In today’s fast-paced world, the term “side hustle” has become a trending topic. From renting a room in your home to walking dogs, creative and enterprising individuals are finding new and innovative ways to earn extra income outside of their regular job. It’s a fantastic way to bring in additional money, which can be used to pay down debt, save for the future, or reduce liabilities.
But while the side hustle sounds great, there’s a catch: the temptation of instant gratification. Cash comes in quickly, and it can be all too easy to spend that money before it ever has a chance to work for you. So, what if you could take that side hustle income and automatically invest it into your future savings? Wouldn’t it be better to let that extra money grow rather than fall victim to the temptation of quick spending?
The Side Hustle Boom
We live in a gig economy where everyone seems to be finding clever ways to make a little extra money. Side hustles come in all shapes and sizes, from renting out a parking space in your driveway to offering freelance services online. The allure of having extra cash in your pocket is undeniable.
Take Sarah and Mike, for example. They’ve embraced the side hustle trend wholeheartedly. Sarah sells handmade crafts online, while Mike picks up part-time work as a ride-share driver on weekends. They’re earning more than they expected, but there’s a problem. Instead of using that extra income to build their future, they’ve been spending it on things like dinners out, new gadgets, and even weekend getaways. The instant gratification of having extra cash has made it difficult for them to prioritize their long-term financial goals.
On the other hand, Emma and John have taken a different approach. Emma freelances as a graphic designer in her spare time. John offers home repair services on the side. They’ve made a conscious effort to funnel that extra money into their savings. Instead of seeing it as “fun money,” they see it as an opportunity to build wealth and prepare for the future.
The Trap of Instant Gratification
The biggest challenge with a side hustle is the temptation to spend. Since many side gigs pay cash or transfer funds directly into your bank account, the money feels almost invisible. It’s so easy to use that extra cash to satisfy your wants instead of saving it for something more meaningful. The fear of missing out (FOMO) can push you to spend like everyone else, whether it’s upgrading to the latest phone or booking a last-minute trip.
The key question is: Can you resist the temptation? Will you let that side hustle money help you achieve your financial goals? Will you give in to the allure of spending it on wants rather than needs?
A Smarter Way to Side Hustle
Now imagine this: What if you could earn extra income from your side hustle and have that money automatically invested into your future savings? The temptation to spend that extra cash would be eliminated because you’d never actually see it in your bank account.
This is where the power of automation comes into play. By setting up an automatic investment plan, you can direct your side hustle income into an investment account without ever having to think about it. This way, your money starts working for you immediately, growing over time without the risk of being spent on short-term desires.
Emma and John have done exactly this. Instead of letting their extra income sit in their checking account, they’ve automated their finances. Every time Emma gets paid from a freelance project or John earns from his repair work, a portion of that money is transferred directly into their investment accounts. They never see the money, and they don’t miss it. Meanwhile, their savings grow steadily, and they’re building a stronger financial future.
Take Control of Your Investments
When it comes to investing your hard-earned side hustle money, there’s another important factor to consider: fees. Many people choose actively managed funds, believing that the experts will get them a better return. However, the reality is that these funds often come with high management fees, usually in the range of 2-3%.
A note on fees – Dirty Little Secret No Financial Advisor Wants You to Know.
These fees can eat away at your investment returns over time, and studies have shown that actively managed funds rarely outperform the market. So, why pay for something that doesn’t give you a better outcome?
The smarter option is to take control of your investments by choosing low-fee, well-diversified funds. These funds, such as index funds or exchange-traded funds (ETFs), often have fees as low as 0.1-0.5%, saving you substantial money over time. The difference may seem small at first, but as your investments grow, those savings can really add up.
Let’s break it down. If you have $50,000 invested and you save 2% on fees, that’s $1,000 in your pocket every year. If you have $100,000 invested, your savings double to $2,000 annually. Over time, this compounding effect makes a significant impact on your overall wealth.
How to Set Up Your Own Investment Account
Setting up an investment account is easier than ever, and you don’t need to be a financial expert to get started. You can open an investment account at your bank or through an online brokerage, and the process typically takes just a few days.
Here’s a simple checklist to get started:
- Meet with your bank or financial institution – Discuss your investment options and open an account. Many banks offer online platforms that allow you to link your investment account with your regular checking account for easy transfers.
- Choose the right investment vehicle – Make sure you’re set up for both registered investments (such as an RRSP or TFSA) and non-registered investments.
- Select low-fee funds – Look for low-cost index funds or ETFs that give you broad market exposure with minimal fees.
- Automate your contributions – Set up automatic transfers from your checking account to your investment account, so a portion of your side hustle income is invested without you having to think about it.
Once your account is set up, you’re ready to start growing your wealth. And remember, you’re saving not just from the money you earn but also from the fees you avoid by choosing low-cost investments.
The Beauty of Compounding
One of the most powerful forces in personal finance is compound interest. When you invest your side hustle money, it doesn’t just sit there. Over time, your money earns returns, and those returns earn more returns. This compounding effect means your investments can grow exponentially over the long term.
By avoiding high fees and choosing low-cost investments, you’re giving your money the best chance to grow. The savings you gain from lower fees are also compounded, which makes a big difference in the long run.
For Emma and John, this strategy has paid off. They’ve been investing their side hustle income for several years now, and their savings have grown significantly. What started as small, regular contributions has turned into a substantial nest egg. They’re well on their way to achieving their financial goals.
Making the Side Hustle Work for You
The ultimate side hustle isn’t just about earning extra money—it’s about using that money wisely. By setting up an investment account, automating your contributions, and choosing low-fee funds, you can turn your side hustle into a powerful tool for building long-term wealth.
Sarah and Mike are starting to realize this too. After watching Emma and John’s progress, they’ve decided to make some changes. Instead of spending all their side hustle income on immediate wants, they’re now focused on saving and investing. It hasn’t been easy to break the habit of instant gratification, but they’re already seeing the benefits of their new approach.
Your Money, Your Future
Managing your money doesn’t have to be complicated. The key is to stay focused on your long-term goals and resist the temptation of short-term spending. Whether you’re earning extra income through a side hustle or just looking to make your money work harder for you, the steps are simple:
- Automate your finances so you never see the money you’re tempted to spend.
- Choose low-fee investments to maximize your returns.
- Watch your savings grow over time through the power of compounding.
In the end, the ultimate side hustle is about more than just making extra money—it’s about using that money to secure your financial future. With a little planning and discipline, you can make your side hustle work for you, not against you.
In my E-books (“Water Barrel” and “The Balance”) I discuss simple methods to live sensibly for today, take charge of your financial affairs, and invest safely for the long term. For more information please visit David Penna Amazon.
In my E-books (“Water Barrel” and “The Balance”) I discuss simple methods to live sensibly for today, take charge of your financial affairs, and invest safely for the long term. For more information please visit David Penna Amazon.
Disclaimer for ManageYourMoney.ca
The information provided on ManageYourMoney.ca is intended for educational and informational purposes only. It should not be taken as financial advice. The opinions shared are those of the authors and are meant to encourage sensible financial habits and decision-making. We recommend that you do your own research or consult a certified financial advisor before making any financial or investment decisions. All investments come with risks, and there is no guarantee of success. Past performance is not a reliable indicator of future results. Always consider your personal financial situation and risk tolerance before pursuing any investment opportunities.
As always, we are not a qualified financial advisors. We just relate financial management to our own experience which may not resemble yours at all. Advice is frequently worth exactly what you paid for it. Most of ours came from expensive experiences.
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