Learning how to diversify your income and ways to earn extra cash outside of your main hustle can really give you a strong edge towards reaching your financial goals, enter the side hustle. Now a days it seems like everyone has found a way to earn a little extra side money. The great news about finding ways to generate income that is not your main source of funding is that is can be completely customizable. You can control the time you dedicate to it, how you earn it, and what you do with those earnings.
Debt Management
There may be times in your life where your side hustle might not be on the side of another paying gig, rather another large life event that requires your full-time attention, such as attending college. As a student, your main job is earning your degree, but since that is not going to pay your bills, or help you save for future ones, you might consider opportunities that are flexible and part time to generate some cash flow. If you are thinking about going to college and need help with financing, you can use a student loan repayment calculator to estimate what your monthly payments may be taking out a student loan with a private lender, so you know what to expect.
Repayment on student loans will not begin until after you graduate, however once they start, they only stop when your debt balance equals zero. Thinking about those payments ahead of their due date is a smart way to prepare your current finances for future responsibilities. You can estimate your monthly payments easily with a student loan repayment calculator to give you a loose guideline for your post-graduation budget. Once you have a handle on that, you can decide how much of your current side hustle money is sensible to stash away for this significant looming bill.
Track and Prep
The very first time you collect money from this stream of income, it is time to start tracking it. Not only is this a good practice for financial health in general, but it will help you to allocate your side money in a smart and efficient way. It is exciting to watch your money grow and being casual about your side hustle since it is not your main income is a mistake. Although this is not your full-time dedication, you are still giving your time, energy, and resources to it, it is still work. You would not let your salary land in your bank account haphazardly, so why create that habit with your bonus cash?
Brace yourself for Uncle Sam. Another huge reason that it is essential to track your earnings is because you will have to pay taxes on this money, and if you are not used to this style of tax payment plus you have not saved for it, the totals can really shock you. Same are there are tools available to estimate your monthly payments regarding student debt, tools exist to estimate your quarterly taxes as well.
Save and Spend in Tandem
After you have a handle on your stream of income and have allocated appropriate percentages towards future tax payments you need to figure out how to handle the balance of your money. Assumably the point of seeking out a side hustle in the first place is to grow your net worth, either on the precipice of a major life event like buying a home or planning a wedding, or to set yourself up for retirement and future financial freedom.
You can spread this money across various savings goals, but also allow yourself to live a little. It is possible to save and spend in tandem and to be responsible about both simultaneously. If you are someone who has taken on a side hustle on top of a full-time job, then you do not need to be told about the merits of hard work so give yourself permission to enjoy the fruits of your labor. Even simple spends like buying lunch on a day you normally would not feel like a treat without taking away from your ultimate goal.