The gig economy is here to stay: According to a recent report from Upwork and the Freelancers Union, America’s freelance workforce has grown three times faster than the overall workforce since 2014, and freelancers are expected to comprise the majority of the U.S. workforce in 10years. On-demand gigs for companies like Lyft and TaskRabbit have also taken off — workers spend an average of 11 hours per week and bring in a quarter of their income from these jobs.
Though many workers take on a side hustles by choice rather than out of necessity, some do so to stay afloat while searching for a more supportive or stable job.
“Side gigs become necessary when cutting expenses alone won’t make ends meet or won’t result in the savings rate that matches your goals,” says Lyn Alden, founder of Lyn Alden Investment Strategy. “In those cases, you need to increase your income as well — either by attaining a higher income in your primary job or by earning income with a side gig.”
Here are a few of the reasons freelance work or a side hustle may be helpful or even necessary when it comes to covering your expenses and preparing for your financial future.
You Encounter Unexpected Bills or a Gap in Employment
For some side hustlers, a gig on top of a 9-to-5 — or several in place of more steady employment — is actually necessary to keep the lights on, pay down debt, or cover unplanned expenses, says Brianna McGurran, a career and education expert at NerdWallet. If you get laid off, have a medical emergency or need to make a significant repair on your home, freelance work can help bridge that gap, especially if you don’t have an emergency fund.
You Have Big Savings or Investment Goals
If you are planning to buy a house or a car, save for your kids’ college tuition or have student loan debt to pay down and don’t expect a significant salary bump in the near future, a side gig can help you earn extra toward your goals.
“If you earn $30,000 per in year in after-tax income and have $20,000 per year in expenses, then that leaves $10,000 per year for paying off debt and building up assets,” Alden explains. “If you bring in another $5,000 per year in after-tax side gig income, it only increases your total income by about 17 percent (from $30,000 to $35,000), but it increases your savings and debt payoff rate by a full 50 percent (from $10,000 to $15,000).”
You Seek Supplemental Skills
If your college degree and work experience don’t support easy entry into a lucrative, professional field — or a major career change — you may use a side hustle to gain extra skills, build your resume, and network with people in your goal industry.
You Are in a Specific Stage of Life
If you are a new parent or a student for whom the demands of everyday life conflict with a normal 9-to-5 schedule, a side hustle may be the best and only option for making money. The perk of many freelance gigs is that work can be done from anywhere and at any time, which gives you the freedom to care for your family, attend classes or travel.
You Want a Trial Period
A side hustle is a good way to check out different industries, work environments, and personal interests, especially if you’re new to the professional world or aren’t sure what you want to be when you grow up. Try things on and explore your passions before committing.
You Like Extra Perks
In certain locations and industries, seasonal side gigs are a no-brainer, even for people who are comfortable in their full-time jobs. Working part-time at a ski resort during the winter gets you a season pass and a bit of extra cash; those who pick up retail shifts around the holidays have access to discounted merchandise.
Experts agree that the question of whether you “need” a side hustle is relative. For example, relying entirely on freelance work means you’ll miss out on the perks of a 9-to-5 job, like a full benefits package, but the flexibility of setting your own schedule could easily outweigh the downsides. So too can the opportunity to pursue creative passions.
If you do pick up extra work to supplement your income, choose something you enjoy, says J.R. Duren, a personal finance expert at HighYa.com who held a side gig delivering pizza. “Even an additional 10 hours a week at a gig you dislike will feel like an additional 20 hours and won’t be worth the stress and frustration in the long run. You want to find work with low barriers to entry and tasks you like.”
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