Tax seasons always had me feeling crazy. When I found myself knee-deep in spreadsheets, deductions, and filing forms, I wanted to scream. But I always felt I needed to be taking advantage of all the tax strategies out there. Tax savings are great — who doesn’t love keeping more of their hard-earned money? But as I dug deeper, I noticed a pattern that went beyond taxes. The real issue wasn’t just about saving on taxes. It was about my money and what it wasn’t doing for me.
Here’s the thing: Tax savings put money back in your pocket right now. That’s a win, no doubt. But what happens after we work so hard to save and invest? We’re diligent about putting our money to work, but too often, we let it go out into the world and don’t see it come back to us.
It’s like sending your kids off to college and never hearing from them again. Sure, they’re out there growing, thriving, and building futures, but wouldn’t you want some regular updates? The same goes for our money. If it’s out there multiplying, but not giving us any cash flow now — or even a plan for cash flow later — what’s the point?
The Real Problem: Getting My Money to Pay Me.
Whether you’re saving for the future or dreaming of financial freedom today, the challenge is the same. How can you be sure that your investments will one day give you regular cash flow if they haven’t started already? What does the amount of money in our portfolio even mean if it's not paying us? We're too often told: "someday, you'll be able to live off of those assets", but waiting for an unspecified “someday” isn’t a solid plan.
So- how do we make our money pay us?
It all starts with clarity. Here’s how I broke it down:
Step 1: How Much Cash Do You Need?
Start by figuring out your living expenses. Be realistic here. What does it cost to maintain your lifestyle? Once you’ve identified this amount, you’ll know how much of your income needs to come from cash flow versus reinvested growth. In the example below, let's start with monthly expenses. In reality, we'll want to factor in a longer history (taking a look at how monthly expenses have averaged out, and changed over the past 18+ months).
For example:
Monthly living expenses: $4,000
Target cash flow: $4,000/month
We have our target. Now, we'll want to see how to achieve this target.
Step 2: Transition Assets to Produce Cash
Here’s where the magic happens. You don’t need to cash out your investments; you just need them to start paying you. Here are the most common options:
Dividends:
Some companies distribute a portion of their earnings directly to shareholders. The stocks they offer are called dividend-paying stocks. Investors can buy shares of these stocks, or funds that invest in dividend-paying stocks.
Example: You own $100,000 in a dividend ETF that pays a 4% annual dividend. That’s $4,000 per year in cash flow.
Interest Income:
Fixed-income investments like CDs or bonds can provide steady interest payments.
Example: A $50,000 investment in bonds earning 5% annually would give you $2,500 per year.
Rental Income:
Owning rental properties can generate monthly income after expenses.
Example: A rental property generating $1,500 per month in rent, with $500 in monthly expenses, results in $1,000 in net monthly cash flow, or $12,000 per year.
Private Equity Distributions:
Investments in private equity funds can provide investors with periodic distributions as profits are realized. (This varies significantly from deal to deal.)
Example: A $100,000 investment in a private equity fund providing annual distributions of 6% can generate $6,000 per year.
Why This Matters
Having your assets work for you in this way means you’re not just growing wealth — you’re creating financial flexibility. Whether you use the cash flow now or let it accumulate for future use, you’re in control. And that’s the ultimate goal: making your money align with your life, not the other way around.
Take a look at your financial picture. Do you have a plan for how you'll adjust your portfolio to make your investments support your life? Because while tax savings are fantastic, true financial freedom comes from knowing your money is not only growing but also giving back to you — now or whenever you need it most.
Enjoyed this post? Subscribe to our free weekly newsletter! 📩
Comments