Ways side hustles provide financial security?

I remember the night that I made the decision to take my finances more seriously and invest in myself. At that time my main source of income was my 9-5 job and as the economy began to change, I became concerned about only having one source of income. I began to read about different ways to make more money. After a few days of research, I had to look in the mirror and ask myself what is my purpose and how can I serve others? Many of us have heard people say, “just follow your passion.” However just following your passion may lead you into a never-ending maze. Just having passion as it is currently defined is a strong characteristic but can be uncontrollable. Finding your purpose and serving others is a better investment to make. Creating something that you can scale overtime can provide you and your family better financial security. Before we go over a few ways that side hustles can provide financial security, we need to define what a side hustle is.  

What is a Side Hustle?

A side hustle is simply a job or piece of work that can be an additional source of income. For example, if you are a great baker, you can make cake and sell them during the time you are not working your main 9-5 job. If you choose to, your can grow your side hustle into a small business opportunity. Remember don’t just follow your passion. Find your purpose and find a way to serve others to sustain the passion you have. So, what are some ways a side hustle can provide financial security?

What are some ways a side hustles can provide us financial security?

Side hustle can:

• Create a stream of income to help pay down debt
• Turn into a small business
• Create a nest egg for a child’s college/ business fund
• Create a savings fund
• Help to fund networking opportunities
• Create the opportunity to monetize our skills
• Might be able to qualify for a standard deduction
• Create flexibility to invest for the long term
• Help encourage us to live below our means and be disciplined

Side hustle can create a stream of income to help pay down debt

A side hustle can provide an additional stream of income that can help you pay down debt or save for retirement. Paying down our debt can help us achieve financial security. If we have a lot of debt, it can be difficult to save for retirement or emergencies. High levels of debt can also hurt our credit score, making it more difficult to borrow money in the future. So, using the additional income stream to help pay down our debt can bring peace of mind.

Side Hustles can turn into a small business

Turning our side hustles into a small business can be challenging but it is possible! If we plan, execute, and have discipline, it can be done. One of the most rewarding things about having a small business is, if the business is successful, we can hire a manager and become a business owner and eventually pass that business on to our children. Ownership gives us access to equity and can help us establish wealth. Being an owner is very rewarding.

Side Hustles can create a nest egg for a child’s college/ business fund

A side hustle can be a great way to create a nest egg for a child’s college or future business fund. Side hustles can provide financial security and help improve our overall financial situation. Many of us have student loan debt. In the times that we are currently living in. It is very difficult for many to make ends meet. If we create a fund and put money aside that can compound for our children, it can help them to not have to take out a large loan to go to college or start a business.

Have you heard about 529 Plans?

529 plans are tax advantaged savings plans that allow tax-free withdrawals for qualified higher education expenses. Money in a 529 plan grows tax-free, and withdrawals are also tax-free if they are used for qualified educational expenses. Many states offer their own 529 plans, which may come with special benefits like matching contributions or reduced fees.

Have you heard about Uniform Transfer to Minors Act and Uniform Gift to Minors Act?

UTMA/UGMA accounts are custodial accounts that can be used to save for any goal, including college. The money in these accounts is owned by the child, but it’s managed by the adult who opens the account. One of the cons of creating UTMA/UGMA Accounts is when the child turns 18 years old, they can use the money for anything they desire, which may be tempting for a young adult. For some states the child must be 21 years old.

Side hustles can create a savings fund

Side hustle income can be used to create a savings fund. By creating a savings fund, we can provide ourselves with a cushion against unexpected expenses or downturns in our financial situation. The savings fund can be used to pay down debt, purchase assets, or a family vacation. In the current economic climate, we may want to consider using accounts that pay us interest versus putting our money in an account that barley accrues interest or doesn’t have any interest at all.

What is a APY savings accounts

An APY savings account is an account that offers a higher annual percentage yield or return on your deposited funds. This type of account is ideal for those who want to grow their savings over time, as the APY rate can be significantly higher than traditional savings accounts or certificates of deposit. By depositing your money in a APY savings account, you can make sure it’s working for you and growing at a rate that outpaces inflation. This is especially important during times of economic turmoil when the stock market is unstable.

NOTE: Remember to shop around and if you aren’t sure about what account is right for you, reach out to a financial advisor.

