At one time or another most of us have thought about starting a side hustle or part-time job. Whether it’s to just bring in a little extra income or you’re pursuing a hobby that might actually pay, these extras can certainly bring in some needed cash. But before you spend it all, let that extra income do some work for your future as well. Use that extra income from a side hustle and invest it!
Some people start projects on Etsy. Others on eBay. Some of course use Amazon to make a little extra money. Others go more traditional and get a part-time job in their local town. No matter where that money comes from (even if it’s an extra shift at your local hospital for us medical professionals), using that money wisely will not only make you happier in the present but can certainly build your future as well.
For myself, I took a part-time job as a flight nurse. Granted, this wasn’t an easy path to just start out on because the requirements were quite involved, but regardless, it became a second source of income for me. At the time I was an ICU nurse and it was time to spread my wings a bit. It was also an exciting adventure to begin and of course, would look pretty sweet on a resume.
I know plenty of others who regularly volunteer for an extra shift to work. Others began their second source of income from teaching students at the local college. Regardless of how you get started, it’s important that this “extra” money is working for you. This cash can be used for good. Of course, it can hurt you as well.
The Negative of Extra Income
Is there a negative? Really? As with anything, I truly believe there is. Let me explain. But before I explain, let’s start thinking of money as more of a tool. We use it to pay our bills. Thus it’s a tool for providing the necessities of life. We also use this tool to provide entertainment, to get a little extra in life that we feel we deserve. However, if used unwisely, the money tool can get us into debt. It can also become a burden.
Can Cause Debt
What do I mean by this? Once you begin to make a little extra income it’s easy to spend it. Right? That’s why you wanted to earn it to begin with (generally). But it’s also easy to get used to that extra income and begin to think of things you can have if that was a “payment”.
Meaning, that extra $500 a month can now be used to finance a newer car. Or a boat. Or a new couch. You get it. You’re financing a larger debt with this extra income. And now even though you’re making extra cash per month, your debt burden just got larger.
Can Trap You
This extra money can become a trap. Don’t believe me? Try working a second job for a year. Guess what? It will be hard to leave that extra income when you no longer want to work that job. If you’re making an extra $500 a month (or $2,000) it will be easy to miss that money. During that year it will also be ever tempting to increase your quality of life by $500 or $2,000 a month.
Then you “need” that extra money.
Can Take Time Away From You
Obviously, working an extra job or side-hustle will demand more time from you. If you love your work it may not be a big deal. No love and the job becomes more of a trap, you’ll love the extra money and not want (or can’t) quit, and you now find yourself committed to something you never intended.
The Positive of Extra Income
The Positive of Extra IncomeYep, just wanted to get all the negativity out of the way – because it’s real. However, there is a lot of good that a bit of extra money can do for you. Let’s take a look!
Pay Off Debt
This should be a no-brainer. Get that debt out of your life! Debt is the life-sucker, wealth-killer enemy in your life. Don’t think so? Try imagining life without it. Feels great, doesn’t it? This extra money can be a tool to get this burden off your shoulders.
Used wisely and you’ll find yourself debt-free!
Use It For A Bit of Fun
Use It For A Bit of FunYes, this is another obvious choice. Life without a bit of fun is, well, just a little boring, correct? So, yes, it’s a good source of money for a little fun in your life especially if things are tight in your routine, normal job.
However, remember, the debt part we talked about earlier? It’s easy to want to “finance” a payment with this extra money. Just because you wanted to have a little fun. Be very careful here. That can trap you very easily. Just be responsible with the extra money.
Save a few months and just buy what you want in cash. Remember to just keep your “buys” reasonable in relation to the actual amount of money you have coming in. You may not be able to buy in cash that new BMW with the $500 saved per month. We still have to say no to some purchases.
Invest It
Yep, this is what we’re talking about now! Use that extra cash as a great tool to finance your future. You want your side-hustles to work for you. And investing it is a great way to build a more solid financial future for yourself.
No, I don’t necessarily mean taking all of it and sticking it aside for a rainy day. Although there are some people who do just that. And I believe they’re better off for it. But for the rest of use mere mortals, I’m talking about using some of it for fun and the rest to build a future with.
Think about it: if you spend every dollar today, it’s literally gone. What do you have to show for it? Maybe some memories and a few fun things. For myself, a lot of those things I bought were loved for only a short time. Then I no longer loved the items and that money was later viewed as ill spent (I wish I would have used it on something else).
But by investing it, you can watch that money in action. Is there a fool-proof way to only have that money grow, with no risk of loss? Usually not unless it’s in a savings account getting negligible growth. But we want that money to grow so we’ll instead start investing it in real assets that grow, whether its real estate, the stock market, or starting a small side business. That extra money can be put to work for you. And with a little practice you’ll hopefully start seeing profits from that investment. That’s when it really gets fun!
And like I said, we don’t have to use every penny here. For myself I committed to 25% of my part-time job going to investing. The other 75% (minus taxes of course) went to paying off debt and later having fun with.
I know 25% may sound like a lot. And it is. But when you had 0% extra money coming in, it’s easy to start with this 25% when the extra money starts flowing in. Start setting it aside before you use it. If you instead put it off and get “used” to the money before you invest it, a few months later it will be harder to commit 25%. And over the years (if you’re still working that side-hustle that long) that money will really add up.
Especially if you’re investing it. And it can be in something simple like the S&P500 (I prefer to choose an index fund or an ETF called SPY for lower fees!) or a Total Market Index Fund.
Build Yourself a Future
That’s what I did with my extra income from flight nursing. As long as I don’t need that money for debt in my life or increase my living expenses because of this extra income, this part-time job is just that: part-time. I can quit when I like. Although all of us tend to miss the extra income, when the time comes you’re able to let it go.
And with this 25% going to investments, I know that my extra endeavor is doing something good for not only my present but for my future as well. I can someday access that money after it’s grown for years in the market. Go ahead a plug in some of your own numbers in a financial calculator and see what that extra side hustle income can do for you after a decade in the market (remember, you don’t have to work this long at a side hustle, but let that extra income build up over time long after you quit working!)
I get to enjoy the extra income today as long as it doesn’t become a trap. If it does I have to be vigilant to get myself out of any sprung trap (because they’re easy to fall in to). I have to be careful because this tool can be used for good or for bad.
For now, I get to use this money for my family presently. But I will also get to watch that money which is still active and working on my behalf long after I let this second income go.
And for me, that’s what keeps the extra efforts worthwhile. I benefit now. And I benefit later.
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