An economic storm is brewing. For some, employment is the concern. Others worry about inflation, stock market tumult, or scarcity. You should do two things in these conditions: save or earn more.
We want to focus on the latter —earning more— for this article. This focus is not because saving is somehow less important or valuable. The opposite is true. Rather it is because saving money is a long-term tactic while earning more or, perhaps, more specifically, having more sources of income can serve as a backstop against economic emergencies.
Job Security is a Farce
In January 2023, at least 93,000 workers at U.S.-based tech companies lost their jobs, according to a report from Crunchbase. Those layoffs came on the heels of more than 140,000 jobs lost in the tech sector at the end of 2022.
Worse still, these well-publicized tech industry layoffs represent less than 10 percent of the jobs lost in the United States in 2022. Zippia reported that in total, something like 15.4 million Americans lost their jobs —their primary income— in 2022. About 6.9 million of those job losses came in just the last four months of 2022, leaving nearly half of working Americans with "layoff anxiety."
Enter the Side Hustle
Job loss or unexpected financial challenges can be devastating without a backup plan. The resulting financial strain can be overwhelming, leading to increased debt, late payments, and eviction in extreme cases. The need for a financial backstop should be obvious.
A side hustle can provide an additional income stream that may help weather these financial storms or accelerate savings in good times. It can be a way to generate income while looking for a new job or building up a main business. Additionally, side hustles can provide flexibility, financial independence, and a sense of purpose in bad times or good.
So let's state the obvious. If you start a side hustle right now, today, presumably whilst you still have a job, that side business will become a secondary source of income. Its proceeds, however meager at first, can be allocated directly toward your savings. You will be developing three forms of financial security at once.
The first form of security comes from having a second income stream. If you get laid off, you will not lose your sole source of personal revenue.
Next, a side hustle can speed up savings. Allocating some portion of side hustle revenue to long-term savings will help you build a financial safety net more quickly than relying on employment income alone.
Lastly, a side hustle can produce a valuable asset. A small freelance writing business with five regular clients is an asset that can be sold even though it may be a side hustle for its owner.
Financial security is not the only reason to consider adding a side hustle, but if you are concerned about your job or the economy generally, having more than one source of monthly income can provide a financial backstop to protect you and your family.