June 18, 2023
Who doesn’t like the sound of that?
I’m yet to meet someone who would object to a bit more money hitting their bank account each month.
That’s especially true for those of us working towards financial independence.
More money in = more investments bought = freedom sooner.
So it’s no surprise then that people get curious about starting a side hustle to generate more income.
Side hustles can take many different forms. From profitable hobbies, to starting small businesses on the side, taking a second job, or freelancing.
The term itself has been hyped up and glorified over the last ten years. But are side hustles actually worth it?
In this post, we’ll explore the pros and cons, the impact it can have, who’s best suited to start a side hustle and how my own thoughts on the topic have changed.
Here are some of the key upsides to venturing down Side Hustle Avenue…
More money. A decent side hustle can add healthy chunks of income, anywhere from hundreds to many thousands per month. This can add up to substantial cash and even affect your FI number (more on that soon).
More experience. An opportunity to test out different jobs and types of work that may be suitable semi-retirement gigs you could step into later.
More variation. Diversifies your productive hours. You might have more energy but would rather direct that somewhere other than your regular job.
More productive. Spending more of your spare time in various ways that earn cash, means less time and money spent on Netflix, shopping and entertainment.
More friends and contacts. Some side hustles have you mingling and working with different people, which could result in new friendships, additional job offers, and a bigger network.
More skills. Depending on the side hustle, you might learn various skills you otherwise wouldn’t have. If it’s a small business side hustle, you’ll naturally learn more about negotiating/pitching/selling/writing/marketing (for products or yourself.
Before you get too excited, let’s consider the tradeoffs.
Give up free time. Working more now also means less freedom in the short term for more freedom later down the road. A big consideration.
Competing desires. Singles will feel a nagging need to spent more time with their friends. Those with a spouse or family will feel a pressure to be more present at home.
Possible costs or complications. Certain side hustles may require startup costs or more training to get started. Costs are more likely for side hustles that are more business-like than a part-time job.
You may not enjoy it. Despite the allure of more money and something different to do, many side hustles (just like normal jobs) may prove to be just another unenjoyable way to trade our time for money.
Extra stress. Due to the above factors you may find having a side hustle to be more stressful than you expected. Especially if you already work a full-time job and have other hobbies or commitments.
While there are non-financial aspects to consider, let’s quickly run through the impact a side hustle could have.
How much extra wealth can we accumulate with a half decent side hustle? And how does that change our timeframe to financial independence?
The income potential differs wildly by side hustle, skillset, and hours put in. But here’s a few simple examples as a starting point (for simplicity, we’ll assume this is after tax and ignore any super you might receive).
Good pay. Working 5 hours a week at $30 an hour is $650 per month. That would compound to roughly $100k in 10 years (at 5% return).
Great pay. Working 10 hours a week at $40 an hour is $1,733 per month. That would compound to roughly $270k in 10 years.
Fantastic pay. Working 15 hours a week at $50 an hour is $3,250 per month. That would compound to roughly $500k in 10 years.
Now, even on the lower end, we’re still talking six figure sums in a decade. Depending on one’s goal, that’s enough to bring financial freedom forward by an entire year in many cases.
And as the numbers elevate towards the higher end, we’re talking many years of additional freedom. That does come at a cost though, as we’ve discussed.
Before we go further, there’s another unusual way a side hustle could impact your FI goal. It could change it altogether!
By stumbling upon a side hustle or other type of work you enjoy, through your experimenting, you may even decide you’d be happy to keep doing it. And so you opt for semi-retirement instead, which is achievable much sooner. Or, if you’ve already built some wealth, possibly even straight away!
I won’t turn this into one of those lame clickbaity pieces of content you typically see…
99 Super Easy Side Hustles to Make BIG BANK NOW (Quit Your 9-5 and Earn Six Figures in 2 Hours a Week!)
55 Secret Side Hustles Rich People Don’t Want You To Know (I tried #34 and my life change FOREVER!)
This one would come with the predictable caption of someone making an overly surprised “Oh my gosh” face 😂
Side note: I actually have fun imagining the most absurd and cringey garbage like this. Because it’s basically all you see these days, and I can’t help but smile at how cheesy and desperate it is. YouTube is perhaps the worst place for this these days.
It’s a good example of how once you finally see marketing for the stomach-churning petri dish of bacteria it really is, you become immune and it then becomes a source of entertainment.
Here’s a brief list of side hustle ideas, with a mixture of skillset, environment, and income level. Finding the right side hustle will depend on your personality, schedule, experience and interest.
