Are you feeling like you are constantly behind the 8 ball? Maybe you’re saving every month in your 401k and saving some on the side, yet it just doesn’t seem enough.
At the end of the day, you look at your bank balance and your retirement accounts and you wonder…. Is this it?
Is this all I can do?
How am I ever going to retire?
I only have enough saved right now for a year or two or three of retirement!?!?!
Honestly, I ran into the same feeling myself. I know what you are going through.
It wasn’t always that way though.
Due to receiving a large inheritance, we were blessed by our mid 20’s.
- We had NO mortgage and owned our house outright
- We had NO car loans and owned our cars outright
- We had paid off our student loans
- I was saving $10k to $15k a year in retirement accounts
- We had bank accounts and investment accounts over $200k
I thought we were going to be filthy rich! Well, maybe not filthy rich, but very well off.
But then this happened….
My wife and I took a huge leap of faith and bought into a practice--- a literal $1 million acquisition of clients --- that took us from Seattle, WA alllllllll the way to Bloomington, MN.
We put EVERYTHING into the acquisition. EVERYTHING
Retirement accounts---- gone
Home equity---- pretty much gone
Assets---- all of it was in the business.
We still owned our cars outright though. =-)
We closed on the acquisition on August 1st, 2008.
It was really, really great timing… really…
Then, the financial crisis happened.
That one HURT.
We didn’t own our house.
We were renting.
We were wondering how we were going to make our bills.
Somehow, some way--- we scrapped by and made it work.
There are many, many more stories of the years before and after the acquisition, but I decided firmly within a few years that I needed a side hustle.
One stream of income wasn’t enough. I NEVER wanted to be dependent again on only one thing. I wanted to have multiple streams of income…. NO rivers of income.
The biggest possible problem with the acquisition was that I was requiring for the assets to generate the cash flow to pay my salary and my income. I was 100% dependent on the financial planning business.
Why A Side Hustle May Not Be For You (and Some Resources)
Now, I have to be honest, having a side hustle isn’t for everyone.
It takes time.
It takes energy.
It takes commitment.
It can take money before it makes money.
It takes time away from family.
It takes time away from your spouse.
It takes time away from your kids.
However…. on the other hand, it can really change your life. I know it has changed my life.
In The Best 12 Pieces of Advice blog post, I lay out the case for why Entrepreneurship Is The Best Path to Financial Independence.
On the other hand, in How this Doctor Can Retire by 45, I lay out a case for how you can retire without a side hustle.
You’ll need to decide if a side hustle is right for you.
My friend (okay, more a casual acquaintance--- although we did hang out for a few hours), Nick Loper, has a great podcast called Side Hustle Nation.
On top of that, he has a great blog! You should definitely read this blog post on 99 Side Hustle Business Ideas You Can Start Today.
Now---- hopefully you have a few ideas and things you could implement immediately.
The Case Studies
If you aren’t convinced quite yet on the importance of a side hustle, let me lay out a case study for you.
Let’s meet Joe Blow and Danny Averageguy. Joe & Danny both work great white collar jobs at MMM. They even make good money. They each make $120,000 pre-tax. They are both saving $7,000 a year in their 401k. On top of that, they are saving another $3,000 a year in their bank accounts.
Saving $10,000 a year--- not too bad. Although, if they don’t get any growth--- it will take 12 years just to save a measly year of salary.
12 friggin years for 1 year!!!
Now, I realize that they could be getting a 401k match. I also realize that there are taxes and this and that. On other hand, there’s inflation.
Just bear with me, okay?
Let’s first look at a simple example.
Joe Blow goes and starts a side hustle. Maybe he starts a blog or a podcast. It does take some money to get started. He invests $1k in year one into the side hustle. In the first year, it brings in absolutely NO revenue. Nada. Zero. Zilch.
However, by year two, he gets an advertiser and he’s making $1k net after his expenses. Not too bad, a little something.
By year two, he’s making $5k. It’s not just a passion project anymore.
By year three, he’s making $10k. This is paying a few bills now.
By year four, he’s making $20k---- this is getting serious now and it grows and grows, but let’s just assume for our case study here that it never grows beyond year four and he’s now stuck at $20k.
Let’s look at this simple case study:
Case Study# 1: Danny Averageguy--- $120 Salary, $10k/year savings, NO SIDE Hustle
Income from Job
Case Study# 2: Joe Blow--- $120 Salary, $10k/year savings, HAS SIDE Hustle
Income from Job
Income from Side Hustle
So---- big charts with quite a few numbers.
Here’s the bottom line.
Danny Averageguy only has assets of $100,000 and Joe Blow has assets of $235,000.
Because Joe Blow has been consistently hustling and putting in additional time and money and energy--- he is literally MORE than 2x ahead of Danny Averageguy in saving for retirement.
In year one, it sure didn’t look great and everyone was probably wondering why the heck Joe Blow was spending all this time and effort and energy.
However, by year 5, 6, 7, and 8--- it all became worth it.
As I’m sure you know (but I’m forced to say it)--- these are EXAMPLES and reality is always different than a simple example.
If you do a side hustle and increase your living expenses in accordance with your income, you’re having a good time--- but not getting anywhere faster financially.
It could be very possible that you have a blog or a podcast or some other sort of side hustle and you spend $1,000 a year and NEVER see any income.
On the other hand, it could be possible that the side hustle income REALLY overtakes your regular job---- so much so that you can quit that job now.
There’s countless examples of that.
Nick Loper is one.
Pat Flynn is another ( check out my 5 Favorite Business Leaders blog post).
Cliff Ravenscraft is yet another.
Ryan Gray is yet another.
Steve Butala and Jill DeWitt are yet other examples.
My friend Greg Benz is yet another.
And another friend Brian David Hood did it too.
It could happen to you too.
You CAN find a passion.
You CAN find a side hustle.
You CAN make and then save extra.
It might take 2 or 3 or 4 tries.
It took a whole number of iterations before I found one that could work for me to generate income, but that’s a story for another day…
What do you think may work for a side hustle for you?
Send me an e-mail at firstname.lastname@example.org and let me know.
Have questions? Call me at 952-831-8243
Advisory services through Capital Advisory Group Advisory Services LLC and securities through United Planners Financial Services of America, a Limited Partnership. Member FINRA and SIPC. The Capital Advisory Group Advisory Services, LLC (CAG) and United Planners Financial Services are not affiliated.
The views expressed are those of the presenter and may not reflect the views of United Planners Financial Services. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax, or legal advice. Individual needs vary & require consideration of your unique objectives & financial situation.
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