What Makes A Good Side Hustle?

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.  

2008: Landlord

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.)

2010: Blogger

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.

  1. Blogging – This grew into a main gig after I left my engineering career. This is my best side hustle so far.
  2. 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.  
  3. 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.
  4. 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
  • Babysitting/petsitting
  • 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?

CrowdStreet is the best RE crowdfunding company on the market right now. Their commercial projects are first class and weathered the downturn very well. Check out their project by signing up for a free account at CrowdStreet.

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

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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21 thoughts on “What Makes A Good Side Hustle?”

  1. Side hustling is all about the thrill of the hunt for me. I think I just like the challenge of how I can get creative to make some extra cash in my spare time, even if it just reinforces that I shouldn’t quit my day job.

    Reply
  2. finding the right side hustle is tricky because I wouldn’t want it to just be another job at a lower per hour rate than the main job.

    But, if the side hustle pays well enough, and gives you autonomy/flexibility on your hours and is a lot of fun, then I’d consider switching to it and freeing up some hours. The structure of formal work can become somewhat draining compared to the options of freelancing/side hustle work.

    Reply
  3. Thanks so much for the shout-out Joe! Yes my side hustle is pretty sweet, and since the income is from royalties (and not cost of goods sold) it’s taxed in a better way as well. I can stop working on it and the royalties keep coming in. And you’ve been a huge supporter – I hope you’re enjoying your camping shirt 🙂

    Your blog is a major side hustle and produces huge income. After all the work you’ve put in over the years it’s well-deserved. I think some side hustles, even though not perfect, have tangential benefits – like the scooter gig that you’ve been doing. The advantages of getting outside and getting some exercise more than make up for the below-average income. After all, you’re FI, you don’t really NEED the money!

    Reply
  4. I LOVE side hustles. I’ve also heard the other side of the argument where if you put in more hours to the company, they’ll reward you in return. The problem is, some days, I’m actually completely free to do anything that I want. There’s literally no more hours that I can put to work for my job.

    So what do I do with the free time? Work on the blog and any side hustles that have the potential to help me out down the road. Maybe it won’t pay off but at least I tried.

    Reply
  5. You’re a side-hustle champ! I’m now down to just one side hustle right now… blogging. I’m not making a fortune with it, but the money keeps increasing and I still love doing it.

    The struggle for me is that I’ve felt almost obligated to have a side hustle going. The personal finance community seems to push that as the “go-to” for folks to do.

    But now that I’m early-retired, I don’t want to do jobs for money anymore… that’s the fun of retirement! 🙂 If I’m doing something for the love of it, then the pay should be gravy. It’s a weird battle I’ve been having in my head, but I’m finally coming to terms with it.

    Reply
  6. I recently got a $2000 sign up bonus for transferring my investments to Chase Private Client. I’m always on the look out for such bank/brokerage promos. Does that count as a side hustle ?

    Reply
  7. I recently got a $2000 sign up bonus for transferring my investments to Chase Private Client. I’m always on the look out for such bank/brokerage promos. Does that count as a side hustle?

    Reply
  8. I don’t consider pet sitting to be trading time for money. It is, but it can take very little time (sometimes). Best case scenario, it’s a couple of minutes to put down food and opening the door to the yard. Worst case scenario, I have a dog that needs more attention. For long stays, I do dog walks, but most of the time a dog is fine to play in the yard for a weekend. Most of the time dog sitting, I can use my time to do another side hustle like blogging or landlording.

    I would say it definitely pays better than minimum wage. Working from home is nice, especially if there’s a child care situation. There are other costs to consider such as wear and tear on the house, lost vacations, and things like that.

    Reply
  9. I guess blogging would be my side hustle, but I don’t really make much money at it. I do it mainly because I’m interested in personal finance, not because I make any money.

    I think you’re right about most side-gigs being about trading time for money Joe. Some people are perfectly willing to do that. They have no upward mobility options in their career, so the only way to make more money is to take on more jobs.

    For people without kids and families to take care of, this can be a very legitimate use of extra time.

    Reply
    • It’s always good to have a little extra income. It’s just a bit sad to see so many people do this. It shows that a lot of workers aren’t making enough with their main job anymore.

      Reply
  10. I’ve not been one for side hustles, partly because I never had any good ideas, partly because I felt it was better to focus on my primary career, and significantly because I preferred to keep my non working time free to enjoy life and, for me, using my spare time for a side hustle wouldn’t accomplish that. However, that’s just me, and I know that it can work well for others.

    For you Joe, I guess with your plans to travel for a year, the best side hustles need to be location independent, so that they can travel with you. I’m thinking the timing for the cat sitting business might not be idea because of that?

    Reply
    • Good point about travel. I probably wait until we get back before I start my pet sitting business. My son will be older then and he can help more too. We can split the money again. 🙂

      Reply
  11. I agree with you that being a landlord may not be an ideal income source for everyone. It is a lot of work to find good tenants and to maintain the rental property. To me, I am considering selling mine becase the real estate is so expensive in the SF bay area. The ROI is not as good as stocks and ETFs.

    I like the idea of cat sitting. Everyone in my family loved cats 🙂 Perhaps, I could be a house or plant sitter for my neighbors as a side hustle.

    Reply
  12. Regarding bad side hustles, you say “MLM (multi-level-marketing) Ugh! This one is just evil.”

    This reminded me of an article I read about 3 years ago about multi-level marketing and how a number of the multi-level marketing companies are based in Utah. The article went on to say why a lot of Mormons get involved in MLM and how a lot of other people in Utah say MLM stands for “Mormons Losing Money.”

    Insofar as good side hustles, speaking gigs and seminar presentations were a good side hustle for me to supplement the income from self-publishing. Back in the early 1990s I made a lot of money from speaking gigs. Of course, not too many people are making money from speaking lately. The last time I made a major speech was in June 2017 when I spoke to 1,200 career professionals (over 67 percent had a Masters or PhD degree) at the National Career Development Associaton’s annual conference in Orlando, Florida. I only received around $3,500 US for the one-hour speech but I also requested Business Class travel through Montreal (at a cost of $2,800 Canadian) so that I could take in the Montreal Jazz and Blues Festival which I had always wanted to attend. The NCDA also paid for 3 nights at the Orlando Marriott Resort and all my meals.

    It will be interesting to see if professional speaking makes a big come back when things get back to normal.

    Reply
    • Wow. It takes a lot of courage to give a speech to 1200 people. The closest that I did was to give a short speech to the students in my school (900 people) as one of the students who did the best in public exams. I think I totally screwed it up because I don’t think that my speech was inspiring.

      Anyways, congratulations!

      Reply
    • I’ve never heard that one about MLMs. I only went to one and I’ll never go again. What a dirty way to make money.

      I think speaking gigs and presentations are great too. They go very well with your main gig – writing books.
      Hopefully, you can go back to public speaking soon.

      Reply

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