Why should you consider using side hustles to make extra money?
A side hustle is defined an activity performed other than your primary job with the goal of earning extra income. Using a side hustles to make extra money is one of the most powerful tools you can use on your path to Financial Independence. That’s because, assuming you’re already living fine off your day job income, every single dollar you earn from a side hustle can be saved.
This can dramatically increase your savings rate and speed up your journey towards Financial Independence. Even a relatively small amount of money – a few hundred dollars a month, for example – can add up to hundreds of thousands of dollars if invested over the long term.
How do side hustles help you retire early?
Not only can a side hustle grow your portfolio, but it can also mean that you could potentially make do with a smaller one.
You’ve learned how much money you need to be Financially Independent by using the 4% Rule – that is, you should be able to withdraw 4% of your portfolio each year and have your portfolio theoretically last forever.
That same principle can work in reverse. $5,000 per year of extra income, for example, requires a $125,000 portfolio to create the same amount.
Thus, someone who can consistently make $5,000 per year on the side could get away with $125,000 less in their portfolio. It might not be complete Financial Independence, but imagine how comfortable you would be if all you had to do was make a few thousand dollars each year to live.
Are using side hustles to make extra money worth it?
Now that you know the value of side hustling, the only thing stopping you might be that you either think you don’t have the time to do it or you don’t have any ideas.
The great thing is that in today’s world, there are so many ways to earn extra income on your own time that anyone can start a side hustle. Sharing economy and gig economy apps like Airbnb, Uber, Rover, Postmates, and Wag allow anyone to start up a side hustle, on their own time and without very much upfront costs.
All you have to do is just get started.
So, if you don’t have a side hustle, consider getting one. It’s worth a lot more than you think as you continue on your path to Financial Independence.
Fiology thanks the FI community’s side hustle expert Kevin of Financial Panther for shaping this lesson.
- 99 Side Hustle Business Ideas You Can Start Today by Nick Loper of sidehustlenation.com
- Monetize Your Life And Get Paid To Live by Kevin of financialpanther.com
- Ten Ways to Find Time for Your Side Hustle by ESI of esimoney.com
- 030 | The Side Hustle | The Unspoken Lever Of FI by Alan Donegan of choosefi.com
- Side Hustle Nation – Invest in Yourself by Nick Loper of madfientist.com
- You now know how valuable a side hustle can be when it comes to reaching Financial Independence. If you don’t have a side hustle, take a look around you and see what things you can do to earn extra income. Start small – challenge yourself to earn just $100 extra each month. Once you do that, you’ll probably find even more ways to earn extra income.
- The Side Hustle Snowball: How to “Erase” Your Expenses with Extra Income Streams by Nick Loper of sidehustlenation.com
- The Underrated Value Of A Side Hustle For Early Retirement by financialpanther.com
- Life Hacking in Pursuit of Financial Freedom: How I Add $1,500+/Mo to My Income by Craig Curelop of biggerpockets.com
- Explore: Airbnb, Rover, Postmates, DoorDash, Uber Eats, Wag, Bird, Lime (these are the Financial Panther’s favorites)
“Everyday I’m hustlin’.” – Rick Ross