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Closing the Wealth Gap

How Side Hustles Can Create Financial “Breathing Room” in Your Budget

Nick Loper helps people earn money outside of their day jobs. He’s an author, online entrepreneur, and host of the award-winning Side Hustle Show podcast, which features new part-time business ideas each week.

Nick Loper

Author, Online Entrepreneur and Host, Side Hustle Show

What is your top advice for people attempting to improve their financial well-being?

You are the CEO of your own life. That means you’re responsible for the profitability of your household — no one else is going to do it for you.

The first step is to take an honest look at your monthly financial picture. How much do you bring in and how much do you spend? What’s left over is your personal “profit.”

(And if it’s more than 5 percent of your income, congrats — you’re doing better than average!)

After you’ve run your numbers, I recommend tackling the profitability problem from both sides. That means spending intentionally and cutting costs that don’t serve you, and since there’s only so much you can cut, looking for ways to increase your income as well.

Do you have any best practices for improving one’s financial literacy?

You don’t need a finance degree to gain a basic understanding, but I do think it’s critically important to educate yourself on how to manage your money. Check out books like “Your Money or Your Life,” “I Will Teach You To Be Rich,” and “Rich Dad, Poor Dad.” The latter was formative for me on the concepts of buying or building assets, and investing for cash flow.

“Whiteboard Finance” on YouTube is a tremendous free resource, just to add into your weekly routine and get yourself thinking about this stuff. I also think ChooseFI is an inspiring podcast choice on achieving financial independence. 

Especially now, what are some of the best ways to create and maintain a side hustle to improve one’s finances?

Start with your goals. If you’re looking for an extra $250-500 a month, there are lots of “plug and play” side hustle options out there, such as making Postmates deliveries or watching dogs via Rover.com. 

Another common way to get started is the age-old business model of “buy low, sell high.” This could be as simple as taking something from Craigslist, and reselling it on eBay or Facebook Marketplace (a recent podcast guest reported earning thousands of dollars a month from her flipping business).

Thinking a little bigger, recognize that businesses are simply systems for solving problems. They’re problem-solving machines, And the good news is you’re a natural-born problem solver!

Think of the challenges you’ve overcome in your own life, the things that frustrate you as you go about your days, or the issues other people complain to you about. On the other side of all those problems is a potential business idea. How you go about solving it depends on what makes the most sense and what excites you, but will usually fall into one of three categories:

  • A service that makes that problem go away. Dirty house? You can hire a cleaning service.
  • A product that makes that problem go away. Dirty house? You can buy cleaning products.
  • “Content” that makes that problem go away. Dirty house? You can watch YouTube videos about how to organize and optimize your space.

What advice would you give someone trying to get a better understanding of their finances and hoping to improve them?

The numbers don’t lie, so don’t hide from them or be afraid of them. You need to get an accurate picture of where you’re at today in terms of income, expenses, assets, and liabilities.

We weren’t taught this stuff in school. Again, I’d second the recommendation of some of the books, podcasts, and YouTube channels above.

In hopes of minimizing financial stress, what advice would you give someone trying to increase the margin between their income and expenses?

There are a couple things I’d do right away. The first is that personal profitability exercise above. Get a realistic look at your income and expenses today. Once you’ve itemized out your expenses, question everything. Does each expense deliver some sort of return on investment, either financially, emotionally, physically, or spiritually?

For those that don’t, cut them. For those that do, awesome! Now you can play the substitution game to try and find better/faster/cheaper alternatives. For example, years ago, I switched my cell phone plan from Verizon to Ting and then to Mint Mobile. I still have a functional smartphone and am $5000 richer because of that simple substitution. 

The next personal finance metric to track is your net worth. In simple terms, this is what you own (cash, stocks, house, cars, etc.) minus what you OWE (mortgage, student debt, credit cards, etc.). While your monthly budget/personal profitability tracking gives you a snapshot in time, your net worth is like your big picture scorecard.

On the income side, there are dozens of side hustle ideas you can start on your own time and your own terms. It’s just a matter of finding one you’re excited about experimenting with.

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