Over the past few years, I have had a revelation about the power of the side hustle. Some people start a side hustle because they want to start a business, but can’t afford to leave their day job. Others start a side hustle because they want to increase their income with no intention of leaving their day job. Some start side hustling because they simply need more money to make their budget work. I personally believe that a side hustle can be one of the most powerful personal finance strategies and that everyone should consider the benefits.
If your budget is working, you are on track to save for retirement, and you are enjoying vacations without charging them, then you may say you don’t need to work any harder than you already are. If this is truly your life, then congratulations… you are not the norm. A few months ago, I posted some alarming statistics about the state of the average American’s financial picture. There is a high likelihood that if you are reading this you may find yourself among those bleak statistics. My mission to is to both inspire and empower people to live fiscally sound lives. What does that mean? That means you don’t have debts, believe that you can pay off your mortgage in less than 15 or 30 years, and have an emergency fund for whatever life throws your way. It also means you are on track to not have to work at Walmart or collect food boxes from local charities in your golden years just to make ends meet. Please know that last line is not a dig; it’s a painful reminder of the many seniors that I see at Costco offering food samples, or working a cash register at Walmart in their 70’s. If I know one thing, it’s that these folks most likely never desired to be in those situations. The sad fact is that they did not plan for their futures, and it is heartbreaking.
I am going to share with you several financial benefits of having a side hustle and hopefully it will inspire you to take one on to better your financial future.1
- Fixing Your Budget. If your budget is broken there is a chance that a side hustle may fix it. You will need to know how much your shortage is so you can take up a side hustle that nets you what you need. I have had a broken budget, and I know it doesn’t feel good. I also know what it’s like to have all of my bills paid and still have money left over (I prefer that).
- Help You Feel Less Guilty About Spending Money. Perhaps you stress over those little extras you spend money on? I still drive for Lyft occasionally and I sometimes call it my sushi money because I can spend money on sushi and not feel like I am taking money out of our family budget for it.
- Build / Preserve Your $1,000 Emergency Fund. Sadly, only 39% of Americans have enough savings to cover a $1,000 emergency. If that is you and you don’t have at least $1,000 in your emergency fund, a side hustle can help you get there. Using rideshare driving as an example, you could easily build a $1,000 emergency fund in 3 months of part time rideshare driving. This based on driving 2 nights per week and making just $50 per driving shift. This can certainly be done faster if you have more time to drive and if you get good at it (I made $73 on a recent Friday night that I drove and made a little over $300 for the weekend – in less than 12 hours).
- Accelerate Your Debt Snowball. Are you using the debt snowball to crush your debt? If so, you know what a great feeling it is to pay off a debt, to have more money to put towards your other debts. What would your debt-crushing plan look like if you added $500 to $1,000 per month to it? Now do you see the power of the side hustle in getting you fiscally sound?
- Maximize Your 401k Contributions. If you have an employer that offers a 401k, having a side hustle can allow you to maximize your contribution, which could allow you to get the maximum match from your employer if they offer a match.
- Build Your Short Term Savings (3-6 Months of expenses). Having a $1,000 emergency fund is a just a start for living a fiscally sound life. Experts recommend having a savings reserve of 3 to 6 months of your monthly living expenses. This will allow you to weather any small lapses in business or job income without disrupting your finances in a major way.
- Save For Retirement. Given that the median the median retirement account balance for all working-age households is $2,500, statistically, it is likely that you could use more retirement savings. A side hustle can give you that money that you “don’t have” for retirement to contribute to your personal retirement plan.
- Learn a New Skill. If you want to learn a new skill, a side hustle is a great way to learn and utilize that skill without “starting over” in an entry-level position in a new field of work. This might be a skill to help you save money, make money on the side, or it could lead you to start a full-fledged business or find a dream job. I recently spoke with someone who wanted to be a college professor but he did not have the qualifications. He was an expert in his field, so he started a blog and started to teach people in his field of expertise. This ultimately led him to be recognized as an expert in his field and he ultimately landed his dream job as a college professor.
I am sure there are many other great benefits to having a side hustle, but this is a great start. If you have any to add, please feel free to add them in the comments.
I hope this list is motivation for anyone who is sitting on the fence on whether or not a side hustle is something they should consider.