Fact vs. Fiction: Are Side Hustles Worth It?
Have you made a purchase from social media, placed a grocery delivery order, or used a ride share service lately? If yes, then you’ve been a part of the global gig economy, valued at $455 billion. Data suggests that 45% of Americans now have a side gig (a.k.a. a “side hustle”).
The first time I read this statistic, I thought it was a typo. Where do people find the time and the energy, and is the perceived value of "hustling" actually making a difference in reaching their financial goals?
After re-reading the statistics several times to ensure my eyes weren't failing, I began to realize that the growing gig economy is proof of a sharp pivot in the way society thinks about work. The days of graduating college with a job offer that leads to a 40+ year career with the same company, a pension, and building the “American dream” on your day job salary alone are going away faster than toilet paper in 2020. This is most true for Gen Z (ages 18-25) just entering the labor force; over half of them have some type of side gig. Even more surprising is that within the demographic of “parents with children under 18” 54% have more than one job, making them the MOST likely to have a side hustle.
But let's get back to the question at hand, and separate fact from fiction. Are side hustles worth it?
Fiction: A side hustle will allow me to completely replace my day job's salary.
Fact: While it's possible to make some money from a side hustle, most require a lot of time and effort to get off the ground, and there's no guarantee that you'll even make a profit. However, if you're willing to put in the work and stay committed, a side hustle can be a great way to earn extra spending money for investing or save up to replace that old couch your wife hates that came from your bachelor pad. The average person with a side hustle brings in around $483/ month, but over half make less than $500/month.
Fiction: A side hustle doesn’t require any investment.
Fact: While some side hustles may not require a lot of upfront investment, most do require at least some money to get started. Whether it's buying supplies for a craft business or investing in a car for a ride-sharing service, there will always be some sort of financial commitment required. Also, don't forget that Benjamin Franklin said, "Time is money" (it's true, that's a direct quote from his essay, "Advice to a Young Tradesman," put that in your back pocket for the next trivia night). If the 20 extra hrs. per week spent outside of your day job on a side hustle isn’t resulting in profits, it would probably be best to invest that time and money elsewhere; like a certification needed for a promotion or building your retirement savings. (The graph below shows the percentage of people with a side hustle and the hours per week dedicated to the effort outside of their day job.)
Fiction: Side hustles are only for people who need extra money.
Fact: While many people do turn to a side hustle to make extra money, there are plenty of other reasons to start one. For example, you might want to explore a new hobby or passion. In fact, half of those that have a side hustle say it’s because they want to. Whatever your motivation, there are plenty of good reasons to consider starting one, just make sure you seek sound financial advice before going “all in.” (I happen to know some very smart and talented financial advisors at BCR if needed! 😊)
This question remains: Is the gig economy shaping the future of work and are side hustles really worth it?
The answer is: it depends.
When it comes to your outlook on the future of work, I believe that it depends on your phase of life. Baby Boomers, Gen X, and even older Millennials (lovingly known as "elder millennials" in some corners of pop culture) are more likely to have a more traditional career trajectory, and side hustles are more likely to be seen as a creative outlet, compared to Gen Z who may be more likely find that a side gig is necessary to meet their financial needs. Your outlook may be different based on if you're a woman; per the statistics, 61% of women with side gigs say that they would struggle without the extra income.
Ultimately, the decision to start a side hustle is a personal one that depends on your individual goals and circumstances. And hey, if nothing else, at least you'll have a good story to tell at your next dinner party. "So, let me tell you about the time I drove a b-list celebrity from Birmingham to Nashville during an Uber shift..."