How do I budget my passive income?
When it comes to measuring wealth, people have different perspectives—some focus on monthly income, others on total assets or net worth. At Build My Wealth, we believe the most powerful indicator of financial independence is how much monthly income your assets generate—your Monthly Passive Income.
Tracking passive income helps you understand how hard your money is working for you, and we’re here to make it easy. Let’s explore the types of assets eligible to provide passive income:
1. Fixed Income Instruments (Bonds and Time Deposits)
These are low-risk investments that provide predictable income on a regular schedule. Bonds pay interest either monthly, semi-annually, or annually, while time deposits earn interest over a fixed term.
Example: A bond that pays you $200 in interest every month or a time deposit earning 5% annually.
2. Stocks
Stocks can generate passive income through dividends—regular payouts distributed to shareholders by profitable companies.
Example: Owning 1,000 shares of a company that pays $2 per share annually provides you with $2,000 in yearly dividends.
3. Rental Real Estate
Earning rental income from properties is a classic way to build passive income. Whether it’s a residential property, vacation rental, or commercial space, monthly rent payments can provide consistent cash flow.
Example: Leasing out an apartment unit for $1,500 per month.
4. Business Ownership
Owning a share of a business—whether as a silent partner, franchise owner, or investor—can provide regular profit distributions without requiring day-to-day involvement.
Example: Earning $1,000 monthly as your share of profits from a café you co-own.
5. Cooperative Shares
Cooperative organizations often distribute earnings back to their members in the form of dividends or patronage refunds. These payments depend on the cooperative’s performance and your contribution as a member.
Example: Receiving $500 annually as dividends from your cooperative shareholding.
6. Whole Life Insurance or Endowment Plans
Certain life insurance policies or endowment plans provide guaranteed payouts or bonuses over time. These can act as passive income streams, helping you meet financial goals while ensuring protection for you and your family.
Example: Receiving $500 annually from a participating whole life policy or cash benefits from a 10-year endowment plan.
Why Track Passive Income with Build My Wealth?
The best part about passive income is that many payment schedules are pre-defined. That means the amount is fixed and it's easy to budget.
Just like you would with a paycheck, you should track your passive income and give it a job to do. You can either add it your savings, use it to pay expenses/debt, or use it to fund your life goals.
With Build My Wealth, you can:
Automatically calculate the average monthly income for each passive income source.
See your total passive income across all assets directly on the Home Page.
Budget your passive income.
Track your Passive Income using Build My Wealth
Let’s say you earned a dividend from one of your stock holdings. Given that your stock portfolio is a long-term investment, you want to reinvest these dividends or keep the cash in your brokerage account as buying power.
Here’s how you would budget this income in Build My Wealth:
Go to Budget.
Click Add Funds.
Click Add Income.
Select Passive Income.
Click Next in the upper right corner of the screen.
Enter details.
Date should be the dividend payable date
Notes can be “Dividends”
Choose the appropriate (Common Stock) asset
Click Save.
Click Budget my $XX.00.
Plan where your money will go.
Click Pay Myself
Enter the full dividend amount
Choose the appropriate asset
Click Save.
A Final Thought
As Robert Kiyosaki said:
"It’s not how much money you make. It’s how much money you keep and how hard that money works for you."
At Build My Wealth, we empower you to take control of your financial life, helping you shed financial anchors and focus on accumulating income-generating assets. Start your journey to financial freedom today!