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3 Reasons You Should Have a Side Hustle | How a Side Hustle Can Change Your Life

One of the most important things you can do to improve your financial health is to diversify your revenue streams

By AndeutPublished about a year ago 9 min read

And, as it turns out, there are far more benefits to starting a side hustle than just the financial ones. I’ll show you the math behind why this is the case, as well as discuss some of my own experiences with my side hustle and how it changed my life.

Today I’m going to go over the top three reasons why I believe you should have a side hustle.

So, if any of those topics sound interesting to you, or if you want to learn how to manage your money better and have more financial freedom, be sure to hit the subscribe button.

1. Having a side hustle gives you security.

The first reason I believe everyone should have a side hustle is the added security it provides.

Most of us only have one source of income, which is the salary from our jobs, which is fine and dandy because you can live a financially successful life on just that, but there are so many unknowns when it comes to the job market and the larger economy as a whole.

What happens if the economy tanks and your company decides to lay off employees in order to stay afloat?

Unless you’ve had enough time to get your financial affairs in order, you’re likely to experience a sudden and drastic change in your standard of living until you either find another job or your company is able to bring you back, and having a side-hustle can help to limit that drop in lifestyle or even prevent it from happening in the first place depending on how well it’s doing for you.

Even $500 or $1,000 per month can help delay the need to dip into your emergency fund or, God forbid, credit cards while you try to recoup your previous income.

Photo by CoWomen on Unsplash

2. Accelerates Your Financial Goals

The second reason I believe everyone should have a side hustle is that it can help you get to financial independence faster.

You’ll see a lot of information online about creating passive sources of income, and there’s nothing wrong with that method; in fact, I’m a fan of it, but it’s not the only way to increase your income.

Some people get a second job, some people deliver pizzas on weekends, some people go on Craigslist and look at the free section and then go grab some of that stuff and sell it on Craigslist, eBay, or Amazon for a profit, some people do a similar thing by going to Dollar stores and buying something for less than it’s worth and then turning around and selling it at market value, and others hire property managers and get housing or apartments that they can then rent out.

And, while it may not be as much as you make at your job, it is a nice secondary source of income that can help you pay down your debts faster or invest more early on when you still have a lot of time for that money to compound on itself, as well as mathematically make it easier for you to retire early if you wish.

So there are a plethora of ways to generate multiple streams of revenue; it all comes down to which one works best for your skill set, goals, and lifestyle.

Photo by Fabian Blank on Unsplash

How Much Money Do You Need To Retire Early

Because one of the biggest impediments to early retirement for many people is the belief that they must have a million dollars, $3 million dollars, or some other large sum of money set aside in order to retire early, you see this brought up frequently with people like Suze Orman.

And, while it will certainly help if you have a lot of extra money because it will give you more wiggle room in retirement, it is not required.

Don’t get me wrong, I’m not saying don’t invest, or that you shouldn’t try to save a large sum of money before retiring, because you absolutely should, but I am saying that there are other things you can do to supplement those investments and possibly speed up your time to be able to retire early if you wish.

In order to retire with a reasonable chance of not running out of money. Now, some people argue that 25 times is insufficient, so they use a 3% safe withdrawal rate and say you need to have 33 times your annual expenses, but this is just a rule of thumb to give us a ballpark estimate, something to aim for, but everyone’s situation is different.

However, it’s a good ballpark estimate in general, and it’s the one I’ll be using for the math in this video because I have to use something or the equations won’t start.

So, say you want to live on $3,000 per month or $36,000 per year in retirement, which is definitely doable if you are debt-free, especially considering you’ll have to get pretty good at controlling your expenses if you ever hope to retire early.

$36,000 a year multiplied by 25 equals $900,000, so that’s our starting point, but what if we had income coming in during retirement?

Let’s say you started a blog about building your own business where you show people how you built your business, what tools you used, how to get through the ups and downs, especially in the early stages, and all that sort of stuff, and you started using ads, affiliate marketing, and selling an ebook on your blog to generate some income.

Over the course of your first year, you begin to build a following and discover that by the end of the year, you’re generating $1,000 per month on average from your blog via book sales, ads, and affiliate marketing.

You enjoy writing on the blog and believe you’ll be able to continue doing so fairly easily when you retire, which means that in addition to your investments, you’ll be bringing in $1,000 per month on average in retirement, if not more if the business grows.

If we’re being honest, $1,000 a month isn’t a lot of money to make on a business assuming you consistently provide good value to your customers, especially if you keep your costs low and have been working on it for years, which they would have been at that point.

However, $1,000 per month equals $12,000 per year. If you earn $12,000 a year in retirement, that’s $12,000 a year you don’t have to take out of your investments.

That is, your investments do not have to cover those specific expenses. They only need to cover the extra $2,000 per month or $24,000 per year that your company does not cover.

$24,000 per year multiplied by 25 equals $600,000.

As a result of generating this side income, you have avoided the need to invest an additional $300,000 for retirement.

And doing the math on the difference can be an eye-opening experience.

Assume someone has already saved $600,000 for retirement but does not have any additional income.

They’ve done it over the long haul, investing roughly $1,000 per month for a little more than 20 years at an average rate of return of 8%.

At this rate, they’d have to work for another nearly 4.5 years to reach the $900,000 mark.

However, if they began working on a side hustle from the start, earning around $1,000 per month and investing it, instead of retiring in 24.5 years with roughly $900,000, they would be financially independent in about 13 years and 9 months with $600,000, allowing them to leave their jobs almost 11 years earlier than they would have without the side-income.

Of course, they could keep working until they reach $900,000 shortly after the 17-year mark, but even then, it would still be a 7 to 7.5-year savings.

In either case, you’re saving a significant amount of time. The third reason I believe everyone should have a side hustle is that it has the potential to completely transform your life. This is exactly what happened to me.

As many of my long-time viewers will recall, my father used to spend a lot of time talking to me about money.

He was always interested in the subject and recognised the importance of properly educating his children about finances. I also realised that schools didn’t teach us much about money, and even the financial classes I took in college didn’t teach me much about managing my own personal finances.

And, despite the fact that my father died when I was young, before he had a chance to put many of the ideas he taught me into action, I could see how important it could be for someone’s life to be properly educated about finances based on where I was in my life at the time.

Even something as seemingly insignificant in the grand scheme of things as finding a way to graduate from college debt-free so that you aren’t putting yourself in such a large hole so early in life can make a significant difference.

So I looked at where my life was at the time and the path I was on, and a desire grew within me to teach what my father had taught me to as many other people as possible, because if I could just get one person, just one, to really get it, to get something to click inside them with money, that is an entire life that is changed for the better, and that would make it all worthwhile.

It changed my entire life plan, and it influenced my decision to try semi-retirement at the age of 24 so that I could devote more time to making these videos and working with people individually to achieve the same level of freedom and choice that I’ve been fortunate enough to enjoy.

So I’m hoping that between me and others like me, you’ll be able to take the first, second, or final steps toward living your dream life.

So those are the top three reasons, at least in my opinion, why everyone should consider starting a side hustle.

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