The benefits of a side hustle and learning how to make more money is one of the most empowering and impactful things you can do on your quest for financial freedom.
Waiting for a raise is one way you can increase your income, sure.
But what if you took matters into your own hands. Instead of waiting on someone else to give you a raise, you gave yourself one?
That’s what a side hustle can do for you. More income equals more options and more options equals more freedom in the long-run. Let;s take a look at the benefits of a side hustle.
You are in control of your earning potential
“ A side hustle is more than just another stream of income, it’s also the new job security” – Chris Guillebeau – Side Hustle: From Idea To Income In 27 Days
If you work in a position with a flat annual salary, your earnings are capped at that number. You might receive a yearly bonus but more or less, you’ve got the same amount of money coming in each week/month.
Now, having a steady income is great, especially if you earn a decent salary.
But it can be even better.
With a side business, your earning potential is up to you.
You decide on what service or product to sell and at what price. You’re in control of how much time you spend building your side business. Which will usually equate to how profitable it will be.
As a bonus, you’ll learn a bunch of new skills, increase your sense of accomplishment and financial self-reliance. It can also be a creative outlet. One that your 9-5 role doesn’t tap into, making it a fun and rewarding way to bring in extra money.
Get debt-free sooner
If you’re seriously committed to paying off your high-interest debt as quickly as possible, it’s likely you’ve already cut all the fat from your expenses to ramp up debt repayments.
Frugality and simplifying your spending can only take you so far in ‘finding’ extra money to throw towards the debt. There’s a limit to how much you can really cut back.
And let’s be honest, cutting back is feeding a scarcity mindset. We all know now that isn’t how to bring more money to you.
Who says there’s a limit to how much extra you can earn?
It’s a formidable financial combination; spending less while simultaneously boosting your income.
Another of the benefits of a side hustle income is that it can help you wipe out debt months or even years earlier than you’d be able to on your current income.
If you begin by using the side hustle money to pay down debt quicker, once you’re free of high-interest debt you can channel the income towards investing.
Supercharge your investments
Your side hustle is an investment in itself that you can use to supercharge your other investments.
This is the difference between creating a side hustle and getting a second job to boost income.
You’re creating a long-term asset with your side hustle. A second job still means you’re earning potential is capped and your boss calls the shots. It’s just exchanging more of your time for money.
Working harder is not the answer. Working smarter is! A mentor of mine has taught me that ‘the less I do, the more I make’. It’s about doing the right things and letting go of the struggle. Another of the benefits of a side hustle is that you get to choose, not only how you spend your time, but how you allocate your earnings.
Why not set a goal to channel the earnings from your side hustle between reinvesting back into the business and investing in your portfolio.
Every dollar earned becomes a dollar working for you to create more income; either in your business or your portfolio.
If you resolve, from the start, to allocate any income from your side hustle to re-investing – not using it as ‘fun’ money or on other expenses – you’ll build an incredibly powerful income stream.
It can get even better if you build a side hustle that has the potential to create passive income in the future. That means at some point you won’t need to be trading as much time for money.
There are those times when a side business goes gangbusters. While creating a 6 figure side business is definitely possible, don’t think you have to be bringing in thousands of dollars a month to make a difference.
Earning an extra $500 or $1000 a month can have a huge impact on your financial goals.
It’s less risky than quitting your job to start a business
It’s called a side hustle for a reason – you’re still working your day job.
You get the best of both worlds; a steady income you can rely on and a (hopefully) continually growing side income.
You don’t have that security when you ditch the day job to go all-in on your own business.
Absolutely, growing your own business has unlimited earning potential too, but it’s way more financially risky in the beginning without a reliable stream of income.
We’ve all heard the grim stats on how many small businesses fail in the first year. Their undoing is often down to cashflow issues.
Keeping your job while starting a side business is a way of hedging your bets. It’s a balancing act though. You don’t want to burn yourself out or the quality of output in both your side hustle and full-time role will take a dive.
If things really take off in your side business, you could consider leaving your 9-5.
Or, you could outsource some of the business functions so you’re not doing everything yourself and continue to maximise two income streams.
A final word on your side hustle: TAX
Don’t overlook the tax implications of your side hustle. Plan for how you will pay the tax you will owe when you lodge your tax return so you keep everything square with the taxman.
Expenses that relate to your side hustle will be deducted from profits and you’ll pay tax on the difference between your income and deductions. For my Australian readers, I recommend checking out the ATO resources or ATO community to get clear on the tax requirement for a second income.
What’s your financial WHY for starting a side hustle?