More and more Americans are doing the side hustle — and we ain’t talking about a disco song from the ’70s!
Particularly if you’re a millennial or younger, having a second job apart from your main source of income is now a fairly common thing. In fact, more than a third of us — 37% — report having a side hustle, according to a new BankRate survey.
But while side hustle income no doubt helps meet a lot of financial needs today, it also presents a great opportunity to start building long-term wealth.
Saving half of your side hustle money is a smart way to go
Respondents in BankRate’s survey said their side hustles netted them anywhere from nearly $200 to more $1,000 a month. However, the average haul was $686.
The most popular side-hustle gigs reported were home repair/landscaping (12%); online sales (7%); selling crafts (7%); and child care (6%). By the way, we’ve got a great list of potential work-at-home side hustles right here on Clark.com!
But while the survey says the average side hustle may bring almost $700 a month, the largest group of respondents — 49% — said their side hustle only brought in up to $200 a month.
Let’s assume you as a side hustler fall in with the biggest cohort of your peers and being in the $200 range is more realistic than being in the $700 range. It’s probably unreasonable to expect that you’ll save every penny of that $200. After all, you may have a car lease to pay off, monthly rent to make…and who can forget about that choking student loan debt?
But let’s say you commit to saving $100 out of the $200 you’re earning each month. Consider this: If you only do a side hustle for one single year of your life and manage to stash $100 each month during that 12-month period, the results will be kind of amazing down the road.
|Timeline horizon to grow||5% projected growth||8% projected growth|
We’ve run two projections here for you to see — one with only 5% annual growth of your initial $1,200 savings over 50 years and the other with 8% annual growth of that same capital over the same time period. (You can play around with the numbers any way you see fit on a compounding calculator.)
By the way, we chose a 50-year time horizon because our theoretical side hustler might be a young 20something who can expect to spend around 50 years in the work force until retiring around age 70.
Furthermore, these numbers assume you’re investing the money in a low-cost index fund or exchange-traded fund, preferably inside a Roth IRA because of the great tax treatment that account gets in retirement.
The point is, the way that money you save today from a side hustle grows over time is huge — and the younger you start saving, the more time it has to compound.
And don’t forget: These numbers only reflect doing a side hustle for one year!
So here’s your call to action, side hustlers: Make a commitment to save half of your side hustle income and you’ll be well on the way to building real long-term wealth!