It's a frightening statistic that nearly half of U.S. adults don't have the cash on hand to pay for a $400 emergency. That's what the Federal Reserve Board discovered when it surveyed a wide range of working Americans. Furthermore, according to a Pew study, more than 50% of households say they don't have enough savings on hand to cover a full month of expenses. And that's just playing with fire.
It's encouraging, then, to learn that 44 million Americans are taking steps to improve their financial picture by working a side hustle. A side hustle is a gig that allows you to make money in addition to your primary job. Popular side hustles today include waiting tables, bartending, dog walking, retail, telemarketing, selling products online, and consulting, but in reality, your side hustle can be pretty much anything you want it to be. In fact, if you have a particular talent or hobby that could help you start earning money, it pays to keep working at it. You never know what good ideas might take off, and if you're like the typical American, you can no doubt use the extra cash.
Why pursue a side hustle?
Working a side hustle is a great way to generate extra income, regardless of why you need it. If you're behind on savings (whether of the emergency or retirement variety), and your living expenses currently eat up your entire paycheck, then taking on a second gig could be the least painful means of catching up to where you need to be. (Your other choice, for the record, is to seriously cut back on your existing expenses, which could result in some serious lifestyle upheaval.)
Similarly, if you have a particular financial goal in mind, working a side hustle can help you get there more quickly. Imagine you're aiming to buy a home and need $20,000 for a down payment. If your current salary and expenses only allow for $300 a month in savings, and you manage to earn another $300 a month from a side hustle, you'll reach your goal in half the time.
Your side hustle also doesn't have to fund something responsible. You can use the money to pay for a big vacation and avoid racking up debt in the process. Or you can use it to enjoy your city's nightlife or avoid ever having to cook in your kitchen. The choice is really yours.
How much income can a side hustle generate?
The amount of money you earn from your side hustle will depend on what it is you do, the amount you charge for your product or services, and the number of hours you're willing to put in. But you should know that among those adults who currently hold down a side gig, an estimated 36% earn over $500 a month as a result -- not exactly pocket change.
Here's another thing: While you might be quick to dismiss the side hustle as a millennial trend, older workers are getting in on the action, too. And it's paying off. Bankrate reports that workers aged 53 to 62 who work a side hustle are more likely to bring home an extra $1,000 per month -- or more -- than any other age group.
Drawbacks of working a side hustle
Of course, the one negative aspect of a side hustle is forgoing a chunk of your free time to bring in that additional money. And that's not something to be taken lightly, because if you sink too many hours into your second gig, it could impact not just your sanity but your physical health.
Spend too much time working a side hustle, and you'll also risk compromising your primary job. After all, you're less likely to perform well at work if you were up till 2:00 in the morning moonlighting as a bartender for extra cash.
That's why if you are going to pursue a side hustle, it pays to start slowly and do so in moderation. Working a side job could be the perfect way to give your finances a much-needed boost, but don't let things reach the point where they put your main job on the line.
Finally, don't discount the possibility of your side hustle one day turning into your primary job. If you enjoy whatever it is you're doing on the side, and it proves to be a moneymaker, you might eventually wind up in a position where you're able to leave your day job and pursue your passion full-time. And, really, that's kind of the dream.