How We Live Off Monthly Dividend Income ($7,795/Month and Counting)

What it really looks like when your portfolio replaces your paycheque.

It used to just be a game and it started in 2021.

Could we earn enough cash every month to cover our phone bills? [$96.32/month]

✅ Check.

What about our internet bill? [$106.40/month]

✅ Check.

Both our car payments? [$756.40/month]

✅ Check.

What started as a fun game to slowly cover all of our bills with completely passive investment income became a lifestyle of travel, play and retiring in our mid 30s.

The game we started playing was The Dividend Game.

I like to think of dividends (or distributions) as ‘thank you payments’ companies or fund managers give out each month for holding shares of their company or fund.

Some pay 25c/month for each share we own.

Some pay 10c/month.

But what we DID learn was that this completely passive income was the key to achieving REAL freedom…

…and we were hooked.

Since we were both working at the time, we didn’t actually USE the dividend income - we kept reinvesting it and compounding.

BUT, we kept a running score card of what living expenses could technically be paid for with dividends.

So we set the audacious goal of covering ALL of our monthly expenses with cash flowing investments, something we now know is called financial independence.

You don’t have to rely on work to pay the bills.

The cash flows in every month on autopilot without having to do anything.

We reached this target in June of 2022, and today, I want to walk you through what it looks like to live off of our dividends.

The Income Data

Right now, we have income flowing in from 4 main sources - our non-registered investment account, our TFSAs, our business and the Canada Child Benefit payment.

Here’s what that looks like:

1. The non-registered investment account is a fully taxable investment account that is held in both my name and my husband’s name. Currently, this brings in $4,171.96/month gross (before tax).

2. The tax free savings account (TFSA) is a unique-to-Canadians investment account in which all income and cash earned is tax free. Combined, our TFSAs bring in $3,623.87/month. This value does fluctuate slightly as we have 3 funds that have variable distributions every month and 2 that are subject to the USD:CAD currency exchange rate.

3. Our business currently brings in between $2,800-$3,000 of gross income per month per month working 2-3 hours per week. We leave this money in our corporation and will take a shareholder dividend out when large expenses arise, like when we are booking flights and travel. In 2024, we took out just over $20,000 between the two of us.

4. Because we have 2 kids and our income bracket is low due to tax efficient or tax free investment income, the Canadian government sends us a Canada Child Benefit payment each month, tax free. This currently totals $1,462.08/month, but changes each July as our income fluctuates year to year.

You’ll notice we don’t have retirement savings accounts (RRSPs), and I cover why in this diary entry entitled Why We Don't Invest In Retirement Accounts.

Excluding the business income, this comes to $9,257.91/month of completely passive income.

With the business, approximately $12,158/month in gross income.

Every Month, Like Clockwork

Up until July 2024, we reinvested 100% of our dividends earned for 3 straight years, letting them compound and grow month after month.

Since July when I greatly reduced activity in my business, we made the decision to begin living off of some of our dividends.

So what does that look like?

Every month, 90% of our cash dividends roll in between the 7th & 14th of the month.

It shows up as cash in our investment accounts that we can choose to reinvest, leave there as cash, or withdraw for whatever purpose we please.

It’s the same as if a direct deposit were to hit your bank account.

Around the 20th of each month when all our dividends for the month are in, Flynn and I sit down together and analyze our portfolio diversity and decide what to do with our money.

We have a different strategy for our Tax Free Savings Account versus our non-registered account.

TFSA: Currently, we are taking the $3,623.87/month from the TFSA and reinvesting it so it continues to grow and compound completely tax free. To date, we have not withdrawn any money from our TFSA.

Non-Registered: We withdraw the amount needed to cover our expenses after we spend the $1,462.08/month from the Canada Child Benefit.

We choose to withdraw from our non-registered account instead of our TFSA because the income earned in it is taxed in the calendar year we earn it, regardless of whether we use it or not.

Reinvesting this income is subject to tax on any further growth or income earned, so it makes sense to save and reinvest the tax free income first.

Between the non-registered account and the benefit deposit, we use $5,534.04/month to pay our bills during my monthly money routine that I wrote about here: My Workflow for Tracking My Cash Every Month.

Some months we use more, and some months we use less, but this is our thinking process.

We are not against using income from the TFSA if needed, but prefer to take it from sources that are already taxed.

The Next Jump

We could comfortably live off of this income and spend the year geo arbitraging our living expenses through travel, especially since we don’t have a home base and the associated expenses right now.

(Read this 3 part series on becoming nomads: This News Shakes Up All Of Our Plans..., How We Plan to Spend the Next Year 'Adventuring', and The Adventure Begins.)

Geo arbitraging is when you make a higher income in one country and travel to a lower cost of living city where your money goes further.

For example, our grocery bill here in the Dominican Republic costs us an average of $700/month whereas it’s closer to $1,100-$1,200/month for the 4 of us in Vancouver.

But naturally, we’re growth oriented at heart and we’re chasing more.

We want to stay in nicer Airbnbs, dine out more often and hire travelling help with our kids. It can sometimes be a lot being with your kids 24/7 for months of travel without help.

We want more adventure, exciting excursions and opportunities to show our kids all parts of the world.

So right now, we’re floating ideas of what it might look like to add an active source of income back on our terms.

What could it look like to earn money without being tied to timezones and a stable internet connection?

Something reliable, fun and efficient.

Something that adds crazy value and gives back to the world.

And definitely more income that is completely, 100% passive as we’re always fiddling with our portfolio to optimize it.

I’ll keep you updated on what we come up with!

But for now, we’ll stay passive and continue our adventure around the world with our 2 little girls.

We just booked our flights to Bali for 17 weeks last night. We leave August 6th.

Let the adventure continue. 🌴

Tanessa

P.S. - Want a step by step walk through, including the numbers, timeline and story, on how we retired in our 30s?

You’ll want to read this diary entry next.