Kevin the blogger behind financialpanther.com has some insights about using side-hustles to build wealth.
The Value of a Good Side Hustle
One of the big benefits of side hustling is the ability to bring in extra income that you don’t need to spend. Arguably, you might need every last bit of your day job income in order to survive.
But if you’re already making ends meet with your day job income, that means that every single dollar you make on the side can be saved. It might not seem like that big a deal to make a few extra hundred bucks a month. But the power of saving the entirety of that money shouldn’t be underestimated.
Everyone Can Make Money With A Side Hustle
Most side hustles are exactly that – something you do on the side. After all, most of us have day jobs that take up the majority of our day, and not all of us are brave (or foolish) enough to just up and quit the safety of a steady paycheck.
This probably means that your side hustle won’t bring in a ton of money – at least not at the beginning. You just won’t have the time necessary to make the big bucks from your side hustle.
But that’s okay! Not all of us want our side hustle to overtake our regular day jobs anyway.
Still, it’s fairly easy to find a side hustle where you can make a few hundred bucks a month. This is especially true with the plethora of sharing economy and gig economy apps out there. Now, anyone can start their own little side hustle business with basically no start-up costs at all. And the amount of time you have to put in per month is fairly minimal.
As documented in my side hustle reports, I’ve been able to make well over $1,000 per month basically doing things I’m already doing or using resources I already have. I’ve rented out a room on Airbnb, hosted dogs on Rover, and delivered food on my bike through apps like DoorDash, Uber Eats, and Grubhub. I even sell trash I find on the street.
If I can make over $1,000 per month doing these types of gigs, I’m positive you can find a way to make a few hundred dollars per month on the side as well.
A Small Amount Can Really Add Up Over Time
Here’s where your side hustle income can really add up. Since we’re not spending that money, it means that we can save the entirety of our side hustle income.
As an example, let’s take everyone’s favorite stealth retirement account, the Health Savings Account (HSA). In 2021, the max a single person could put into an HSA was $3,600. Thus, in order to max out an HSA, a single person would need to contribute $300 per month.
What if you made $300 per month from a side hustle and put it all into an HSA (assuming you have access to one)? Below is a graphic showing how much a $300 per month investment can grow over a 30-year period, assuming an annual rate of return of 7%. Final investment value $352,819.46.
Wow! Just earning an extra $300 per month in side hustle income and throwing it all into an HSA yields over $300,000 in a 30 year period! Your tiny, couple hundred bucks per month side hustle doesn’t seem so small now. And the great thing is that this is money that you otherwise wouldn’t have had. You won’t even notice it being saved.
What If We Increased The Savings?
What if we tried to up our side hustle income to meet the IRA contribution limits? The 2021 IRA contribution limit is $6,000. In order to max that out, a person would need to put away $500 per month. Here’s what that amount looks like over a 30-year period. $588,032.43.