Dividend Dominator
- Jan 25, 2023
- 6 min read

How to cover your expenses with dividends

Updated: Mar 3

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Covering your expenses with dividends

I’ve been a dividend investor for 7 years now and during those 7 years, I’ve hit tons of roadblocks. Barriers that have been hard to overcome. The majority of them are related to consistency and discipline, two of the most important qualities of a long-term investor.

If you don’t have those two qualities, you will never make any money in the stock market.

It can be hard to see the light at the end of the tunnel when your dividends are small. It feels like you’re not making any progress. Like you’re not getting anywhere and that it’s just not worth it to be making a laughable $5 every 3 months.

But I’ve realized one thing that has served me very well: mindset is everything

The best investors are the ones who are optimistic about the future of their investments but at the same time are emotionally unavailable when prices drop. They don’t care about what the market is doing today. They care about what it will do 10+ years from now.

One trick I’ve found that has helped me stay consistent with dividend investing, as well as make it more fun, is setting a goal to cover one of my expenses at a time.

When I first started, I didn’t set any goals. I was navigating through this new thing called “investing” with no direction. I would contribute money where I could, reinvest all of my dividends and watch my income grow month after month. But after a while, I started to fall off. I was burning out.

Why? Because I didn’t feel like I was making any progress (although I was). Kind of like going to the gym. If you’re not tracking your workouts and pushing more weight or doing more reps every week and you’re not seeing your body change in the mirror, it can be difficult to stay motivated to continue showing up.

So that’s what I did with dividend investing. I decided it was time to start setting measurable and attainable goals. Small milestones that I could check off along the way that would keep me on track toward my goal of financial freedom. I switched from having no plan to trying to cover each one of my expenses with dividend income.

Here’s what I did:

I started with my smallest expenses first. I wouldn’t actually use my dividends to cover the expense (I reinvested them all) but I did create a game within the game. It was the peace of mind that came with knowing you could cover the expense at any time. That’s powerful.

The first one I started with was my phone bill. It's $50/month. Once I was making $50/month in dividends, I moved to my grocery bill. I average about $200/month on groceries (I just buy for myself) and still have yet to hit this milestone but I’m getting closer every month.

My next expense will be my gas bill, which is around $250-300 every month (I drive a lot). From there, you could try to cover your hydro bill. Then your rent. Then your vacations.

All you need to do is work backward. Figure out how much you need to make per month and what dividend stock will cover it. If you own a company that pays a 5% dividend and you need to make $200/month to cover your grocery bill, then you would need roughly $48,000 invested in that stock to cover it. Of course you don't just wake up with $48,000 to invest, but you build up to it. Maybe you start investing $5/day. Then you move to $50/week. Whatever it is, build it brick by brick.

The whole point is to eliminate one expense at a time until eventually, you can live for free. You won’t be physically taking your dividends out of your account to pay these bills, but the peace of mind in knowing you can at any given moment is absolutely priceless.

This simple trick has allowed me to stay consistent with my dividend investing journey. I’m constantly looking to hit the next goal and cover the next expense.

It’s fun to create little games like these to help you stay on track. There’s nothing like hitting small milestones on your way to the final destination.

Keep knocking off those expenses one at a time.

Alex (The Dividend Dominator) Founder and CEO of Dividend Domination Inc.

Follow me on Twitter, Instagram and LinkedIn

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Money Mastermind - the “Money Bible”. Myself and 29 other expert creators teamed up to create the most all-inclusive 280-page finance book on the market. Over 100 topics about money including real estate, crypto, budgeting, dividend stocks, online business, and more.
The Complete Investors Accelerator Pack - everything you need to build a dividend portfolio that grows on itself. Learn more about dividend investing, how to analyze dividend stocks, what to do with your dividends and how to build a stream of passive income through the stock market.
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