What does financial freedom mean to you? For some, it means spending the days with their friends and family. For others, it means pursuing a passion they haven’t had the time to explore. Whatever it means to you, having access to capital can give you freedom and independence. Many people are exploring side hustles to accelerate their journey toward financial independence. Here’s how your side hustle can help you reach financial freedom.
What is Financial Freedom
Before we explore how your side hustle can help you reach financial freedom, you need to understand what financial freedom truly is. In the past, the goal was to work at a job for 40 years, save well, and then retire. The goal has now shifted to achieving financial freedom and independence at an early age. Many are working hard to free themselves from debt and achieve flexibility to pursue the things they value the most. They are leaving tradition behind to seek fulfillment and happiness.
Essentially, financial freedom is having the means to support your lifestyle without the security of a steady and consistent paycheck. Financial freedom eliminates the worry and stress of making financial decisions. You can shift your focus to the impact of your financial decisions instead of whether you have the capital to support your financial decisions.
Achieving Financial Freedom with a Job Alone
Every journey to financial freedom starts with a specific number. This number consists of the amount of annual income you will need in order to pursue the life you desire. Everyone’s number may differ depending on their living expenses.
According to the United States Census Bureau, the median household income in 2016 was $55,322. So, for example, let’s say you make about $50,000 a year and your goal is to save over $1,000,000 by the time you retire. If you put away 20% of your income, it would take you 34 years to invest and save $1,041,837.55, assuming a 6% rate of return.
Sounds simple right? Well, life happens and sometimes unexpected expenses come up. Staying consistent with your savings rate for 34 years may be a bit of a challenge. It doesn’t give you a lot of flexibility and may leave you feeling restricted. This is also true of getting a part-time job. The amount of money you make is limited by the amount of time you can devote.
Achieving Financial Freedom with Your Side Hustle
If you have a side hustle, you may be able to accelerate your journey to financial freedom. Your side hustle can give your income the boost it needs to help you achieve your goals in a shorter timeframe. It gives you more flexibility to do the things you want to do and achieve the lifestyle you have always desired.
Let’s say you make an extra $500 a month from your side hustle. This would increase your income by $6,000 a year. If we use the example above and you put the extra $6,000 towards your savings, it would increase your retirement fund to $1,666,940.07. Just by staying consistent you increased your retirement fund by $666,940.07. This is another best case scenario but you can see how it highlights the impact a side hustle can have on your financial future.
Would this give you peace of mind and more flexibility? Would it allow you to feel financially free?
Alex Babayev, the founder of Aral Properties states, “Having a side hustle gives you control of your future. It allows you the freedom to eventually become financially independent by creating an extra source of income that if saved and invested properly can exponentially speed up the growth of your net worth and eventually allow you to stop trading time for money at your day to day job.”
Why Having a Side Hustle Isn’t Just About Financial Freedom
Not only can your side hustle help you reach financial freedom but it can provide some additional benefits. The benefit of freedom gives you time to explore your creativity. The sky’s the limit with what you can accomplish with your side hustle. It gives you the opportunity to explore something you love in your free time while making money.
Your side hustle can also enhance your skill set. It may encourage you to step outside your comfort zone and try something new. For example, you might design a website or marketing materials even though you may have never executed this in your current career. Your increased skill sets may make you more marketable to employers and give you more employment options.
Creating your own side hustle may also expand your network. You will need to seek clients as well as mentors who can guide you in your career or side hustle journey.
Finding the Side Hustle That’s Right for You
There are plenty of opportunities for you to find a side hustle that fits your lifestyle and skill set. Many side hustlers choose to do something similar to their profession or something they are extremely passionate about. For example, if you enjoy animals, consider starting a dog walking or pet care business.
Creating your own side hustle takes times, consistency, and persistence. Building a new income stream may not happen overnight. Alex Babayev, the founder of Aral Properties, started his real estate investing side hustle when he was 21. By day he works in corporate America as a Financial Analyst and by night and weekends, he flips homes. Last year he generated $150K of net profit from the properties he invested in. It took him seven years to have a substantial side hustle income stream, but now he is on his way to financial freedom at the age of 28.
Your side hustle may take a little time to get started and make a profit. But just like Alex, you can build your side hustle over time and really amplify your income growth.
If you have something you are passionate about or want to explore, get creative and develop a side hustle. There are countless ways you can make money on your downtime. A side hustle can help you reach financial freedom in a shorter time while building your skill set. So, get out there and create!
Note: To use the same retirement calculator as the author, you can view it here.