Getting a second job could work wonders for your finances.
- A side gig could help you boost your savings and pay off high-interest debt.
- It could also offer some income security at a time when recession fears continue to mount.
If you’ve contemplated picking up a side hustle this year, you’re no doubt in good company. Recent data from Prudential reveals that 70% of workers across all generations have pursued or considered picking up gig work to supplement their income over the past year.
Of course, the downside to getting a side hustle is having to carve out the time for that extra work. But a side gig could really work to your benefit these days in particular. Here are a few reasons to consider one.
1. You can boost your savings
Many financial experts are still convinced that we’re heading into a recession in 2023. If economic conditions worsen in the new year, it could lead to an uptick in unemployment levels. And the best way to protect yourself financially at a time when layoffs are rampant is to have a solid emergency fund.
If you don’t have all that much money tucked away in savings, then it pays to get a second job and use your earnings to build up cash reserves. In fact, ideally, you should have enough money in your emergency fund to cover at least three full months of essential expenses. For even better protection, you’ll want to aim higher — more like six months’ worth of essential bills, or even nine months’ worth.
Chances are, you can only cut back on so much spending to free up money for savings. But a side gig could help you ramp up your savings quickly.
2. You can pay off high-interest debt
If you’re sitting on credit card debt right now, you should know that your balances might start to cost you more money in the near term. Interest rate hikes on the part of the Federal Reserve are making credit card debt more expensive, so the sooner you can pay off that debt, the better.
Plus, if a recession hits in 2023, your income might take a hit. At that point, your debt payments might be very hard to keep up with. So if you’re able to get a side gig now and use your earnings to pay down that debt, you might end up in a much less stressful situation if you lose your job next year.
3. You’ll have some income security
The idea of being laid off and losing your paycheck can be scary. If you get a side gig, that job can serve as a backup income source if your main job goes away.
Let’s say you pick up a side hustle that has you working 10 hours a week because that’s all you can manage right now. If you’re laid off at your main job, you might be able to work your side gig for 20 hours a week, thereby replacing more of your missing paycheck.
All told, there are plenty of good reasons to get a side gig. So if you’ve been on the fence, talk to the people you know who do work on the side and learn more about their experiences. That could help you narrow down your side hustle choices and land on a gig that’s rewarding and manageable.
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