Side hustles are becoming a regular part of Americans’ financial lives, with a new Goldman Sachs survey finding that 61% of workers are doing additional work outside their primary jobs.
For many, the extra work is not simply about having more spending money. Among workers with additional jobs or gigs, 71% said they are doing the work because they need the additional income. Younger workers are especially likely to have another source of earnings, including 80% of Gen Z and 77% of Millennials.
But bringing in extra money does not automatically make a side hustle profitable. Someone earning $500 a month may have considerably less left after supplies, platform fees, transportation and other expenses. Before committing to a gig, calculate what you would actually be earning after costs — and how many hours it would take to earn it.
Low-cost side hustles can make that math easier. Freelance services, tutoring, pet care, consulting, digital products, online selling and other businesses built around skills or resources you already have can require less upfront investment than opportunities that demand expensive equipment, inventory or fees before the first dollar comes in.
There is also the tax bill to consider. Side-hustle and gig income generally must be reported to the IRS, even when the work is temporary or part time. Independent contractors may also need to make estimated tax payments, so keeping records of income and legitimate business expenses from the beginning can prevent an unpleasant surprise later.
Finally, give the extra income a job. Putting even part of it toward an emergency fund, paying down expensive debt, investing or building another source of income can turn a side hustle from extra spending money into something that improves your finances over time.
The Readovia Lens
The rise of side hustles says something important about the changing American paycheck, but earning more is only half the equation. A side hustle becomes a wealth-building tool when the money left after expenses and taxes is deliberately used to strengthen your financial position.
