Parents: Here’s How to Boost Your Monthly Income

Happy family father of mother and child daughter launch a kite on nature at sunset

Parents have enough on their plates before worrying about finances. Between getting to school, making dinners, cleaning the endless piles of laundry, it seems pretty unfair that parents then have to put cash aside for their children’s future. Never mind just putting food on the table.

That’s why parents can use all the help they can get when it comes to money. Which is why today I’m going to focus on how parents can start making monthly income in 2023.

Putting the cash aside

Here’s the hard part, of course. If you’re already struggling to make ends meet, then do not start investing large amounts of cash. Sure, we’ve all heard of that one guy who made a killing on the stock market. But if you’re a newbie, that’s not likely to be you.

That’s fine! Instead, you can be the one who said I started investing with just $5, and turned that into a massive passive income stream. That’s all it could take in some cases. Instead of eating out for lunch every day, put that cash aside each week and start making some sandwiches. Little changes like this can lead to huge results.

For example, let’s say you were able to put aside $10 per week. That adds up to about $40 per month. Do this every month, and you now have $480 per year set aside. Sure, it’s not a huge amount, but we can see what even $480 could do given time.

Choose a solid dividend stock

The market isn’t great right now, which is why you want a dividend stock that’s going to bounce back relatively quickly. Especially if you’re a parent who may need that cash before you realize it. So the first step is to do your research and find a dividend stock you understand and are comfortable with.

Parents may want to check out financial institutions right now, given each trade down but have a history of solid recoveries. A great example is Bank of Montreal (TSX:BMO), which is down 15% in the last year. When it hits rock bottom and starts climbing, it should go on to hit former all-time highs within a year, as it has in the past.

So with shares down so far, let’s move onto what could happen over the next decade should shares return to former highs.

Putting it all together

BMO stock currently has a dividend yield at 5.07% as of writing. That dividend has risen at a compound annual growth rate (CAGR) of 7.4% in the last decade. Shares of BMO stock have risen at a CAGR of 6.3% in that time, which includes the recent drop.

So let’s say shares first climbed back to 52-week highs of $138 in the first year. Investors keep putting $480 aside each year, reinvesting dividends along the way. Should you do this, you can create passive income you can access each and every month if you choose.

YearShare PriceShares OwnedAnnual Dividend Per ShareAnnual DividendAfter DRIP ValueAnnual ContributionYear End Stock PriceNew Shares PurchasedYear End Shares OwnedNew Balance

So parents, if you were to do this method for a decade before needing that cash flow, you could have a total balance of $7,274.74. That’s compared to the $4,800 you would have from savings alone. You now have access to $606.23 per month at this point.

The post Parents: Here’s How to Boost Your Monthly Income appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.