It’s in style; and it makes sense—and cents? Gigs are now just a click or tap away on most of our devices, and a little extra money never hurts! Here are a few things to consider when starting up a side hustle.
What are your side hustle goals? We typically think of a side hustle as being an easy way to score a little extra cash. But they can sometimes be gateways into bigger things. Do you have skills that you’d like to develop into a full time career? A passion that you can turn into a business? Or do you just need some serious additional income to pay down debt? These considerations can help you determine how much time and money you invest into your gig and what gigs to pursue.
What are your marketable skills? Some gigs don’t require many skills beyond a serviceable car and a driver’s license. But others can be great outlets for your hobbies and skills. Love writing? Start freelancing on your weekends. Got massive gains from hours at the gym and love the outdoors? Start doing moving jobs in your spare time. You might be surprised by the demand for your passions!
Keep it reasonable Burnout is no joke. Some people thrive on 80 hour work weeks between jobs and side hustles, but don’t feel pressured to bite off more than you can chew. Consider how much you’re willing to commit to your gigs and don’t exceed that limit.
One great thing about side hustles is their flexibility. You choose your level of commitment, you find the work, and your success can depend on how much you put in. Consider your goals and inventory your skills to get there—and start hustling!
It represents a transition from student to adult for millions of people. But leaving university and joining the workforce can be intimidating. Looking for a job, paying bills, commuting, and living independently are often uncharted territory for recent grads.
Here are a few tips for fresh graduates trying to get on their feet financially.
Figure out what you want
It’s one thing to leave college with an idea of what career you want to pursue. It’s something else entirely to ask yourself what kind of life you want. It’s one of those big issues that can be difficult even to wrap your head around!
However, it’s something that’s important to grapple with. It will help you answer questions like “What kind of lifestyle do I want to live” and “how much will it cost to do the things I want?” You might even find that you don’t really need some of the things that you thought were necessities, and that happiness comes from places you might not have expected.
Come up with a budget
Let’s say you’ve got a ballpark idea of your financial and lifestyle goals. It’s time to come up with a strategy. There are plenty of resources on starting a budget on this blog and the internet on the whole, but the barebones of budgeting are pretty simple. First, figure out how much you make, how much you have to spend, how much you actually spend, then subtract your total spending from how much you make. Get a positive number? Awesome! Use that leftover cash to start saving for retirement (it’s never too early!) or build up an emergency fund. Negative number? Look for places in your unnecessary spending to cut back and maybe consider a side hustle to make more money.
Looking at your spending habits can be difficult. But owning up to mistakes you might be making and coming up with a solid strategy can be far easier than the agony that spending blindly may bring. That’s why starting a budget is a post-graduation must!
Meet with a financial professional
Find a qualified and licensed financial professional and schedule an appointment. Don’t let the idea of meeting with a professional intimidate you. Afterall, you trust your health, car, and legal representation to properly trained experts. Why wouldn’t you do the same with your financial future?
Being scared of starting a new chapter of life is natural. There are a lot of new experiences and unknowns to deal with that come along with leaving the familiarity of college. But the best way to overcome fear is to face it head on. These tips are a great way to start taking control of your future!
Unfortunately, it’s not a group of financially secure, middle-aged foodies whose most important mission is hanging out in the kitchens of their paid-off homes, brainstorming ideas about how to make the perfect sandwich. The Sandwich Generation refers to adults who find themselves in the position of financially supporting their grown children and their own parents, all while trying to save for their futures. They’re “sandwiched” between caring for both the older generation and the younger generation.
Can you relate to this? Do you feel like a PB&J that was forgotten at the bottom of a 2nd grader’s backpack?
If you feel like a sandwich, here are 3 tips to help put a wrap on that:
1. Have a plan. In an airplane, the flight attendants instruct us to put on our own oxygen mask before helping someone else put on theirs – this means before anyone, even your children or your elderly parents. Put your own mask on first. This practice is designed to help keep you and everyone else safe. Imagine if half the plane passed out from lack of oxygen because everyone neglected themselves while trying to help other people. When it comes to potentially having to support your kids and your parents, a tailored financial strategy that includes life insurance and contributing to a retirement fund will help you get your own affairs in order first, so that you can help care for your loved ones next.
