How a Side Hustle Can Help You Achieve Financial Security and Reach Your Money Goals
Volumes have been written about how to start a side hustle and which gigs might bring in the most money. What’s discussed less frequently is how that money — even just a little extra per month — can change your life and put you on the path toward good financial health.
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A lot of effort goes into a side hustle, but that effort can pay you back in the form of financial stability and goals realized. Here’s how.
Side Hustles Provide Income Security
For millions of Americans, the boilerplate money advice of saving three to six months’ worth of income is a pipe dream, but when the pandemic hit, even those who had a big cushion of savings quickly realized it wasn’t enough. Unless you’re rich, true financial security, it turned out, can only be achieved through multiple income streams.
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“A side hustle can help to diversify your income sources,” said Oscar Rodriguez, a financial blogger and founder of OssieRodriguez.com. “This is especially important if you are relying on a single source of income, such as your paycheck from your full-time job. Having multiple sources of income can help to buffer against financial shocks, such as a job loss or an unexpected expense.”
With a Side Hustle, You Can Finally Build That Emergency Fund
Pandemic or no pandemic, money in the bank in case of an emergency is a key ingredient for good financial health. But with 64% of America now living paycheck-to-paycheck, according to a new Lending Club study, that’s just not possible for tens of millions of Americans — unless they launch a gig on the side.
“A side hustle can be a great way to help you build an emergency fund,” said Nicole Shi, a personal finance blogger and founder of Create Earn Live. “It gives you some financial flexibility if something unexpected happens, like losing your job, so that you don’t have to rely on credit cards or other loans.”
A Gig Lets You Do More Than Just Chip Away at Debt
According to the New York Federal Reserve, America owes $1.59 trillion in student debt and $15.84 trillion in household debt — and as inflation rises, those numbers just keep growing. Millions of households, however, aren’t really paying down their debt — they’re just paying as little as possible to avoid default while new finance charges accumulate.
With a second income, you can dedicate every new dollar to really taking a crack at the debt monster looming over your life.
“If you have got a huge credit card bill that you need to pay off in the next few months, a side hustle can help you do so without having to make drastic lifestyle changes — like moving into your parents’ basement,” said Shi.
With a Side Gig, There Are No More Excuses Not to Invest
A lack of funds is one of the most common reasons people give for not investing. While there are options today to get you started with next to nothing, a side gig can give you a dedicated source of seed money to grow into a nest egg — no matter how small that seed might be.
“I’ve seen many of our clients always complaining that not enough money is left to invest from their monthly salaries,” said C.T. Price, CEO of Life Grows Green. “By starting a side hustle, you can invest… You’ll only figure in the power of compounding in the years to come.”
Even if You Fail, You’ll Pick Up Skills, Experience and Moxy
Even if you never earn a dime from it, just the act of launching a side hustle can set you up for career improvement or entrepreneurial success.
“It can be an opportunity to increase your skills, confidence and resilience, depending on what avenue you choose to pursue,” said finance, marketing and advertising expert John Cammidge, managing director of JTC Consultants. “For instance, working on social media for a small company is a great way to improve your marketing skills. It can give you an opportunity to follow market trends, learn about consumer engagement and discover new ideas.”
Side Hustles Can Give New Business Ventures a Fighting Chance
If you already have an entrepreneurial endeavor in mind, a temporary side hustle can give you the financial breathing room that you need to bring it to fruition.
“My business would not have survived its early stages if I didn’t have a side hustle,” said real estate investor Brian Davis, founder of Spark Rental. “New businesses take far more time and money than you think they will to reach profitability and get off the ground. My business partner and I were running out of runway, and we could have given up and closed shop, but instead we each went out and picked up side hustles. That side income extended our runway to help us lift off to profitability.”
A Side Hustle Can Purchase Your Ticket to Freedom
Income security. Debt reduction. An emergency fund. Money to invest.
These are all good things to have if you’re working toward a life of good financial health, and a side hustle can buy each and every one of them. It can also, however, buy something that’s equally important yet far more elusive for most people — freedom.
“As a full-time digital nomad for the past 20 years, a side hustle has allowed us to travel the world with a safety net,” said Patrick Schulte, co-founder of Wanderer Financial. “We haven’t put all of our eggs in one basket so to speak, so should something happen to my wife or I that would prohibit us from being able to work, we know we will still have some income coming in. This strategy has allowed us to sail around the world, live in a campervan and bus, and more recently, a trawler in the Caribbean. A side hustle is also the perfect precursor to finally leaving that soul-sucking job that you hate.”
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This article originally appeared on GOBankingRates.com: How a Side Hustle Can Help You Achieve Financial Security and Reach Your Money Goals