Some of these are forms of lower paid casual work, while can become highly profitable businesses if scaled up.
As I mentioned in my post on DIY vs Outsourcing, you can literally outsource anything these days. The flipside of this is you can also get paid to do anything.
Like move a piece of furniture from one room to another. Yes, seriously, I’ve seen it. People need help with the most peculiar things which you can now earn money for.
Sites like Airtasker, Fiverr, and others are essentially the online hub for side hustles. If you can find a few regular customers through these methods, or others like Facebook, Gumtree and word of mouth, that’s often all it takes to make a profitable side gig.
It goes without saying that side hustles are appealing to some people but not others. Personal choice at the end of the day.
My thoughts? I’ve actually warmed to the idea of side hustles over the last couple of years. Before, I would’ve said they’re generally a waste of time with limited monetary upside. And while that may be true in many cases, I now think there’s more to consider.
Why the change of heart? I’ve come to realise that side hustles can be a healthy way to experiment with different jobs or hobbies, using spare time productively and learning more about what you do and don’t like.
Aside from the money, it can lead to more skills, more experience, and more opportunities. Plus, just as importantly, a side hustle can loosen the chokehold our job identity has on us. By wearing different hats, we become far less tied to thinking “this is me, this is what I do.”
Because as most of you know, after doing the same thing for years, the rat race has a magical way of dulling our spirit, making it hard to imagine us doing anything else productive with our time.
A side hustle can diversify not only your income stream, but also your identity.
Despite the above, side hustles are definitely not for everyone.
If your life is plenty busy already, and you don’t need the additional workload, or extra cash, then it’s probably better to keep life as is.
But if you meet a bunch of the following criteria, I’d say a side hustle is definitely worth considering.
There’s also a few questions to ask yourself.
Are you more interested in maximising your income as soon as possible? If so, maybe focusing on either overtime or levelling up in your current role is the right move.
Or, are you more keen on testing out side hustles for the sake of exploration, testing and personal development? If so, maybe dip your toe into a few part-time ponds and see where it takes you.
Ideally, pick something that you have at least some interest in. Otherwise it’s unlikely to be sustainable over the long run. After the initial excitement and bump in income, you’ll probably burn out and lose motivation if there’s nothing else behind it.
Some people suggest your ‘side hustle’ should simply be just working extra hours in your current job, or further training so you can attain a higher position in the company. And that’s definitely a smart approach.
I regularly worked overtime and extra shifts during my warehouse days, which was extremely effective at increasing my income. Thanks to penalty rates, I earned 50% more for those extra hours, which was more profitable and easier to tap into than any side hustle I could think of.
Of course, this isn’t feasible (or even desirable) in many cases for the following reasons.
“But Dave, you’re always talking about a simple life with space and free time to relax”
You’re right, I’m all for these things. But I’m also a big on priorities.
Let me be clear: if I was just starting my journey today, I would be spending A LOT of time being productive and making money. Outside of that, I’d prioritise my health, friendships, and learning. But that still leaves a shit-ton of time for earning cash, and rest.
You know what it doesn’t leave time for? Mindless entertainment that takes up MULTIPLE HOURS of most people’s day.
To me, true wealth means permanent freedom. Having no wealth is an unacceptable situation that needs to be corrected as quickly as possible.
If overtime wasn’t possible, I would’ve definitely looked at different side hustles as a way to make more money.
And if I was broke (which I was at age 18), I’d damn sure be hustling in some form until my position dramatically improved.
It’s only as my wealth grew that I began to prioritise other things and live with more balance. But I think that’s the natural order of things for any ambitious person.
Side hustles can be an enjoyable, productive and profitable way to spend your spare time.
But are the extra hours you put in worth it? It all depends on what you expect to get out of the activity, and how the side hustle impacts your goals.
It’s entirely possible to turn a side hustle into a real business, or ignite a passion you didn’t know you had. But it could also be a disappointing flop or an unenjoyable use of your time.
You’ll only know if you try.
The overarching goal of this blog is removing our need to trade time for money. After all, that’s why we build investments.
In the short term, a side hustle goes against that rule. But with any luck, you might find something you actually enjoy doing. Something that doesn’t even feel like work, which changes your plans entirely!
Because ultimately, if you can find activities which earn you money but don’t really feel like work, then you need MUCH less wealth to build a self-directed life of freedom.
What are your thoughts on side hustles? Worth it? Waste of time? Or somewhere in the middle? Let me know in the comments.
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