I’ll be as honest as possible: your 30s are the toughest decade you will face. You will be challenged from every angle; work, marriage, kids, and housing will all play on your fears.
However, this is also the perfect time to establish passive income streams that will last a lifetime. As you settle down in your 40s and 50s, you will appreciate the hard work you put in in your 30s.
But, how do you create passive income during your 30s when so much is happening? The trick is budgeting and converting valuable time into income. Let’s begin.
- Planning for Retirement in Your 30s
- Real Estate Investing in Your 30s
- Staying Debt-Free in Your 30s
- Dividend Investing in Your 30s
- Bond Investing in Your 30s
- Stock & Bond Investing in Your 30s
- Options Trading in Your 30s
- Stocks, Bonds, and Options in Your 30s
- Stock Market Investing in Your 30s
No time like the present. My wife and I were quite busy in our 30s. I was at the height of my career in the Marine Corps, and my wife was working her tail off in the federal government.
Struggle-Mania 2: Is Your Mindset Keeping You Down?
We had two kids and owned an expensive home. We also accumulated a lot of debt because we didn’t pay close enough attention to our finances.
We sure could have used some passive income to help us through these tough times. But, looking back, we had many great moments because we were naive about our financial future. Live and let live, I guess.
We discovered how to create passive income when I was 38 (in 2019) and she was 35. Understanding how to make money in our sleep changed our lives—here’s how.
The only way to truly get ahead of the meat grinder (workforce) is to make money in your sleep. You can work only a finite amount of hours, especially if you have kids.
The Most Challenging Part of Passive Income: Enjoying It
Let’s look at an example of passive income. If we made $7,000/month from our jobs and our expenses were $7,000, we wouldn’t be able to save or invest.
Now imagine if we earned $700/month from a roommate, $300/month from book royalties, and $500/month in dividends. We can use that money to save and invest to make even more passive income.
Getting started with passive income. There are only two ways to become rich: increase income and lower expenses. Let’s start by lowering our expenses.
If I could talk to my 30-year-old self, I would tell him to budget diligently. In fact, budgeting is the single most important thing you can do to make yourself wealthy.
In particular, controlling your food and entertainment budgets is key to successfully running your household.
The 30-Day $1,000 Emergency Fund Challenge
It can be challenging to limit your entertainment and food budgets when you have small kids. You want them to be comfortable, have food choices, go to amusement parks, and attend recreational events.
However, all these things come at a cost, and you must be keenly aware of the price. You don’t want to leave your 30s with a bunch of bad debt.
We paid off $ 77,000 of consumer debt when I turned 40. If I had had the information, I would have left my 30s with zero debt and $1,000/month in dividends.
The goal of a budget is to create cash flow, which allows you to invest— and increase cash flow. Let’s see how it works.
New Car Payments vs. Income Investing
Turning cash flow into more cash flow. Say we earn $7,000/month in earned income with $7,000 in expenses.
We decided to move to a smaller apartment, which saved us $500/month. We also limited our food and entertainment budgets, which saved us $500/month.
We then decide to invest that $1,000/month in a PIMCO closed-end fund (PDI) that yields 12%. After three years of investing in PDI, we have $36,000, which earns us $360/month.
Our income is $7,360, and we have $1,360 to save and invest. We will continue this process until we are quite wealthy. We created passive income by budgeting and investing the cash flow we carved out of our lifestyle. But there are more things we can do.
Turning time into cash flow. Do you have parents or siblings that can help you out? It takes a village to raise children, and it can be mutually beneficial to all.
Living in 1,000 Square Feet as a Family of Four
Can your parents or siblings move in with you to help with childcare? They can live for free in exchange for watching your children. You now save $800/month in childcare expenses that you can put toward PDI.
You start a blog ( or podcast, YouTube channel, or music band) in your precious off-hours. Whatever your creative choice, you start producing content.
After three years of making content, you earn $500/month in royalties. Let’s go back to our income. You now earn $7,860 in revenue while having $2,660 to save and invest.
Let’s break down that $2,660. You have $500 in royalties, $360 from PDI, $800 from saved childcare, $500 from moving apartments, and $500 from budgeting.
Becoming an Entrepreneur #7
Do these changes work in real life? I am living proof that they do, and they work well. In fact, making them is akin to learning magic.
Last month, I saved and invested $5,000. That’s pretty good, especially given that I don’t work. My life also doesn’t work. We are both retired and enjoying the snow in Florida (seriously).
You’ll be surprised how fast your wealth grows when you don’t have bad debt. That alone is a game changer when building your financial empire.
“My 2024 Passive Income Streams” reviews our passive income streams. The best part is that we can take advantage of potential passive income opportunities.
The 401K Lie: Saving 10% is a Fool’s Errand
Let’s say someone offers us an ATM machine that earns $500 per month and sells it for $4000. By doing the math, I see we will be profitable in about a year, so we can make an informed decision.
The more income and wealth you have, the more investment opportunities you can take advantage of. It doesn’t seem fair, but this is how life works.
I am currently using my free time to attend college because the VA is paying me $1,800/month. This is an excellent opportunity for me to get smarter while building wealth.
Changing your mindset in your 30s. Most people have two chances to find a financial epiphany: when they have kids or when they turn 40.
Think of Preferred Shares as Gift Cards
I had mine when I turned 38. I realized that my job wasn’t going to save me. I would have to learn how to make money when I sleep.
It was a tough mindset shift for a career government employee. I dreamed of having all of my pension income in retirement. Alas, building a dividend portfolio is much better than earning a pension.
You, too, must realize that your job won’t save you. No amount of money can save you from yourself if you spend it all. Even worse, if you overspend via credit cards, you will be in a world of pain.
Renting Rooms to Family Members
Instead, focus on your budget in your 30s. Take your money very, very seriously. Do not “round up” your utility and food bills, as I did. Track every penny that comes into your household.
Conclusion. After tracking each dollar that comes into your household, your job is to turn it into two dollars. It may take 3-7 years to double your dollar, but that’s okay.
Understand the three stages of wealth: debt, saving, and investing, and why that is all important. Avoid debt (past), save for emergencies (present), and invest for the future. Do these things, and you will be in great shape when you enter your 40s. Good Luck!
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