We all know that having a side hustle can bring us tons of extra income each month or year. There are so many ways to cultivate a side hustle – from monetizing your hobbies to turning your professional career into a thriving business. Having a side hustle may even allow you to grow into a full-time business owner and become your own boss!
What you may not know is how important it is to manage the extra money you’re making from your side hustle so you can create and build wealth. Yes, this is way less fun than going all out on Amazon, but it’ll be so beneficial in the long run. If you want to create wealth, the important thing is to not fall into the trap of increasing your standard of living to meet your new income level. You’ll want to take those extra funds and put them toward growing your money, leading to greater wealth and financial freedom!
5 ways to create and build wealth with your side hustle income
1. Save your money, honey
You probably knew saving your extra side hustle money was going to be on the list! It’s not enough just to make extra money; you’ve got to put it somewhere and let it accumulate into a savings fund. Depending on your plans for your extra cash, you may want to put it into a personal savings account, such as an emergency fund.
If you know that you plan to turn your side hustle into a full-time career, getting into the habit of saving your money in a separate savings account will make things so much easier when it comes to things like taxes or getting paid. You can even save for things like your kid’s college education or some other future endeavor.
Bonus Tip: saving your money in a high-yield savings account, where you’ll typically earn as much as 25 times more on your money than a traditional savings account, will help you create wealth at a quicker rate!
2. Reinvest in your side hustle or business
You may have heard the term “you have to spend money to make money.” This one’s a bit more risky than putting your side hustle money in a nice cozy savings account, but if you want to grow your side hustle or business reinvesting is a must. And with growth comes more money that you can put towards further growth or funding your savings.
For example, if you’re a videographer, you might want to use any extra income from your business to purchase more sophisticated equipment to boost the quality of your videos. You might also consider enrolling in courses, seminars, or attending networking events to up your knowledge game. This can be applicable to any venture.
When you reinvest in yourself or your business, you’re more likely to see a bigger return on those investments that’ll help earn your business more money and build wealth for yourself. Who wouldn’t want that?!
3. Pay off debt like a boss
If you’re like most Americans, you may have some form of financial debt going on. This includes credit cards, personal loans, mortgages, student loans, and so on. Having a side hustle that earns you extra income is a fantastic way to help alleviate the stress of figuring out how you’ll pay towards your debt each month.
When you pay off your debt, you open the doors for yourself towards financial freedom and you can begin to create wealth. Using your side hustle income to pay off your debt is a win-win because you’re not having to dip as much into your regular income to make payments. And there’s even more good news: once your debt is paid, you’ll be able to put that side hustle income towards something else!
4. Invest your side hustle income
Speaking of putting your side hustle income towards something else… you can invest! There are so many people out there wanting to invest but have a hard time coming up with the funds. Look no further than those extra funds from your business or side hustle.
Depending on the amount of money you’re wanting to put towards an investment, there are many different ways to invest. If you don’t have a huge chunk of money or you’d rather not take such a huge risk, you can choose to invest using a service such as Acorns. With Acorns, your everyday purchases are rounded up and rolled over to an investment portfolio.
No matter now you choose to invest, the important thing is that you’ve taken the step towards creating wealth for yourself. Go you!
5. Contribute to a retirement plan
Ready or not, retirement is coming faster than you think! You probably know that if you want to live a comfortable life in your retirement, you need to get your financial ducks in a row, like, yesterday. Often, your employer provides you with a means to set yourself up for retirement. But if you plan to turn your side hustle into a full-time career, you may want to think about how you’ll approach your retirement funds yourself.
Using your side hustle income and putting it towards retirement is a great way to set yourself up for success. You’ll be well on your way to building wealth and worrying less about your financial future. With self-employment on the rise, having a proper way to prepare for retirement is more important than ever before!
There you have it. You’re going after the life you want and you’re working so hard for all of that extra side hustle income. When you look back at the wealth you were able to create for yourself or your family, you’ll be so proud of yourself. Now take it to the next level and manage your side hustle income like the boss that you are!
QOTD: What are some other ways you like to use your side hustle income to build wealth?