Many times when we think about creating new forms of passive income, the focus is put on generating new opportunities through things like investing in dividend stocks, writing online content, or investing in high yielding accounts. One of the simplest ways to create easy passive income that is often not discussed is actually directly in front of you. Saving money and cutting expenses can be a great way to build multiple streams of income.
In order to create a solid passive income portfolio, you must not only focus on building and maintaining income streams – but must also consider ways to save money. Saving money is a way to create easy passive income month after month. Once you eliminate or reduce an expense from your budget, that savings or passive income stream can be invested into another income producing asset. Here are a few ways that you can cut expenses from your budget to create new income producing opportunities.
- Mortgage – Consider taking advantage of historic low mortgage rates and refinance your home. Make sure that refinancing is worth the closing costs and you will recoup these expenses within a year or two. Once you refinance, simply take the monthly savings and funnel it into a income producing asset instead of spending it on a new television or toy. Depending on your current mortgage and real estate market, you can probably create a hundred dollars or more of passive income each month just from refinancing your home.
- Save on Groceries – Saving money on your grocery bill is another great way to create easy passive income. Whether you use coupons to get discounted grocery items or start a new vegetable garden, the monthly savings can really add up.
- Cut your Utility Expenses – Look to cut back on your utility expenses as a way to save money. Changing up a few simple practices in and around your home can reduce your monthly utility bills and increase your income earning potential.
- Cars – Think of ways to eliminate or reduce vehicle expenses from your budget. Look into refinancing an existing car loan as a way to cut down on your expenses. You could also consider taking advantage of public transportation to cut down on vehicle related expenses such as gas and insurance. The important thing to remember is to be creative when looking for ways to reduce your spending.
- Cell, Cable, Phone – Look to cut or reduce one of these expenses from your monthly budget. Expenses from cable and phone packages can really add up and limit your passive income earning potential. Try sacrificing one or all of these items to build a easy passive income stream
Some critics may argue that saving money is not a form of passive income. While I agree that it is out of the norm when you think of a traditional income streams, the fact is that you are bringing back income that would have been paid as an expense. If you can cut expenses from your monthly bills, then this is a form of income generation that is recurring and will pay you back each month. That savings or income that you have created can then be reinvested back into creating new passive income opportunities.
What can you cut from your expenses to create easy passive income?
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Saving and bank interest are my two favorite forms of passive income – because they really are passive. Unlike a lot of other income streams that at least require some set up work, savings is just a matter of not doing something. I’ve made huge savings by changing my insurance for home, life and auto, putting in cfls to cut electricity costs and simply looking for ways to use less – food, water, power, etc.
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passivefamilyincome Reply:
May 4th, 2009 at 11:59 pm
Dawn – Have you calculated the money saved from using CFLs? I am starting to hear a lot more positive information on LED lights instead of CFLs. We still have the same CFL’s on our front porch that run every night and can see the difference in the monthly bills.
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