Do We Really Need Side Hustles?

Let's face it, we're living in uncertain times as the global pandemic still lingers, inflation and cost of living keep increasing, and the economy trying to recover. With that being said, side hustles have become glamorous buzzwords uttered by financial 'gurus' and ordinary people alike as a way for people to make extra income apart from their employment. With the rise of e-commerce, social media, and other online and mobile platforms, it has risen in popularity because of the promise of earning extra money so you can treat yourself to a dream vacation getaway, save for future investment, or simply make everyday living expenses more manageable.

These side hustles can take the form of flipping items sold on Lazada or Shopee to driving for Grab. Some of these gigs may have the potential of making you very decent money alongside an occasional boost to your monthly income. It is interesting to know that some people even dreamed of doing their side hustles 'full time' instead of their real full-time day job. Can't blame them as this buzzword has been glamorized to the point that YouTubers and social media influencers can now be considered a profession these days as hobbies have become monetized. That's why side hustles have become so alluring that they want to be paid for simply doing something they do for fun.

The Hustle Culture

We got to admit that it has shown its promise as interest exploded in recent years but if we have to be brutally honest with ourselves - no one wants to be overworked these days and that means, we don't need extra work like a side hustle. Why?

Would you rather drive people from a nightclub on Grab or deal with customer complaints from your online store when you're supposed to spend more time with your family after a long day at your day job. Think about it. No one wants side hustles and even if they are lucky, they would have to convince themselves that benefits them in the long run apart from the extra income. Sure, you may have heard about people saying that you need multiple streams of income to get by. You may have stumbled upon the idea floating around that nobody got wealthy from their nine-to-five job. It has strengthened the idea that getting your hands dirty even more outside your career is all worthwhile.

The Checklist

There is nothing wrong with the hustle culture in general. After all, what's the problem with self-motivated individuals looking to do extra work to earn more money on the side? Maybe it can do some good but the idea of incentivizing and normalizing it is something we shouldn't be too gung-ho crazy about. Side hustles have to satisfy these four things:

1. Make money, otherwise, it's just a hobby
2. Manageable and doable outside your regular work
3. Have the expertise and resources to accomplish it
4. Make it your full-time job

If you are really keen on getting a side hustle, you may want to make a checklist of very important questions you should be asking before embarking on that journey. 

You need to know that side hustles are just small businesses in reality so making money is as difficult as any business. Why? Most side hustles often fail before they grow to become real businesses. Sure, you can keep on picking up rides on Grab as they become available but everything depends on demand and the app algorithm as other drivers vie for the same riders as you do. What makes it worse is that a significant chunk of that income will be deducted by Grab as they facilitated the work. Even if you fully commit yourself to driving long hours, your income may not be the same as regular jobs.

You may want to look for side hustles that are more self-driven that allow you to make money without going through a middleman.

Is it really worth it?

Let's just say that you want to do some side hustle like mowing your neighbour's lawn in your free time. If you earn good money doing it then it's worth it. Right?

Now, you might think that it's straightforward work that won't need expertise and resources to get started with it. You will be surprised that lawns may be only cut once every two weeks. That means you need to do a lot of lawn mowing from everyone's lawn so you can start making serious money. It also means that you need to convince more people to have their lawns mowed. Failing to gain more bookings would mean that you are only wasting your time and effort.

Even if things go well with it and you managed to book out mowing lawns, you will probably ask yourself why to make it your new full-time job if you make more money in it than in your day job. The truth is that you can't mow lawns more than one day a week. When you cover many lawns in your locality, you will lose business as demand dries up. You have to be a door-to-door salesman in order to drum up more business. If you think your day job is no longer worth it then you might focus all your time and effort on your side hustle so you can build your lawn care empire.

Think about it, an excellent salesman who spends more time pushing a lawnmower will be able to earn more money than the same salesman that focuses solely on making deals. Which one are you?

The Myth of Multiple Income Streams

Have you heard about the idea that most millionaires have seven different income streams? Is it really true?

A such perpetuated claim is attributed to a 2002 US Internal Revenue System study that tracked over 6,000 wealthy individuals and their tax returns. The study found that they have seven distinct forms of income streams coming from:

• investment income
• earned income
• rental income
• royalty income
• capital gains
• profit-based income
• interest income

You can see the fact that these supposed "income streams" are simply the result of being rich, to begin with, and not the idea of going out for side hustles. The study has also shown that rich people built their wealth by building their businesses from the ground up or focusing on their careers so they could raise the funds to build up their assets for these other "income streams."

The claim that the average millionaire has multiple income streams is stretching the results of the study. In fact, only 29% of the millionaires reported five or more income streams while the large majority had just three. The "income stream" assumption is far cry from what some people might want you to think.

There is what you called 'selection bias' when it comes to drawing conclusions about the study, which looked at wealthy people that died between 1996 and 2002. Rich people have more time to accumulate their assets and diversify their wealth away from their primary income stream. Ordinary people, like you and me, will have to work longer to achieve financial success.

So if the common belief about multiple income streams is not true then why is it repeated everywhere? Well, there are those who believe that people who have promoted such claims have an ulterior motive - to sell you a special course that will teach you the "secrets" of earning a lot of money from different income stream rackets. Maybe we're wrong about it, some may have perpetuated these ideas because they genuinely believe in the claim. 

In today's ultra-competitive society, young people tend to experience job insecurity, career stagnation, and a lack of opportunities as compared with the older generations. Just having a backup income as a cushion for an unexpected loss of income, brought about by losing a job or failing a business, is a sound decision. After all, having multiple gigs will help support you and your family especially when income from your full-time job is not enough. Calling these extra multiple small jobs as side hustles is just sugar-coating a bad situation.

Ask yourself the same questions mentioned earlier so you can avoid wasting your time working just to make a financial guru or tech giant richer than before. What is a decent side hustle would look like? If you ask these questions before starting a new project, you won't be forced into doing something you hate just because a self-proclaimed financial guru says that working multiple side hustles will make you rich.

Instead of looking for more opportunities to work more, you may want to find ways to work smarter and more efficiently.

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