If you’ve ever thought about starting a side hustle, chances are you’ve wondered if it’s really worth the effort — and if you’ve shared your ideas with friends and family, they’ve likely expressed their doubts as well.
At least, this has been my experience.
For many years, I’d consider starting a side hustle and then quickly become convinced that the effort required wouldn’t be worth any potential profits I could earn.
And as my career continued to progress — with my salary following close behind — it seemed harder and harder to come up with ideas that wouldn’t feel like a waste of time.
It wasn’t until we started actively pursuing financial independence and focusing our efforts on increasing our savings rate that the true power of the side hustle became clear to me.
Up until this point I had always compared the potential income from a side hustle to my primary job. And because the income would be such a small fraction of what I was already making, my ideas never felt worth pursuing.
But then, something started to change in my perception.
Since we were now focused on increasing our savings rate, I started evaluating my potential side hustles not by how much I could increase my income, but by how much more money we could save.
This changed everything. To understand why, consider the following scenario.
Let’s say you’re earning $50,000 per year. If you were able to start a side hustle and earn an extra $2,500, you’d boost your income by 5%.
Not bad — but not a huge increase.
However, let’s now consider the impact of this side hustle on your savings rate.
Let’s say you earn the same $50,000 salary as before. After taxes, you’re left with approximately $38,500. You require $3,000 to cover your living expenses each month, for a total of $36,000 per year.
That means that after covering all of your expenses, you’re left with $2,500 to put towards your savings. By taking on that same $2,500 side hustle — you’d be able to double your savings rate.
Increase that side hustle income to $5,000 and your savings triple.
Framing it this way shows you the true potential of a side hustle and makes these opportunities much more appealing.
That’s not to say that every side hustle is worth while, but when we only consider the potential impact on our overall income, we’re almost certainly writing some of these opportunities off too quickly.
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