Side Hustles and the need for multiple income streams
In today’s changing economy, a lot of people are exploring side hustles and seeking to create multiple streams of income. The rise of job insecurity has led many to rethink their financial strategies. But while side hustles offer opportunities for increased earnings and financial freedom, they also raise important questions about how we value our time, manage stress, and balance short-term costs with long-term gains.
Anne Lyse Wealth, a personal finance educator and writer for Harvard Business Review said,
“It takes time, effort, and a lot of energy to commit yourself to more than one job and to do both well. For those of us who are already drained by the day-to-day, but seeking more financial security, how can we determine if starting a side hustle is worth it, let alone what kind of side hustle to start?”
In this post we aim to examine how to weigh time versus money, whether “peace of mind” should be factored into financial decisions, and how to balance immediate costs with future rewards.
Why Are Multiple Income Sources Important?
A side hustle is one way to create additional income. Whether it’s freelance work, starting a small business like an online store, investing in real estate, or offering a specialized service, the diversification of one’s income streams helps spread the financial risk. If one source of income dries up, you still have others to fall back on.
It may also be essential to have multiple streams of income if it's necessary for making ends meet. Not all who have a “second job” are doing it simply because they want to make money from a hobby or are looking to be completely financially free. Many Americans can’t cover all necessary expenses with only one income and as a result are forced to pursue secondary employment to provide for themselves or their families.
Mitchell Earl, COO of Discover Praxis and a Financial Educator said this in his 2024 article titled “How Much Time Are You Willing To Trade For Money?”,
“While it’s fun to aspire to the “Total Freedom” end of the continuum, for most of us, it’s unrealistic. Especially considering the utility of money as a means for transacting to create a better life.”
Earl brings credibility to the above point, shining light on the fact that because money is necessary to live, it’s sometimes unrealistic to think about a side hustle merely as a luxury.
How Do You Value Your Time?
We’ve seen time be called a “non-renewable resource”. Money can be earned, saved, and gifted but time can only be spent and once it’s gone, it’s gone. Because of that, it’s important to understand the tradeoff between time and money.
What are you sacrificing in terms of your personal life, hobbies, or family life to pursue a side hustle? For example, if getting a second job means you must work evenings and weekends, it might restrict your social life and your ability to relax and recharge. When deciding if a side hustle is worth it, you should weigh the potential monetary gain against the personal costs, including mental, spiritual and physical well-being.
A typical way some value their time while doing side work is by calculating their “hourly rate”. For example, if you normally earn $200 for five hours of work, your hourly rate is $40. When considering an opportunity, it can be helpful to think, “will it compensate my time fairly? Will it be worth the energy and time commitment?”
Does ‘Peace of Mind’ Play A Role In Financial Considerations?
The quick answer is, yes. It’s not just about making money; it’s about making money in a way that feels fulfilling. Time spent working on something you love might feel more valuable than a higher paying job that drains your energy. Some side hustles come with stress and long or unpredictable hours, which can negatively impact your or your family’s quality of life.
When considering side hustles, consider choosing opportunities that align with your beliefs, goals and passions, rather than going after every potential revenue stream. This will have lasting impact on your overall well-being. It’s our opinion that this will help with staying focused and motivated without reaching a burnout point.
In conclusion, side hustles can be powerful tools for reaching financial goals, building wealth, and pursuing passions. However, it’s important to consider all factors outside of monetary gain. We outlined three considerations that we believe can help create the right balance of fulfillment and income.
Multiple income streams: Having multiple income sources can provide financial security, and diversification
Time vs. Money: Your time is valuable—don’t let a side hustle eat away at the personal time you cherish. Make sure the hustle compensates you fairly for your effort.
Peace of mind: Your mental, spiritual and emotional well-being should always be considered in your pursuit of money. Consider the stress and satisfaction that come with your financial pursuits
Earl, M. (2024, January 5). How much of your time are you willing to trade for money?. Medium. https://medium.com/the-playbook-by-praxis/how-much-of-your-time-are-you-willing-to-trade-for-money-65da253810d3
Houston, M. (2024, April 17). Why diversifying your income streams is essential in today’s economy. Forbes. https://www.forbes.com/sites/melissahouston/2024/04/17/why-diversifying-your-income-streams-is-essential-in-todays-economy/
Wealth, A.-L. (2022b, July 8). Is Starting a Side Hustle Really Worth It?. Harvard Business Review . https://hbr.org/2022/07/is-starting-a-side-hustle-really-worth-it