2. Increase your income. For that sandwich, does it feel like there’s never enough mayonnaise? You’re always trying to scrape that last little bit from the jar. Increasing your income would help stock your pantry (figuratively, and also literally) with an extra jar or two. Options for a 2nd career are everywhere, and many entrepreneurial opportunities let you set your own hours and pace. Working part-time as your own boss while helping to get out of the proverbial panini press? Go for it!
3. Start dreaming again. You may have been in survival mode for so long that you’ve forgotten you once had dreams. What would you love to do for yourself or your family when you have the time and money? Take that vacation to Europe? Build that addition on to the house? Own that luxury car you’ve always wanted? Maybe you’d like to have enough leftover to help others pursue their goals.
It’s never too late to get the ball rolling on any of these steps. When you’re ready, feel free to give me a call. We can work together to quickly prioritize how you can start feeling less like baloney and more like a Monte Cristo.
What if you could get paid for doing something that you already enjoy doing? We’re all good at something. Many people have turned their hobbies into a side business as a way to earn extra money. For nearly everyone, there’s a topic they know well or a skill they have that many other people don’t have. That niche can spell opportunity – and a chance to turn something you enjoy doing anyway into a money-maker.
Depending on the type of hobby you want to monetize, your startup expenses may be quite low. For writing, coding, or graphic design, you might only need a laptop or tablet – something you may already have. If your hobby is fixing up old cars, however, you might need a place to do the work – possibly adding to the expense. For that scenario, you could check out the possibility of putting in a couple of Saturdays per month at a local shop to help save on rent and insurance costs.
With a little ingenuity, you might be able to earn $10 to $40 (or maybe more) per hour doing work you enjoy. Artists can earn extra money by selling arts and crafts items through virtual stores on specialized websites. Freelance writers, coders, designers, and even teachers can find work as well on similar type websites that bring clients and service providers together. If you have a knack for knowing what’s valuable, you may be able to turn garage sale and estate sale buys into a rewarding online business on any popular consumer-to-consumer and/or business-to-consumer sales website. (Hint: If this is something you’d like to try, start out small. Concentrate on one type of item that might be near and dear to you, like brass musical instruments, or antique mason jars.)
The old saying that asserts “knowledge is power” applies here as well. Let’s say your childhood fascination with dinosaurs never quite went extinct. Maybe there’s a successful educational blog or a YouTube channel in your future. Technology has given us the power to reach a larger audience than ever before and to bring our knowledge to anyone who wants to learn more. Sharing what you know can be monetized in many ways and – if you love doing it – you might not feel like you’re working at all!
Do your research and understand any legal or insurance requirements that may apply to the area you want to get into, but don’t let a little legwork bar the way to your next great endeavor – even if it just starts as a side gig.
Nearly every choice you make precludes something else that might have been.
Opportunity cost exists in everything from relationships to finances to career choices, but here we’ll focus on that last one. Over a lifetime, the cost of career decisions can be massive.
For opportunity costs that can be measured, usually in dollars, there’s even a math equation.
What I sacrifice / What I gain = Opportunity cost[i]
Let’s say you have two career choices. One is to work as a mechanic at $50 per hour and the other is to work as a karate instructor at $20 per hour.
Opportunity A / Opportunity B = Opportunity cost
Here it is with numbers: $50 / $20 = $2.50
To translate that, for every $1 you earn as a karate instructor, you could have earned $2.50 as a mechanic. The ratio remains the same whether it’s for one hour worked or 1,000 hours worked because it’s based on earnings per hour.
Adding a time element
We can only work a certain number of hours in a week and we can only work for a certain number of years in a lifetime. Adding time into the discussion doesn’t change the math relationship between the opportunities but it does recognize real-world constraints. Sometimes these limits are by choice. You could be both a full-time mechanic and a full-time karate instructor, but most people don’t want to work 80 hours per week. Something has to give, and that’s where considering opportunity cost comes in.
If you only want to work 40 hours in a week, you’ll have to choose one career over the other or split your time between the two. But even in splitting your time, there is an opportunity cost. Think about it like this: Every hour spent in a lower paying job costs money if you had an opportunity to earn more doing something else.
The bigger picture
In our example using the mechanic vs. the karate instructor, the difference in annual income is over $60,000 per year ($104,000 minus $41,600). Over a 40-year working career, the difference in earnings is nearly $2.5 million, and it all happened one hour at a time.
