More people are getting into side hustling these days and it’s often because they need to earn more money. Earning side hustle income can feel great, but if you mismanage it, you may find yourself back at square one.
Side hustling is not all fun and games. Depending on what your side hustle entails, it can involve a lot of hard work and be mentally and/or physically demanding.
I remember days when my husband and I would both side hustle and we’d be pretty tired some days, but the money that was coming in really helped us out financially. Plus, we truly enjoyed our side hustles so the tradeoff was tolerable.
However, if we hadn’t been using our side hustle money wisely, all our hard work would have been in vain and we wouldn’t have been able to improve our situation at all.
This is why it’s so important to make smart moves with your side hustle income in order to improve your finances. Here are 5 wise ways to spend your side hustle income that you should consider.
1. Pay Off Debt
Being in debt can hold you back in so many ways. A side hustle can help you pay off your debt much quicker, only if you actually use your earnings to make extra debt payments.
When I was working a full-time job and side hustling, I was dedicated to putting a large portion of my extra income toward debt repayment. I paid off thousands of dollars in debt and saved a ton of money in interest by doing this in just in year 1.
Now, I’ve encouraged my husband to do the same and he uses his side hustle income from driving for Uber to make extra payments on his car loan. He dedicates at least half of his earnings toward making extra payments on his car loan, then uses the rest for whatever he wants (right now it’s holiday savings).
We’re more than happy to use our side hustle income to pay off debt because it brings us one step closer to freedom. My husband should have his car loan paid off by next month.
2. Boost Your Savings
Another smart move to make with your side hustle income is to simply save it. If you don’t have much of an emergency fund, when unexpected expenses pop up, you may have to get into debt to take care of them.
Having a solid savings cushion to fall back on is a must whether you’re single, have a family, or regardless of your age. You don’t have to dedicate all your extra income toward savings, but you can take a chunk of what you earn and stash it away for a rainy day.
Plus, if you’re not having taxes withheld, you could end up having to pay taxes on your side hustle income the following year so it’s best to also set aside a reasonable amount for taxes as well.
3. Supplement Some of Your Living Expenses
If you’re side hustling to earn extra money so you can live more comfortably, be sure to use that extra income to pay a bill or supplement some of your living expenses.
Back when I was in college and had a few side hustles, I used the income to pay for some of my regular expenses and it helped me stress less about money and focus more on school and taking care of my son.
Side hustle income can also allow you to catch up on bills that you’re behind on or even help you cover annual and one-time expenses that otherwise could throw your budget off.Don't let your extra work be for nothing. Use your side hustle money wisely! Click To Tweet
4. Add to Your Retirement Fund
Could your retirement account use a boost? Putting off saving for retirement is NOT a good idea. You’ll most likely want to stop working one day, and you need to start saving early and allow your money enough time grow and let interest compound.
The problem is that many people aren’t thinking about retirement right now and the ones who are may not be able to contribute much to their accounts.
This is why side hustle income can help you add to your retirement account. If you’re missing out on a 401(k) match with your employer because you can’t afford to contribute enough, you can use your side hustle income to help you increase your contributions.
If you don’t have a 401(k), you can put your side hustle income directly into an Individual Retirement Account (IRA) or make some other investments. Using your side hustle to build wealth is one of the best decisions you can make.
5. Do Something Fun For Yourself
Finally, consider having some fun with your side hustle income. You work hard and there’s nothing wrong with using the extra money you earn to do something you enjoy.
However, spending your money mindlessly is a problem. If you are blowing your extra income on fast food, beer, and impulse purchases at the mall, your money isn’t really being used for something purposeful unless dining out is a true value of yours and makes you happier.
Take a look at what your values are and try to align your spending with them. For example, if you like to travel, you could use your side hustle income to save up for trips.
If you’ve always been a fan of Janet Jackson, you may want to use your side hustle income to attend one of her concerts because it’s an experience you’d value.
If your child loves soccer, you may use your extra money to enroll them in a program.
At the end of the day, you don’t want to work hard to earn extra money, then blow it on nonsense. All of these 5 options allow you to use your side hustle income for a meaningful purpose.
If all else fails, go back to the reason why you started side hustling and that should help you determine some smart moves to make with your side hustle income so you can improve your finances and live better.
Do you have a side hustle? What do you do with your side hustle income?