When you think of a side hustle, you may think of a 20 or 30-something millennial with a full-time job who also drives an Uber or mows lawns over the weekends. While this may not be the picture of a millionaire that you had in mind, you may be surprised to learn that side hustles are only limited by your imagination. If you’re considering a side hustle, you can use your existing skills coupled with a bit of business, marketing, and financial savvy to generate extra income and grow your net worth.
Side hustlers are taking advantage of the ever-growing gig-economy that’s taking our nation by storm. The gig-economy is compromised of freelancers, short-term contractors and side hustlers, as opposed to full-time permanent jobs. The gig-economy is growing faster than traditional payroll employment. Never has it been easier in our nation’s history to earn extra income. With the rise of the internet, it is easier than ever to connect with potential consumers and sponsors.
Before starting a side hustle, it’s important to identify your goal. Is your goal to have extra spending money? Is it to get out of debt? Or is it to help you grow some significant wealth? If it’s the latter, keep reading.
Pick Your Side Hustle Carefully
While driving an Uber is a popular side hustle, it’s not scalable. By driving an Uber, you are working for Uber, not for yourself. You are not in control of how much your customers are charged or how much Uber pays you. There is no way to grow this business without spending more time driving. As the nature of a side hustle is just what the name suggests, “on the side,” your time is likely to be already limited due to a full-time job.
Consider side hustles that are not limited solely by your time. Here are some examples:
- Starting a blog about anything that interests you. You can generate money through advertising, affiliate links and sponsorships.
- Instead of being a solo dog walker, start a dog walking platform where you and other people can sign up to be dog walkers. You can make money by taking a percentage of all dog walkers using your platform.
- Instead of tutoring, launch a tutoring company with guides and workbooks that can be purchased through a website. This can be paired with a blog.
- Your imagination is your only limitation!
Answer these questions before committing:
- Is this something I am passionate about? Without passion, most new business ventures fail!
- Can I grow this without constantly spending more time? Can I generate a “snowball effect” where this side hustle can build momentum?
Have a Plan
Once you decide what your side hustle will be, you need to make a plan. The heart of your plan should be two-fold:
- How this side hustle generates income and how you use this income
- Your passion and reason for starting this side hustle (aside from making money)
Depending on the type of side hustle you choose, you may need to learn new skills before starting it. You also may need to enlist the help of your network, have or obtain funding for any start-up costs, and create a schedule on how and when you will work.
It may be helpful to visualize what your new side hustle will look like once it is more mature, and in the “up-and-running” stage. This will help you have a goal to work towards and will guide your plans. Like any new business, your side hustle needs a plan!
What Does It Mean to Be a Millionaire?
To build wealth, you must focus on your net worth. Your net worth is how much you own (assets, investments, cash) subtracted by how much you owe (liabilities, debts). If you’re earning a million dollars a year and spending a million dollars a year, you are not a millionaire, you are essentially worth $0. Not to mention, when it’s time to retire, you would have no savings, and you’d be broke.
Once your side hustle is running, you may see money trickling in. Remember, your goal is not to have extra spending cash, so you cannot spend it on coffee and a new wardrobe.
Make Money While You Sleep
Re-invest the money you earn from your side hustle into the markets. Continue living off your income from your full-time job. Any extra money you generate should be invested to earn compound interest.
For example, let’s say you can invest $100 per week ($5,200 per year) from your side hustle. As your side hustle builds momentum, so do your investment contributions. So, you increase your investment by 10% per year.
- In 5 years, you could have $38,569
- In 10 years, you could have $116,212
- In 15 years, you could have $263,032
- In 20 years, you could have $530,030
- In 25 years, you could cross the $1 million-dollar mark and have $1,002,869 just from your side hustle!
- In 30 years, you could have $1,824,463
For this to work, your money must stay invested. Every dollar you invest will continue to earn compound interest. This is essentially your money growing without any extra time or effort on your part. It can continue growing even while you sleep!
So, Can a Side Hustle Make You a Millionaire?
In short, the answer is yes. However, starting a side hustle does not guarantee to make you a millionaire and it doesn’t even guarantee to make you a single dollar. Like any business venture, starting a side hustle takes work (especially in the initial stages), careful planning and good decision making.
A financial advisor can help show you how extra income can impact your bottom line, your cash flow and your net worth. Send us a note below if you’re interested in learning more!
 This example showcases the growth of your investment pre-tax. It also assumes a 7% rate of return.
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