be a landlord, you have to develop veins of ice. However, that doesn’t mean you have to be mean; you’ll just have to ensure tenants pay rent on time and you increase your rents.
Yes, you must increase the rents every year—even if it is a trivial amount. Your costs as a landlord will continually increase because of property taxes, insurance, HOA, and repairs).
Zillow is a good way to find your average rent costs. It also is a great way to determine the value of rental rooms.
A master bedroom should rent for half the value of a full house. You may need to add some extras, but you can get there.
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My wife and I have two rental rooms and two rental properties. We ensure we raise rates to match the going prices.
In December 2021, we earned $1,800 in rents ($200 properties, $1,600 rooms). In April 2023, we earned $2,750 ($650 properties, $2,100 rooms).
Creativity is the key. Perhaps the best way to increase your income annually is through creativity. Be warned; it takes a while for your creative pursuits to take hold.
The best part of being creative is that you can add additional income streams to almost every creative endeavor.
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For example, as a writer, you can write a blog, books, and publish on Medium—all from the same articles.
There are many ways to be creative, you’ll just have to put yourself out there. If you fear going public, you must turn to an automated business to increase your income.
In December 2021, I earned $125 across my creative pursuits. In April 2023, I earned $208. Again, December is a great month for book sales, so it doesn’t represent the typical month as much as April.
Automate your automated business. A great way to increase your income is to use an automated business to fund your money system.
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Ideally, you will start something like an ATM business, vending machines, or renting cars on Turo. You can use that revenue to grow your money system at a faster rate.
You will want to create something that doesn’t take too much of your time. As you become more efficient, you’ll move faster and require much less time.
I haven’t been able to start an automated business outside of my website. As soon as I retire, I plan to place my third car on Turo.
Putting it all together. The key to growing your income is funding your money system, increasing rents, and creating a massive backlog of creative works.
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Notice that I didn’t say seeking a higher paying job. Yes, a high-paying job is great, but it is risky to only depend on this income.
The great part is that you can do all of the other things in the article while you have a full time job. I know you can because I did it.
Conclusion. Yes, reading about the stock market daily, maintaining three homes, and writing in the middle of the night was tough.
But, my wife and I are reaping the rewards today. She is retired and I am 90 days away from leaving my job for good.
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As I walk away with my pension, I am secure in the fact that I can control my income via rents, dividends, and royalties.
We can live comfortably on our pension income, so the other passive income can go to create more passive income—funny how that works.
To stay ahead in life, you must think outside of the box. The minute you say “I’m good,” the world will change on you. Income keeps us and our family safe, so go generate more. Good Luck!
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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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