Can you believe 1 in 3 working Americans have a side hustle? More and more people are working extra outside of their primary work every year. Life is tough for many of us. This is very different than when I was growing up. Back then, workers focused on their main job and enjoyed life after the workday is over. What changed?
Today, workers feel less secure about their jobs. We all know we are expendable. Anyone can lose their job with minimal notice. We want something to fall back on if that happens. The extra income from a side hustle is great too. There are more ways to spend money than ever and money doesn’t go as far as it used to. Even if you don’t need the extra income, it’s nice to set something aside for the rainy days. As we all learned from 2020…
That’s why so many people are working extra gigs these days. However, not all side hustles are created equal. Some side hustles are much better than others. Today, we’ll figure out the characteristics of a good side hustle.
Why you shouldn’t side hustle
Side hustle is a big deal in the FIRE (Financial independence, retire early) community. We want to reach financial independence as soon as we can. Extra income can only be positive, right? Well, not necessarily. Side hustling takes time.
Some people think it’s better to focus on your main career. They think working on the side is a waste of time. If you stay focused and improve at your main job, you can get more promotions and raises. That’s a much better way to spend your time. The cumulative raises would be more money than working a side hustle.
My side hustles
Focusing on your main career is solid advice. However, I still think a side hustle is a great alternative. I’ve been side hustling since 2008 and I love it. By that time, I knew I had to change careers. I didn’t want to focus on my engineering career anymore and I wasn’t interested in any promotions. The side hustles helped ease the exit from my main career. Let’s take a look at some of my side hustles.
In 2008, we moved into a condo, but kept our old house. I became a landlord. Since then, we have owned rental condos, single-family homes, a four-plex, and a duplex. I learned a lot. Unfortunately, the main lesson is that I really don’t want to a landlord. It’s too much hassle for me. These days, I’d rather be a passive real estate investor through CrowdStreet. (Real estate crowdfunding.)
In 2010, I started Retire by 40 and became a blogger. This side hustle was a crucial stepping stone to early retirement. I learned so much about personal finance and early retirement from being a FIRE blogger. If I didn’t start blogging, I probably would have put off early retirement for at least 5 more years. That’s why I think everyone should have a blog. Check out my tutorial on how to start a blog and why you should.
2019: Scooter charger
In 2019, I became a scooter charger. I pick up electric scooters from around our neighborhood, charge them, and release them so paying customers can use them. This is a low pay gig, but I enjoy walking around our neighborhood and getting a little exercise.
2021: Neighborhood cat sitter
I want to start a neighborhood cat sitting business. However, I’m a bit too busy right now. I’d probably have to cut way back on scooter charging if I start this side gig. Maybe I can do it once the weather cools down later this year. Scooter usage drops way down during the rainy season.
Ranking my side hustles
Some of these side hustles are better than others for various reasons. Here is how I rank my side hustles.
- Blogging – This grew into a main gig after I left my engineering career. This is my best side hustle so far.
- Landlord – I think this one is really good too. Lots of people retire from their main career if they become a successful landlord. Unfortunately, I’m just not very good at this.
- Cat sitting – This side hustle could grow into a small business. It really depends on how much I want to commit to this. I could house sit and work with dogs if I really want to grow this income stream. You have to be really good with pets and their owners to do well.
- Scooter charging – From a financial standpoint, this is not a good side gig because it’s just trading time for money. It doesn’t scale well. The only way to make more money is to work longer. However, I really like this gig because I spend more time outdoors and get some exercise every day. Also, I split the income with RB40Jr. He helps me occasionally. This is a lesson in work and investing for him. I invest his portion and we can see it grow. He can use it when he goes to college.
Bad side hustles
Let’s start with what makes a bad side hustle. If you’re just trading time for money, it isn’t a good gig.
- Charging scooters
- Rideshare/delivery driver
- Brand ambassador
- Part-time hourly minimum wage work
- MLM (multi-level-marketing) Ugh! This one is just evil.
These are the side hustles that any unskilled worker can do. There is no growth. Basically, you’re working a minimum wage job with no benefits. These kinds of job are only good as a temporary gig to help ends meet. There are better ways to use your time.
Good side hustles
Here are some characteristic of good side hustles.
- Growth potential. It can possibly grow into the main gig.
- Compound potential. The longer you work at it, the more money you make. Here is a good example – graphic design. Dave’s income keeps growing as he adds more designs. That’s a good side hustle.
- Generate passive income. Being a landlord is a great example here. A good landlord can acquire more properties through leverage and hire the right support people to do most of the work.
- Self-employment. This one is tricky. Driving for Uber isn’t self-employment. You’re working for a company. Self-employment has more autonomy and growth than that.
- Income potential. A good side hustle should generate more income than a minimum wage. Some side hustles will take a while to accomplish this. For instance, making YouTube clips. It might take a while to get traction. (Or never…)
In conclusion, don’t just trade your time for money. Do it temporarily if you have to, but there are better side hustles out there. A good side hustle has some growth potential. It’s not just another part-time minimum wage job. If you’re lucky, you just might find the right side hustle that can grow into the main gig. That’s what helped me retired early from my engineering career.
Do you have a side hustle? What do you think make a good side hustle?
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Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
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