6 Reasons to Start a Side Hustle in 2023

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  • Extra income can do great things for your finances.
  • In the face of a looming possible recession, now is an excellent time to pay off debt and pad your emergency fund.
  • You can also build your job skills and maybe discover a new passion through your side hustle.

Getting a side hustle could be the best thing you do next year.

I bet there aren't many people out there who wouldn't like a little extra cash flow in their lives. As we head into a financially uncertain future, having an additional income source could really help a lot of people. Read on to learn six compelling reasons to get a side gig next year, or even sooner if you can manage it.

1. Pay off debt

If you're reading a lot of personal finance news these days, you've probably heard a lot of predictions about a coming recession, or possibly even something worse than a recession. There's reason to think one is coming; inflation has spiraled this last year, with prices up 8.3% between August 2021 and August 2022, according to data from the U.S. Bureau of Labor Statistics' Consumer Price Index Summary. To better cope with rising prices, the Federal Reserve has raised interest rates several times this year, and may raise them again soon, in hopes of slowing down consumer spending to allow inflation a chance to cool off.

What does this have to do with your debt? If you're carrying variable-interest debt, like credit card debt, the interest rate on that date increases in response to the Fed's rate hikes. All of this means that now is a terrible time to be carrying debt without a fixed interest rate. Getting a side hustle could help you pay down that debt, and maybe pay it off completely if you stick with it. If we head into a recession next year, and your job is at risk as a result, you'll be glad you got out from under your debt. And hey, bonus! Paying off debt will also boost your credit score.

2. Achieve a big financial goal

I've made no secret of the fact that I want to buy a house in the next few years. If you've got a big financial goal like mine, having a side gig could help you achieve it. If your main job doesn't leave you with much money to put towards a goal like buying a house or a new car, or saving for a dream vacation or a big wedding, side hustle earnings can be earmarked for just that.

3. Boost your emergency savings

Not to bang that gloom-and-doom drum again, but having a well-funded savings account could be a major help in weathering a possible recession. Many finance experts are now recommending that Americans have eight to 12 months' worth of bills put aside in the event of an emergency or job loss, and a side hustle could make that happen for you.

4. Invest for retirement

Since you can't really expect to live well on Social Security income alone, it's important to save and invest for a financially secure and comfortable retirement. The sooner you can get started, the more chance you'll have for the miracle of compound interest to work for you. If your main gig doesn't pay enough for you to put much into your IRA, you can help fund it with side gig earnings.

5. Increase your job skills

Just in case you thought all of my reasons for getting a side hustle would directly result in more money in your pocket, here's a great reason that may not result in more money immediately, but could end up making you richer down the line. A side gig can be a great way to invest in yourself as a professional. The best side gigs will give you the opportunity to add to your resume in a positive way and build the kind of skills that may let you change careers, or even score a higher-paying position in your current career down the line.

6. Find a new passion

Finally, my last reason to start a side hustle in 2023 (or sooner) is that it may give you the opportunity to discover a new passion. The job you take as a weekend math tutor for middle school kids may show you that you'd love to go back to school and get your teaching certificate. Sometimes the jobs we take for an immediate goal (such as paying off debt or saving money to buy a house) turn into something more. You can certainly pick up a casual side gig delivering takeout or doing data entry at home, and expect nothing more to come out of it (except less credit card debt and a bigger emergency fund). But don't discount the chance that you could end up doing something you really enjoy, like teaching, coaching youth sports, or even writing about personal finance.

If you've got some extra time and energy and want to do excellent things for your finances, I recommend getting a side hustle. Your bank account and resume will thank you.

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