With over 140 million people in the United States having received at least one dose of the COVID-19 vaccine and the job market slowly recovering, there is a glimmer of hope amid the ongoing health and economic crisis. However, the pandemic has had an unprecedented impact on the lives of many. Unemployment, wage cuts, and business closures have reshaped people’s financial priorities and spending habits.
How to manage “safety nets” like emergency funds and savings?
I am a strong proponent of separating my money from my savings. It’s very easy to do that nowadays with the way banks operate, where you can create different sub-accounts for savings. If you’re saving, you should save for something specific. So for an emergency fund, you should have an account labeled “Emergency Fund” and you’ll know that’s why it exists.
What are the keys to success in this area?
Side hustles are easier to come by these days than they used to be. Even ten years ago, you couldn’t make extra money in the same way you can now. Take, for example, the side hustle of food delivery that I do, which is among my favorite side jobs because I love delivering food on my bike. Back in the day, you couldn’t say “I’ll work for 10 minutes and earn $7.” However, you can certainly say that now, especially if you live in dense neighborhoods where people order a lot of food and you can just step out the door.
How can individuals organize their finances now?
If you weren’t prepared for the crisis this time, you want to be prepared for the next crisis. So you can start doing side jobs and saving your emergency fund; these are things you can start on now. Hopefully, things start to improve and stabilize, so now is the right time to begin.
What are the main challenges of living off side gigs and what should people be aware of?
The challenge you face when you work for yourself or try to achieve things on your own is that income will be irregular. That’s why it’s really important to have multiple sources of income and savings, because you can never know when months will be good and when they will be bad, and you won’t get the stability that comes with a regular paycheck.
In a part-time economy, you just need to have more savings than most people. If you’re a teacher or a nurse, your job is likely stable and you’ll have a fairly steady income. But if you’re a freelancer or a part-timer, your income will be volatile, and you won’t know when it will run out. So if an average person has savings for three months, you should have six months, just to give yourself a cushion in case things get tough.
Are you concerned about overextending yourself?
Side hustles are almost therapeutic for me, especially if you have a stressful job you can’t step away from. It’s nice to be able to do something specific and know what you need to do, and you’re in control of it, and don’t have to think too hard about it while you’re doing it. If I’m stressed out while doing something else, I can do this for 30 minutes or an hour, and it will be like exercising for me. That’s one thing people don’t often think about with side hustles. We all have hobbies and things we do, but those hobbies that happen on the side can also become a source of profit.
Source:
https://www.thebalancemoney.com/perspectives-the-financial-panther-talks-side-hustles-5181106
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