I’m sure many of us feel like we could use a little extra money. This is why options like side hustling and working from home are so popular. If you already have a full time job but still feel stuck financially, a flexible income stream could be just what you need for a financial breakthrough.
Will more money really solve all your financial problems? Yes and no. Earning more money can definitely help you, but the extra income must be used strategically so you can reach goals and get the results you want.
Working extra hours and earning more is a commitment that you want to pay off sooner rather than later. Here are some smart ways to use side income to get ahead financially. This is the same process I followed when trying to improve my finances and start thriving.
First, Catch Up On Bills
If you work hard at your side hustle but spend all the extra money on restaurant food and take out each Friday because you’re too tired to cook, the money won’t really have that much of an impact.
Instead, start by catching up on your bills if you’re behind. When money is low, it’s all too easy to fall behind on your household utility bills and other regular expenses. If you’re carrying a balance on any of your bills, use your first payments from your side hustle to catch up.
Next Put Money Toward Debt
Once all your bills and regular monthly expenses are current, start putting the extra money toward your debt. Debt can be such a huge burden once all your monthly payments start adding up.
In order to create some breathing room in your budget, things must be tight and uncomfortable for a little while. I love the idea of throwing all your extra money toward one debt at a time in order to get rid of it.
For example, if you have a medical bill, student loans, and a car payment pick which one you want to tackle first with extra payments. Pay the minimum payments on the other debts until the one you targeted is paid off. As you pay off each debt, your disposable income will increase – also known as, breathing room!
Of course, side hustle income can be used to accelerate payments. Don’t fall for the temptation of lifestyle inflation. Focus on your goal of paying off your debt and throw everything but the kitchen sink toward those balances.
Consider Saving 10% – 20%
It may sound boring, but the wisest people actually just save their side income. Sure, planning an exotic vacation to Bora Bora does sound a lot better, but it may not be the best choice financially.
The scary truth is, we don’t know what tomorrow holds. We don’t know if we will have a job next year or when an unexpected expense will come up.
This is why it’s best to save money when you have money coming in. Even the ants, one of the wisest insects on the Earth, understands this concept as they work hard all summer and stash away food for the harsh winter.
As you earn side hustle income during your season of abundance, purpose to save some of it for a rainy day or a future goal. Start by saving 10% to 20% of your side hustle income. If you are debt free, consider saving the entire amount so you can build up your emergency fund and add to other sinking funds.
Another strategic way to use your side hustle income to get ahead is to invest it. If you ever want to stop working some day, you’ll need to invest and save for retirement.
I used to think it was such a sacrifice to set aside $500 per month in a Roth IRA. However, the greatest sacrifice is to not do this. When you prolong retirement savings, you miss out on precious time where your contributions could have been growing due to compound interest.
The worst part is that you can’t turn back time or borrow money for retirement. When you don’t have it, you simply have to keep working into your 70s and 80s.
Earning extra money provides the perfect opportunity to make investing affordable for you. Remember that setting aside something is better than nothing – even if it’s just $100 per month.
Invest in Yourself
Don’t forget to consider using side hustle income to invest in yourself as well. You must take care of yourself and your needs or you won’t be around to enjoy all the benefits of being financially secure and thriving.
Consider using side hustle income to help you cover necessary medical expenses whether for your mental health or physical health.
You can also consider investing in opportunities for you to learn and grow more. If you’ve been thinking of starting a business, side income can help cover education, training and other costs.
You may be thinking about going back to school so you can get a higher paying job. In that case, your extra income can be set aside to help you cover the cost of tuition.
Making extra money can be fun and I’m sure there are plenty of things you could buy with side income. However, it’s best to practice a little delayed gratification and use a large portion of this extra money to help you get ahead financially.
Do you earn any money on the side each month? How do you use it to improve your situation?