Your career choice shouldn’t just be about money – you should do something you enjoy and that gives you satisfaction. There may be several other considerations as well – like opportunity to travel, the kind of people you work with, and the greater contribution you can make to the world. However, if there are two choices that meet all your criteria but one pays a bit more, just do the math!
Life insurance companies are more willing to offer lower premium life insurance policies to young, healthy people who will likely not need the death benefit payout of their policy for a while. (Keep in mind that exceptions for pre-existing medical conditions or certain careers exist – think “skydiving instructor”. But in many cases, the odds are more in your favor for lower premiums than you might guess.)
At this point you might be thinking, “Well, I am young and healthy, so why do I need to add another expense into my budget for something I might not need for a long time?”
Unlike a financial goal of saving up for a downpayment on your first house, waiting for “the right moment” to get life insurance – perhaps when you feel like you’re prepared enough – is less beneficial. A huge part of that is due to getting older. As your body ages, things can start to go wrong – unexpectedly and occasionally chronically. Ask any 35-year-old who just threw out their back for the first time and is now Googling every posture-perfecting stretch and cushy mattress to prevent it from happening again.
With age-related health issues in mind, remember that the premium you pay at 22 may be very different than the premium you’ll pay at 32. Most people hit several physical peaks in that 10 year window:¹
If you’re feeling your mortality after reading those numbers, don’t worry! You’re probably not going to go to pieces like fine china hitting a cement floor on your 30th birthday. But there is one certainty as you age: your premium will rise an average of 8-10% on each birthday.² Combine that with an issue like the sudden chronic back problems from throwing your back out that one time (one time!), and your premium will likely reflect both the age increase and a pre-existing condition.
If you experience certain types of illness or injury prior to getting life insurance, it often goes in the books as a pre-existing condition, which will cause a premium to go up. Remember: the less likely a person is going to need their life insurance payout, the lower the premium will likely be. Possible scenarios like the recurrence of cancer or a sudden inability to work due to re-injury are red flags for insurance companies because it increases the likelihood that a policyholder will need their policy’s payout.
A person’s age, unique medical history, and financial goals will all factor into the process of finding the right coverage and determining the rate. So taking advantage of your youth and good health now without bringing an age-borne illness or injury to the table could be beneficial for your journey to financial independence.
That equates to landing a new job roughly every 2.5 years by age 32!
So if you’re feeling the itch to leave your current job and head out for a new adventure in the workforce, the experience you’ve gained along the way will go with you. You may have made some great business connections too, and gotten some fabulous on-the-job-training. All of these things will “travel well” to a new job.
But there’s one thing you can’t take with you: An employer-supplied life insurance policy. While the price is right at “free” for many of these policies, there are several drawbacks that may deter you from relying on them solely for coverage.
1. An employer-provided policy turns in its two weeks notice when you do. Since your employer owns the policy – not you – your coverage will end when you leave that job. And unless you’re walking right into another employment opportunity where you’re offered the same type and amount of coverage, you might experience gaps or a total loss of coverage in an area where you had it before. When you’re not depending on an employer to provide your only life insurance coverage, you can change jobs as often as you please without the worry of the rug being pulled out from under you.
2. The employer policy is touted as ‘one size fits most.’ But it’s not likely that a group policy offered through an employer will be tailored to you and your unique needs. There may be no room for you to chime in and request certain features or a rider you’re interested in. However, when you build your own policy around your individual needs, you can get the right coverage that suits who you are and where you’d like to go on your financial journey.
3. An employer policy may not offer enough to cover your family. What amount of coverage is your employer offering? When you’re first starting out in your career, a $50,000 or even a $25,000 employer-provided policy might sound like a lot. But how far would that benefit really go to protect your family, cover funeral costs, or help with daily expenses if something were to happen to you?
Whether or not your 5-year plan includes 5 different jobs (or 5 entirely unrelated career paths), with a well-tailored policy that you own independent of your employment situation – you have the potential for a little more freedom and security in your financial strategy. And you won’t be starting from square one just because you’re starting a new opportunity.
Long, Heather. “The new normal: 4 job changes by the time you’re 32.” CNN Money, https://cnnmon.ie/1RRxCfl.