you need a side hustle

3 Reasons why you need a side hustle

In this post, I’m going to show you the math behind why you need a side hustle? Some of my own experiences with my side hustles and how it changed my life.

Diversifying your Revenue streams is one of the most important things that you can do to improve your financial status and as it turns out there are far more benefits to creating a side hustle than just the monetary factors.

1. Side-hustle improves financial security

you need a side hustle

Most of us only have one source of income and that would be the salary from our jobs and that’s all fine and good, you can create a financially successful life based off of just that. However, there are so many unknowns when it comes to the job market and the larger economy as a whole.

What happens to you when the economy tanks if your company decides that it needs to lay people off in order to stay afloat?

Unless you had enough time to set your financial affairs in order already, you’re likely going to experience a very sudden and very drastic change in your standard of living, at least until you can find another job or your company is able to bring you back.

Having a side hustle can help you limit that drop off in lifestyle or even prevent it from dropping off in the first place depending on how well it’s doing for you and even something as small as a hundred or five hundred or $1,000 a month can help you delay the need to dip into any sort of emergency fund or credit cards while you’re trying to regain your previous level of income.

2. Side-hustles speed up your path to Financial Independence

you need a side hustle

The second reason that I think everyone should have a side hustle is that it can help speed up your path to Financial Independence.

Now, you’ll see a lot of stuff online about creating passive sources of income, and there’s nothing wrong with that method, I’m a fan myself but that’s not the only way to create more sources of income.

Some people get a part-time job maybe delivering pizzas on the side, other people sell things on eBay, some people go onto Craigslist and look at the free section in their neighborhood and then go grab some stuff off of that and sell it either on Craigslist eBay or Amazon for a profit.

Others do a similar Thing by going to the local dollar store and buying something for less than it’s worth and then turning around and selling it at market value.

Others higher property managers and get housing or apartments that they can rent out at a profit without having the inconvenience of having to fix toilets.

Still, others start a YouTube channel or a Blog, write and publish an ebook, there are so many options out there, I cannot stress that enough, and it may not be as much as you’re making at your current job especially in the beginning but it is nice as a secondary source of income. Which can help you pay down your debt faster or invest more early on when you still had a lot of time to add that money to compound as well as just make it mathematically much easier for you to either retire or go to part-time if you wish to.

So there are tons of ways that you can create multiple streams of Revenue it really just comes down to what one works best for you with your skill set and your goals as well as the lifestyle you want to have.

And I’m not going to go over all the various ways that you can go about making money on the side in this post, you can read 10 Legit ways to earn money online and make a living from your home.

How much money do you need to retire?

you need a side hustle

I just want to focus on the math behind why getting another income stream is so important and I’m not going to focus on the debt pay off end of things in this post because I think it’s obvious that if you’re throwing more money at your debts you’re going to pay them off a lot faster.

The end that I’m interested in is mathematically what this side income does for you if you wish to retire early or go to part-time and coast your way into Financial Independence.

Because one of the biggest Roadblocks to early retirement for a lot of people, when they’re just getting started reading about the subject, is that they feel they need to have a million-dollar or $3 million or some gigantic stack of money in order to retire early.

It’s certainly going to help you if you have a lot of extra money because it gives you more wiggle room in your retirement but it’s not necessarily required.

Now, don’t get me wrong I’m not saying don’t invest, I’m not saying don’t try to get a large sum of money before retiring because you definitely should still try and do that.

What I’m saying is there are things you can do to supplement those investments and maybe speed up your time to be able to retire early if you wish to.

Also, I need to talk about the 4% rule it’s also known as the safe withdraw rate, it’s a rule of thumb that many early retiree hopefuls use to get a good guesstimate of how much they might need to invest in order to retire early.

In general, you need roughly 25 times your annual expenses in order to be able to retire and have a reasonable chance of not running out of money.

Now, some people say that 25 times your annual expenses are not going to be enough. So some people do use a 3% safe withdraw rate and have 33 times of their annual expenses, but again, it’s a rule of thumb to give us an estimate, something to shoot for, and everyone’s situation is different.

So always keep that in mind as you’re planning your future but, in general, it’s a good ballpark estimate and it’s what I’ll use for the math in this post.

Example

So, say if you wanted to live on $3,000 a month once you’re in retirement, which is $36,000 a year, which if you’re debt-free is definitely doable. Especially, considering that you’re retired, you can live anywhere.

And that’s not to mention the fact that in order to be able to retire early at all you’re probably going to have to be pretty good at controlling your expenses in the first place.

So $36,000 * 25 = $900,000

So that’s our starting goal but what happens if we had an income coming in during retirement through a side hustle?

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

Over the course of your first year, you begin to build a bit of following and you find that by the end of the year you’re generating about a $1,000 a month on average through your blog, ads, and affiliate marketing.

You enjoy writing on the blog and figure you can continue doing this, fairly easy when you retire, especially since it doesn’t require you to be anywhere in order to do it.

Which means that in addition to your investments you’re actually bringing in roughly a $1,000 a month on average in retirement if not more because a business may continue to grow and to be honest a $1,000 a month is not that much money to make on a business, assuming you’re consistently providing good value to your customers.

Anyway, $1,000 a month is $12,000 a year.

$12,000 a year in income during retirement means that every year that’s $12,000 that you don’t have to take out of your investments which means that the investments don’t actually need to cover all of your expenses.

They just need to cover the extra $2,000 a month or $24,000 a year that are not covered by your business and $24,000 * 25 = $600,000.

So, generating this side income has saved you from the need to invest an extra $300,000 for retirement.

And if you do the math on the difference it can really be an eye opening experience.

Let’s someone had already managed to invest $600,000 for retirement but they didn’t have any side income, they’ve built their wealth by investing roughly $1,000 a month every month for a little over 20 years at this point at an average return of 8%.

At this rate, they would have to continue working for nearly another four and a half years to reach that $900,000 mark.

However, if they started working on a side hustle from the beginning, generating roughly $1,000 a month and threw that into their investment.

Then, instead of retiring in 24 and a half years with roughly $900,000 they would be financially independent in just about 13 years and 9 months with $600,000.

This means they’re capable of leaving their jobs almost 11 years earlier than they would have without the side income.

Now, of course, they could continue working until they reach that $900,000 shortly after the 17-year mark, and there’s nothing wrong with that, but even then it’s still a savings of almost seven and a half years.

Either way, you look at it, it’s quite a lot of time that you’re saving

3. A Side-hustle can change your life

you need a side hustle

The third reason that I think everyone should have some sort of a side-hustle is that it has the potential to radically change your life.

For the record, this is what happened to me.

My dad used to talk to me about Finance quite a bit. He was always interested in the subject matter and realized how important it was to properly educate his kid about finances.

I also realized that schools, at the least at the time I was going, didn’t really teach us much about money. We learned how to write a check but that was pretty much it.

Even the financial classes that I took while in college didn’t teach me much about handling my own personal finances.

So, when I realized the impact of an extra income can have on my life I decided to try out semi-retirement at the age of 24 so that I could have financial freedom as young as possible and really enjoy my life and do what I’m passionate about.

I hope that between me and others like me you’re able to take the first, second, or last step on your journey to reaching your dream life.

So, those are the top three reasons, at least according to me, why I think everyone should look into getting a side-hustle of some sort

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Let’s really get this information out there and start our own Financial Revolution.

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