Paying normal expenses is a lot like renting, you never really get ahead and may even be living paycheck to paycheck for your entire life, just barely getting by.
Or perhaps you are hording away money living like a miser until it’s time to retire. The problem with that approach is retirement may never come, after all, accidents happen…
Maybe your plan is to just spending everything, going into massive debt figuring that you can always declare bankruptcy and start overall someday in the future.
All of these are ways to handle expenses and spend money, but what if we tried paying our expenses from dividends instead of money from our paychecks?
In fact, what if from the beginning of adulthood we started paying expenses from dividends?
If from the start, we took our salary or wherever you get your income, and bought stocks that provide a stable dividend, we could have a level of freedom that most people don’t have after 10 or 20 years! I’m sure you are thinking that it wouldn’t be possible, and you would be right! It would have to be a gradual process, buying some dividend stocks at the beginning, but slowly using that dividend money to pay your expenses.
Using the graph above, the red would be the money we bleed from our paychecks, whereas the green would be the dividend money that would continue to grow over time. Eventually we would be paying all of our expenses from dividends!
You wouldn’t have to directly use the dividend money, instead you could have the money automatically reinvest back into the stock (let’s say a DRIP), while paying from your paycheck as normal. it might take decades for your expense to totally be handled by your dividends, but it’s worth a try!
Much like the line in the graph above isn’t straight, neither would the stream of dividends. At the end, it would dividend money would grow more quickly, so it would be slightly parabolic.
So I’m going to try this approach, but more importantly, I’m going to teach my kids early when they are young. If they could incorporate such a system into their lifes, I think they would be well provided for in the future!