What is a Side Hustle?
You may have heard or read about the term “side hustle” in the last few years or months and wondered, what is that? Well, a side hustle is any sort of way to make money outside of your regular day job. You will read about stories of individuals who have made significant sums of money through a side hustle and learn many ways to make money part time or on a commission basis by doing things such as survey completion, freelance writing, answering online questions, mystery shopping, joining marketing groups, etc.
What Can a Side Hustle do for me?
Having a side hustle can do a few things for you. If you find something you enjoy, it can offer a creative outlet, which can provide additional satisfaction and relaxation in your life. It can offer a way to make substantial sums of money if you are truly invested and continue to work hard, putting in significant effort to passionately grow the side hustle into a full blown business. It can also offer a way to make some part time money to pay for individual items (saving for a vacation, car, etc.) or it can provide you with extra money to invest for long term growth and wealth (for those looking to become millionaires and beyond).
Is a Side Hustle Right for me?
A side hustle may or may not be right for you in my opinion. Depending upon what your goals are, and your present work situation. Perhaps you could gleam more value in your present career by putting in more time at work, finding ways to bring your employer more value. One problem which can occur with side hustles is having too many and by being so spread out or spread thin, the only money being made with side hustles is not too significant and may never give you the type of freedom you want or income you want (if your true dream is to have financial freedom, free up your time, become a millionaire, grow long term wealth). If you are running from side hustle to side hustle and only making a few hundred here and there and not able to invest it to grow your wealth, and don’t feel that one of those side hustles is growing into a long term underlying business that you can continue to develop, then perhaps you should reconsider. By refocusing and either limiting your side hustles, or finding one that may grow into a long term business and focusing more on that, you may hit your goals faster and develop real cash flow to get to your target sooner.
Why You Should Side Hustle for Money to Invest
A side hustle takes your valuable time and effort just like most ways of making money do. Therefore, wanting your side hustle to grow or turn into a larger income stream, or using it as a way to grow your wealth makes more sense to me than just as a way to pay for extra things (eventually we all learn that just having extra stuff does not make us happy long term). Although it is important to earn enough money to pay your bills, and to learn to live on less, or even better, completely without carrying a debt load (i.e. saving for things in advance), the entire purpose of a side hustle (a way to earn income in addition to your job) is to make extra money. This extra money can then be used to either achieve instant gratification in purchasing something you have been wanting for a while, or it can be used to help push you toward a larger goal of financial independence, financial freedom, an earlier retirement, growing a business, having enough cash flow to quit your job, becoming a millionaire, etc.
One of the best ways you can use this extra money is to invest (absent needing to put that money back into the business to continue to grow the business if that is your plan, as growing a business can also be an incredible way to build wealth for some). For example, let’s say you are making an extra $250 per month in side hustle money. You can automatically invest in a mutual fund with T. Rowe Price, or another company. This money can then earn additional interest every year and the growth will continue. If you have started early enough this can grow into a substantial sum. However, just to be clear, tax advantaged accounts should always be prioritized first (401k’s, IRA’s). If you don’t have one and are considered self employed for purposes of your side hustle income, you can simply and easily start a SEP IRA with a number of big financial firms and then put in money tax free. Taking advantage of tax free compound growth is one of the best ways to build your wealth long term, or to make your way to financial freedom in retirement.
Having a side hustle can be very beneficial, but based upon your individual goals it is important to determine whether the side hustle(s) you choose are serving your purposes or not. If you have too many which take too much time and you are not planning to build them into a long term business, make sure you are investing for long term wealth growth. Ensure you are working toward your goal of financial independence or financial freedom if that is the path you choose. Remember, it only takes $50-$250/month to start auto-investing (Acorns, T. Rowe Price, etc.) so you can build wealth without significant effort, it just takes time. Use your side hustle to build a better life long term. Don’t lose sight of your overarching goals so you will get where you want to go.