Budget Sense

On October 31, 2015, I celebrated my 35th birthday. That was also the year I had became a father for the first time. Needless to say, it was a year full of milestones, changes and things to reflect on.

That evening, after having taken my 6 month old son to visit relatives for his first trick-or-treating, I was driving back home from an errand and literally parked my car for a brief moment and thought to myself: I just turned 35, what do I have to show for it? While I meant this in terms of personal development in general, it was more specifically from a financial prospective. Though I had already been pretty good with my money, I thought I could do more. For example, while myself and my wife had personal savings and something we always did, I thought I needed something on my own. Something that allowed me to try somewhat riskier investments than I would otherwise be able to do with family savings.

An idea flashed into my head, the result of having read a lot about investing, stocks trading, and dividend income the last few years. The idea was that I would start saving small chunks of money and within 10 years (by age 45) I would hopefully have enough money to generate $12K in annual ($1K a month) side income from dividends alone! That would be a start but would scale it through dividend reinvestment the first few years.

And I literally started that same night, and for the next 7 years, I never stopped. In fact, at one time, I had some side gigs and saved most of that money for this new 10 year goal.

Through 7 years and with 3 more to go, while I am not 100% on target, I am consistent with my savings and stock investments. In fact, I took advantage of the March 2020 lockdown and the current economic downturn, to be stock at a big discount. In the next 3 years, I will continue to reinvest my dividends to buy more stocks where possible, and stay consistent with saving and investing in good dividend paying equities.

There you have it. A decision literally made from thin air, all while driving and having decided to park to review my personal development after making it to my mid 30s. This has already changed my life and will do even more as I start reaping the rewards of this decade of sound and consistent investing in dividends paying stocks, in the form of a stable passive income.

Have you ever had a job, stint or contract, which is long in the rear view mirror, which you are not only happy it is in the past, but was a bad experience? We have all had these jobs and experiences.

But not appreciating that job is different from gaining something out of it: if not the experience, then the money at least! It may be in the past, but have something to show for it, mainly some saved money.

From March 2017 through March 2020 – a stint ended by Covid – I drove part time for Uber. That is 3 years of working long weekend hours, night shifts away from my family and young son, and lots of mileage of wear and tear on my car. And while I did generally enjoy the job and learnt a lot from it, it is not something I would want to do again. It was a once and done type of thing. But here is the thing that made it worthwhile: in addition to using the income to pay for things, bills and vacations at the time, I also got to save more than half of that money. I wanted to be able to look at it when it was all said and done and be able to show something for this sacrifice I made. And yes, I considered the job as a sacrifice as it put me away from my family for long hours and nights. Not to mention, it was my second job besides my FT job. So it was tiring on the body.

Fast forward to March 2020, when the Covid virus started spreading and all the ensuing lockdowns, I quit my Uber driving job, and started working from home for my FT job. While working from home in the first two weeks, the stock market started to decline dramatically, to the point where a lot of stocks lost more than 50% of their value. I kept watching the market and by March 22/23, I made my move and bought several blue-chip, high yielding stocks, at amazing bargain prices. All, or at least most of it was from money I had saved from my Uber driving!

So I basically diverted this hard earned money to investment that has since gone up by over 35%, and I am getting regular and compounding dividends. As of last check, I am just over $1,500 in annual dividends.

Compare that to the alternative where I work Uber for 3 years, earned decent money, but never made that simple decision to save some of the money earned. I would basically have nothing to show for it. Thank god the reality is one where I get to enjoy the fruits of my decision to save a lot of the money earned, and be lucky to have had that money during a generational market downturn.

No matter what your revenue source is, be it a full time job, an online or driving gig, a side business etc.: always treat it like it won’t be there forever and need to save some money from it to make it a worthwhile investment of your time, effort and sacrifice.

It is a no brainer you need to save money. But it is even more important when it is a difficult side gig, one that puts you away from family and loved ones. The least you can do is to save some money from it so that you can look back at it and have something to show for it.

I am no slave to junk food. I may eat it once or twice a week, sometimes with the family. But despite it not being a daily habit, it still goes a long way towards causing damage to both my pocket and health, especially with the rising prices for food of late.

So for 2022, I have a new saving goal in mind, which will help improve two hugely important areas of my life: my pocket and my heart, both in an almost literal sense.

Junk to Health to Wealth

The idea is simple: on the days I know I would go out and eat junk (usually over the weekend) I will withhold those purchases and instead save that money. At first, I thought I would just keep the money and spend it on something else, since it was part of my ‘personal spending money’ anyway. But I thought it is more effective if I diverted this saved money to a new saving program or even into a piggy bank. Why? To be able to physically see the result of this diversion initiative. In other words, in 6 months or 1 year from now, I will not only be able to go on the scale and see a difference in my weight , I should also realize some nice financial savings from this junk food boycott or reduction.

Putting it in OKR terminology

If you are thinking this in terms of ‘Objectives and Key Results’ , it could read something like this:

Objective: (based on historical data of how often I ate at junk food places and how much I spend) : To save $500 a year and reduce my weight by 7 lbs for the year by reducing how often I frequent these places.

Key results:

• Visit max of once a week (from two)
• Spend a max of $7.50 a visit
• Skip at least once a month from the remaining regular visits.

If I eliminate my visits from 2 to 1 visit a week , this alone would result into savings of $375 per year, based on 50 weeks. If I can also eliminate one extra visit per month, that is another $90, putting me close to my goal of saving $500 from this ‘Junk to Health to Wealth‘ initiative.

While the numbers look clear and the advantages are numerous, this will not be without challenges and distractions. There will be those random days and weeks where you are out with the family and are too far from home or can’t wait , so you just do the easy thing and buy junk. That is fine. We should almost build those in and try to make up by skipping the next visit to eat junk.

Good luck if you decide to do this and let us in the comments below how it goes.