Why You Should Have A Side HustleDecember 23, 2019
Updated December 31, 2021
Side hustle. It’s a relatively new phrase, but a concept that’s older than you think. It’s simply a second job that helps people make ends meet or earn extra cash to supplement retirement plans, pay off student loan debt, save up to buy a car, etc. You might also hear these jobs referred to as gigs, which constitute the gig economy.
Why the Popularity?
If you wonder why you’re hearing so much about side hustles and the gig economy, it’s because these concepts have exploded in popularity. The U.S. Bureau of Labor Statistics estimates that 59 million people work in the gig economy, which is about 36% of the country’s workforce. “Side hustlers,” as they’re called, take the form of teachers who write blogs for major companies, stay-at-home moms who moonlight as Uber® drivers, retirees who tutor school-age children, or even college students who design logos for local businesses.
But side hustles aren’t limited to these more typical archetypes. Even high-earning, highly skilled professions offer ample opportunities for “side hustling”. For example, the gig economy has increasingly penetrated the healthcare industry – doctors and nurses have the ability to work in temporary positions called “locum tenens” to fill staffing needs at healthcare facilities.
These positions, often worked during shift downtimes, allow healthcare professionals to have more flexibility and control of their schedule while earning supplemental income. High-end software developers at major technology brands can also benefit from the gig economy, using sites like Upwork to maximize the return on their skills and to explore new projects. Regardless of the reason, the answer to the question, “Do I need a side hustle?” is almost always, “Yes!”
Check out the following scenario to see just how valuable a side hustle can be. The average student loan debt in America is around $37,000 with a loan term of 10 years and monthly payments of $381 a month. If you made an extra $100 a month ($1,200 a year), you could make three extra payments a year, helping you pay down your student loan debt up to two years early! If you want to see how much you can impact your loan with a side hustle, check out ELFI’s student loan refinancing calculator.*
Not only can you bring in extra income with a second gig, you can also diversify how you make that money. In other words, if you lose your full-time job, you will still have a way to pay bills.
Having a side gig is also a way for you to indulge hobbies or hone talents, giving more meaning to your work than perhaps your regular nine-to-five job. If you’re really good with computers, have a knack for photography, possess a knowledge of HVAC systems, or if you’re just really good at IKEA® assembly directions, you can pick up a side hustle by hawking your services on sites like Thumbtack®, Nextdoor®, TaskRabbit®, or Fiverr®.
The ideal hustle would allow you to “make money while you sleep.” It sounds hokey, but if you don’t have to trade working hours for money, you can reach your extra income goals to pay off student loan debt without sacrificing your full-time job, family, or social life to do so. These holy grail side hustles take the form of rental properties (that you pay someone else to manage), stock market investing, renting a room or parking space, publishing a book, creating an app, or other similar ideas that require little time to maintain.
One such example is with ELFI’s Referral Program.1 Simply sign up and create a personalized referral link to share with friends or family. When someone decides to refinance their student loans using your link, you’ll get a $400 referral bonus check and your friend will receive a $100 credit toward the principal balance of an approved Education Loan Finance loan. There’s no limit to the number of people you can refer.
Downfalls of Side Hustles
While we started this blog by saying, “Yes, you need a side hustle,” there are several downfalls that you should be aware of. Sure, the hours for side gigs are flexible, but these jobs generally don’t come with employer benefits. This means there is no safety net of unemployment claims should you not be able to find enough work. Also, if you don’t have a clear, effective contract and invoicing system set up, payment can get delayed or—even worse—lost in the shuffle. If you don’t work with honest people or established companies, both can run out of money or just simply disappear without paying the money owed.
You also need strong personal motivation to work a side hustle. Like most jobs, side hustles rarely just fall profitably into your lap. You should realistically expect to spend a few hours a week promoting yourself and following up on leads. You need to be organized and disciplined to avoid double-booking yourself and to get the work done by agreed-upon deadlines.
You’ll also need to be diligent when it comes to filing side hustle taxes.2 The money made from your side job will need to be reported on a 1040 Form at tax time. If you fail to report your earnings, you might find yourself subject to tax assessments or penalties. On the plus side of tax time with a side gig, you may be able to deduct certain expenses like car mileage related to your business, necessary equipment, or even subscriptions to business-related organizations.
When it comes to side hustles, there’s no need to quit your day job to earn extra cash. The benefits outweigh the downfalls, and a bonus gig can actually benefit your day job by giving you additional skills and insights or by helping you make connections with clients you wouldn’t otherwise meet. You can work as little or as much as you’d like on your own schedule to pay down debts or save for big expenses.
Curious about how much you need to earn with a side gig to pay down your student loan debt? First, see how much you could save by using ELFI’s Student Loan Refinancing Calculator*. Once you know what your monthly payment could be, you can set a realistic target for your extra income. The Student Loan Refinancing Calculator will show you your current vs estimated monthly payment, as well as estimated monthly and lifetime savings.
1Subject to credit approval. Program requirements apply. Limit one $400 cash bonus per referral. Offer available to those who are above the age of majority in their state of legal residence who refer new customers who refinance their education loans with Education Loan Finance. The new customer will receive a $100 principal reduction on the new loan within 6-8 weeks of loan disbursement. The referring party will be mailed a $400 cash bonus check within 6-8 weeks after both the loan has been disbursed, and the referring party has provided ELFI with a completed IRS form W-9. Taxes are the sole responsibility of each recipient. While referrers can refer multiple borrowers and receive multiple referral bonuses, this offer is not valid for referrers who refer current ELFI customers who refinance their existing ELFI loans or customers who have refinanced with ELFI previously. Additional terms and conditions apply. Offer is subject to change without notice. Employees of SouthEast Bank and its affiliates are not eligible. The new customer is required to register online at www.elfi.com/referral-program and refinance a student loan with Education Loan Finance within 90 days of registration. The minimum refinance balance required to refinance with Education Loan Finance and obtain the bonus is $15,000.Additional terms and conditions apply.
2This blog has been prepared for informational purposes only, and does not constitute tax or financial advice. Please consult your tax advisor for guidance on your personal tax situation.