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Prices are soaring on everything from housing to groceries. That has left nearly two-thirds of all Americans living paycheck to paycheck, according to a new report from LendingClub.
As a result, 44% of Americans have picked up a side hustle in the past few years. That's up 13% from 2020, according to a separate survey by LendingTree.
"No matter your income bracket, having supplemental income greatly impacts financial stability and can often mean the difference between living without difficulty and living paycheck to paycheck and struggling to pay monthly bills," Anuj Nayar, LendingClub's financial health officer, told CNBC.
If you're considering taking on a side hustle, it's important to ask yourself a few key questions:
- What do I want to do?
- What is my goal with the side hustle?
- How much time will it take? Do I have that time to commit?
- How will this affect my work-life balance?
- How long do I plan to do it?
A few hours a week can add up to a few hundred dollars a month
If you ask yourself those questions and conclude that you need, and have time to make, a little extra income, think of things you can — and would like to — do.
"They are paying teenage babysitters $30 an hour," Suze Orman noted during a CNBC Twitter Space conversation.
If you do that for around three hours per week, that could bring in an extra $360 or more a month. "That all of a sudden covers your rent increase," Orman explained.
Other hourly jobs you might consider that can be well paid:
- Dog walker
- Errand runner
- Uber/Lyft driver
- Furniture assembler
- Mover
- Home cleaner
- Yardworker
- Handyman
You can put up your own listing on local Facebook groups, publications or other social media platforms. Or you can find jobs through sites like Rover, Fiverr or Taskrabbit.
Think about your friends, neighbors and others in your social network: What do they need and what would they pay money for?
10 in-demand side hustles you can do from home
There are also side hustles you can do right from home, and some can pay well. Here are a few from job-listing site FlexJobs, with salary estimates from Payscale:
- Writer ($29 per hour)
- Project manager ($37 per hour)
- Interpreter ($21 per hour)
- Editor ($27 per hour)
- Graphic designer ($24 per hour)
- Virtual assistant ($17 per hour)
Check out the full list here.
Consider the tax and legal implications
If you do launch a side hustle, make sure you understand any tax and legal implications. RBC Wealth Management suggests you ask yourself these additional questions:
- Will you need a license, insurance or to establish a corporation?
- What are the tax implications of the extra income?
A side hustle can quickly turn from a source of extra money to a source of extra costs and headaches if you don't pay attention to these things.
Tax laws are different in each state, so you might want to consider consulting an advisor about how much you might need to set aside for the IRS, if you can deduct any of your expenses related to your side hustle, and what forms you'd need to fill out.
Consider your work-life balance
At the end of the day, any amount of time you devote to a side hustle cuts into your work-life balance. "What are you going to have to put into it to get a return, and does that make sense for you from a financial standpoint?" Anh Tran, a certified financial planner and managing partner at SageMint Wealth, told CNBC.
If your primary job is a high-paying position, maybe your time would be better spent trying to get a promotion or making a move to another company at a higher salary, Paula Pant, host of the podcast "Afford Anything," said during a CNBC Own Your Money (… Before it Owns You) event.
"Choose whatever is the most time-efficient and energy- and spirit-efficient way of earning more," she said.
Consider a money check in
Maybe the best answer for you isn't launching a side hustle but taking another look at your financial picture.
There are several things you can do right now to help improve your situation — and stretch your paycheck — consumer finance expert Andrea Woroch told CNBC:
- Refresh your budget. Go over your expenses and figure out where you can cut costs.
- Purge any subscriptions or services you pay for on a monthly basis but aren't using.
- Get a grip on your debt. Consolidate credit card and other debt wherever possible. Consider transferring to a card with a 0% or low annual percentage rate. Then set a plan for paying it off.
- Set up a monthly automatic transfer to your savings account if you haven't already. Check your rate — transfer it to a high-yield savings account if it pays more than your current rate.
- Cut out the spending temptations. Turn off sales notifications for in-store apps, unsubscribe from retail newsletters and don't walk into a store to browse.
It's Financial Literacy Month, which isn't usually a celebrated holiday for most people, but it's a good reminder to do a money check-in.
Know your numbers: Understand what you earn, what you spend, and where the gaps are. If you, like a lot of people, are falling short right now, figure out if a side hustle could be the answer. Maybe it's a short-term solution to bring in some extra cash. Or maybe it's your next big thing.
— With reporting by Jessica Dickler, Carmen Reinicke and Morgan Smith.
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