Making a living is hard these days. Between the rising costs of living and your stagnating wage, you can’t buy as much as usual. You can learn to live on less, budgeting your limited paycheck. Or, like roughly half of Americans, you can start a side hustle.
You have a lot of opportunities in a side hustle. It can be a traditional part-time job picking up extra shifts at a diner or shop. You can freelance as an accountant, graphic designer, or tutor. You can even try your hand at emerging digital options like dropshipping or affiliate marketing.
Whatever you choose, a side hustle can help you shore up your finances, giving you more flexibility to do the following five tasks:
1. Build an Emergency Fund
One of the best reasons to hustle on the side is the emergency fund. You can sink all the extra funds you make hustling into an emergency fund. Eventually, all that money adds up. You’ll have an impressive stash of cash that can help you with unexpected expenses.
An unexpected expense can completely blindside you, even with savings. But don’t worry — there are ways to get help when you’re short on cash. In emergencies, you can request help from your creditors or apply for a personal loan. But let’s face it — handling the unexpected is easier when you have savings at your disposal.
Think of your emergency fund balance as your personal key performance indicator: the closer you are to the recommended three to six months of living expenses, the better position you are in.
2. Pay Off Debt
Most people have a few debts to their name. Maybe you took out an online installment loan to help you with an unexpected household repair. Perhaps you financed your new Honda. Or, like 43 million Americans, you still have student debt. You can put your side hustle to use paying off these accounts faster.
3. Start an Investment Portfolio
When money is tight, risking what little extra cash you have on the market might be unappealing. Unfortunately, you have to invest to grow your wealth. Whether it’s using tax-advantaged retirement funds, bonds, or stocks, these financial instruments are the greatest ways to earn money in the long term.
While investments always involve risk, you may be willing to roll the dice when you have a side hustle. You can use your side hustle funds to buy stocks without losing the money you need to pay your bills. You can rely on your main job to cover your usual budget.
4. Fund the Fun Stuff
Your side hustle doesn’t have to perform a serious financial job. You can also start hustling to fund splurges. You can use your side hustle to boost your weekly spending, giving you the freedom to indulge in takeout, online shopping, or nights out.
Alternatively, you can sock away your side hustle earnings, saving up for a big purchase. A side hustle can finance your dream vacation, a new car, or household renovations.
5. Test out a New Career Path
Starting a new career can be daunting, especially if it involves quitting your current job to get your foot in the door. A side hustle offers a low-risk way to gain valuable experience in a different industry or profession without taking up all your time.
Use your side hustle as a testing ground to explore your interests and talents without jeopardizing your main source of income. This broadens your skills and enhances your marketability, opening doors to potential career transitions with confidence.