Side hustles can help fund networking opportunities

Starting a side hustle can be a great way to meet others in the same niche. Meeting others can lead to a pool of opportunities for us and our side hustle. Networking with other professionals can help us learn new skills and make connections that could lead to bigger and better things down the road. When we establish connections with other professionals it can motivate us to continue to invest in our side hustle. Learning for others who have been in our niche longer can help us improve our income.

Where are some places, we can network our side hustle?

• Attend local networking events
• Join an entrepreneur group or club
• Online networking

Local networking events are usually held at local businesses, and they give you the opportunity to meet other business owners and entrepreneurs. At these events you may find potential collaborators and brainstorm with them.

Entrepreneur clubs can provide support and help us connect with potential clients. We live in a time now where zoom and Microsoft teams meetings are normal due to Covid-19. However, I do see in the future the return of meetings at local restaurants and happy hour spots.

Online Networking is full of opportunities. There are lots of social media platforms that we can use to network with others. These platforms include LinkedIn, Facebook, Instagram, Clubhouse, Reddit…and the list goes on. There a plenty of networking opportunities out there. Find which platform works best for you!

Side hustles can create the opportunity to monetize our skills.

A side hustle can also provide an opportunity to monetize our skills and talents. There are a few ways we can monetize our skills as side hustles. If you have skills that businesses need, you can freelance your services and make some money on the side. Popular freelance services include web design, programming, writing, and graphic design. If you’re passionate about a particular topic, starting a blog or podcast can be a great way to share your insights with the world and make some money in the process. There are lots of ways to monetize a blog or podcast, including paid advertising, affiliate marketing, and sponsorships. Lastly, we can sell products or services online. You can set up a website or use online marketplaces like Shopify or Etsy to sell your creations or services.

Side hustles might be able to qualify for a standard deduction.

First…What is a standard deduction?

A standard deduction is a predetermined amount that you can claim on your tax return, regardless of whether you itemize your deductions or not. Standard deductions were created to help us who don’t have a lot of itemized deductions save when we file our taxes.

How can we qualify with our side hustle?

Well, for a side hustle to qualify, the side hustle must meet certain criteria. First, the side hustle must be a legitimate business. You must also report your income from the side hustle on your tax return. If we meet the criteria necessary, we may be able to claim the standard deduction for your side hustle. This can save you a lot of money on your taxes.

Note: Certain states have different rules so please speak with a tax expert in your state.

How can we keep track of our finances? Here’s a small list

• Receipts
• Tax forms
• Car mileage/ expenses
• Bank statements
• Certified Financial planner

Side Hustles can create flexibility to invest for the long term.

A side hustle can be a great way to create flexibility to invest for the long term. Some long-term investments that we can make are in real estate, stocks, retirement, and business investments. It is important to invest for the long term, especially if we want to achieve financial security. By investing early and often, we can give ourselves the best chance of reaching our financial goals. We can use some income from our side hustle to put in a retirement account. Depending on which retirement account we choose it’s possible to save money tax-free, which can help us grow our savings faster. Another option is to invest in stocks or mutual funds. These investments can provide us with a steady stream of income over time depending on the market conditions. One of the best investments we can make is in real estate. When investing in real estate there are a few things we need to consider: location, property type, market analysis, and investment strategy. Please speak with a real estate agent or real estate investor to help guide you if you aren’t not sure how to get started.

Side Hustles can help encourage us to live below our means and be discipline.

Living below our means can be a difficult task, but it is worth it in the long run. A side hustle can help us to bring in extra money. That extra money can serve a specific purpose. That purpose could be paying down debt or saving for a new car. If we choose to allocate the extra money towards paying down debt, we must be disciplined and consistent. Some may encourage us to spend the money for trips, new purses, or shoes, but understanding that we have a goal to reach and sticking to that goal is important. Learning to be financially responsible is key for us to build financial security.

Conclusion: So there you have it! A few of the many reasons a side hustle can provide us with some much-needed financial security. Whether you’re looking to pay down debt, turn your side hustle into a small business, or create a nest egg for your child’s college fund, there are plenty of ways to make extra money on the side. And don’t forget – many side hustles offer great opportunities to monetize our skills and passions. Plus, they can give us more flexibility when it comes time to invest for the long term. Sound appealing? I hope so! Please feel free to share this post with your friends and family and be sure to comment below if you have any other ideas.