Ever thought of starting a side hustle to supplement your income? Marc over at VitalDollar.com stops by the blog today to give us a peek at 9 ways you can use side hustle cash to improve your life. With the ever-increasing cost of living and wages staying stagnant longer than ever before, a side hustle just might be the answer to bridging the financial gap. And with that, take it away, Marc!
If you’ve spent any amount of time reading personal finance blogs or listening to money podcasts, I’m sure you’ve come across a lot of content about side hustles and different ways to make extra money. You may wonder how much difference a small amount of extra money can actually make, and why it would be worth your time.
The truth is, even small side hustles have the possibility to have a major impact on your life. It doesn’t need to make a huge amount of money. Just an extra $500 per month could be life-changing in a few different ways.
In this article, we’ll look at nine different ways that a simple hustle could possibly have a profound impact.
1. Pay Off Debt
If you’re in an aggressive mode of debt payoff, like the debt snowball or debt avalanche approaches, any extra money that you have can be used to pay down your debt faster. That means less interest and faster progress towards being debt free.
The money that you use to pay off debt can come from savings that you create in your budget (like finding ways to reduce your expenses), or by making some extra money. That extra $500 per month can have a big impact on how quickly you’re able to pay off your debt. You can use a debt payoff calculator to see how much impact a side hustle could have by plugging in some different numbers based on your own situation.
2. Build Up Savings
If debt isn’t an issue for you, the money that you make from a side hustle could be used to build up your savings. Regardless of whether you’re saving for a house, a car, retirement, a college education, or anything else, the extra money will drastically speed up your progress.
Let’s take a look at a specific example. If you’re 30 years old and you start a side hustle that allows you to save and invest $500 per month, what kind of long-term impact do you think it will have? If the money that you’re investing earns an average 6% return, and you continue to save that $500 per month for 30 years, you would have $489,628 when you are 60 years old, as a direct result of your side hustle.
The point is, if you’re saving the extra money you’re making from a side hustle (regardless of whether it is $200 per month or $2,000 per month), it will make a difference.
3. Cover Gaps in Your Budget
Maybe your motivation for a side hustle is simply to make ends meet. If you struggle to cover your monthly expenses with your current income, a side hustle could provide the extra money that you need to cover those gaps in the budget.
Although a side hustle can be great for this purpose, I want to point out that before turning to a side hustle you should try to get your living expenses below your income first. Using a side hustle (on top of a full-time job) to cover your living expenses shouldn’t be your first move. If your issue is with budgeting or managing your money, making a little extra money doesn’t solve the main problem. In fact, it only gets you accustomed to a higher income that you’ll need to maintain going forward.
Sometimes you’ve done everything you can to cut expenses and you’re still struggling to make ends meet on the income from your job. That’s where a side hustle can prove to be a good use of your time.
4. Be a Stay-at-Home Parent
Going from a dual-income family to a single-income family is a difficult transition. Many couples would love to move to one income so someone could stay home with the kids, but covering all of the bills on one income is hard.
Although one income may not be quite enough, sometimes a side hustle may be able to replace the need for one of the incomes. A side hustle that brings in $1,000 per month may be enough to allow you to be a stay-at-home parent.
Would you be willing to work a few hours per day freelancing while your kids are napping if it meant that you could leave a full-time job? How about pet sitting or dog walking? What about flipping furniture that you buy at yard sales and re-paint?
5. Speed Up the Process to FIRE
Side hustles are extremely common in the financial independence community because that extra money that can be invested each month will have an incredible impact on how quickly you’re able to reach financial independence and retire.
Let’s take a look at an example to demonstrate (I’m using the Early Retirement Calculator at Networthify for this). If you have an annual income of $50,000 and you’re currently saving $15,000 per year, you could retire in 28 years. If your expenses stay the same and you add $10,000 of income from a side hustle (giving you an income of $60,000 and $25,000 of savings), you could retire in 20.6 years. In this example, the side hustle allows you to retire 7.4 years earlier!
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6. Income After Retirement
While a side hustle can be extremely effective at helping you to progress towards early retirement, maybe you don’t want to completely retire. You could retire from a traditional job and still generate some income from a side hustle, or even a few different side hustles.
In some cases, this side hustle income may be part of what makes it possible to retire early. In other cases, the income may not be needed and the side hustle may be more for enjoyment than the money.
There are plenty of real-life examples, but one that comes to mind right away is Steve Adcock from Think Save Retire. Steve retired in his 30’s and now uses side hustles like blogging.
7. Make Money with a Hobby
One of my favorite things about a side hustle is the fact that you can choose from so many different possibilities. That means that you’re able to choose to work on something that you enjoy.
There are many different ways that you can incorporate a hobby into your side hustle:
- You could use a service (graphic design, photography, personal trainer, painting, etc.) and get paid for work that you enjoy.
- You could create and sell a product (handmade crafts, custom t-shirts, digital products).
- You could teach (online courses, tutoring, coach sports, yoga instructor).
- You could produce content (blog, podcast, YouTube channel).
Of course, not every hobby will present the same money-making opportunities, but there are plenty of hobbies that make money, and with a little bit of creativity it’s not that hard to find something. I used my photography hobby to make extra money, and it even led to a full-time business for a few years.
8. Develop New Skills
Working on a side hustle can also help you to learn new skills, or to improve skills that you already have. Those skills could be valuable to you in the future.
My friend Todd who blogs at Invested Wallet has a full-time job in marketing. Todd doesn’t have a marketing degree, but he got some experience through blogging and basically taught himself how to do it. That experience was enough to get him a full-time job in marketing.
Think about the skills that you would like to develop. Is there a side hustle that would help with that?
9. Lead to a Full-Time Business
I mentioned earlier that my photography side hustle turned into a full-time income. One of the best things about side hustles is that you have the possibility to make it something much bigger.
Of course, not every side hustle offers the potential to earn a full-time income. If you hope to turn it into something bigger than a side hustle, you should choose something that gives you the potential to grow.
Side hustles like blogging, freelancing, selling on Amazon, flea market flipping, and many others give you the potential to replace the income from a full-time job. This may or may not be something that you’re even interested in, but for many people, it can be enticing. Starting as a side hustle means you can begin without the need to quit your job, so you can minimize the risk.
Putting It Into Action
Not all of these things will apply to your own situation, but each one of them has the power to change your life in a significant way. If you’ve considered starting a side hustle but haven’t taken the plunge, I’d encourage you to commit to making it happen. I have an article, How to Start a Side Hustle, that walks you through the steps from choosing the right side hustle for you, to actually making some money.
What would you do with extra money each month?
Marc is a personal finance blogger at VitalDollar.com where he writes about managing money, saving money, and making more money.
