As the summer came to a close, Anthony Garcia, 34, achieved a big financial goal: He bought a lightly used car that he loved, a 2015 Jeep Renegade, to be precise. When all was said and done, the purchase set him back $14,500.
It’s Garcia’s active side hustles that cushioned the monetary blow, helping him make a $1,000 down payment before financing the rest with a low-interest loan.
“My main side gig is deejaying,”the Long Beach, Calif., resident told MagnifyMoney. “What I make varies, but weddings range from about $800 to $1,000;corporate events, clubs and bars range anywhere from $200 to $500 per event.”
Garcia, an online banking specialist for a local credit union by day, has been picking up work as a DJ on and off for about seven years. These days, he books two or three gigs per month. He plans to use the money to cover his monthly car payments.
“It’s almost like not having a car payment,”says Garcia. “I love what I do and get a car out of it, as long as I’m working on a steady basis.”
His story isn’t without precedent. According to new research from CareerBuilder, close to a third of American workers have side gigs, with those under 35 making up the biggest piece of the pie. What’s more, a recent Pew Research Center survey found that 24 percent of Americans bring in money from what they call the digital “platform economy”— think apps and online platforms like Uber, TaskRabbit, thredUp and beyond. Some do it by economic necessity, others for extra cash.
The findings suggest that today’s most popular side gigs cover everything from ride services to shopping/delivery tasks to selling your old clothes and gadgets online.
Then there are folks like Garcia, who leverage an existing skill to bring in some additional income.
Along similar lines, Dana Bruce, a 38-year-old nonprofit executive in Alexandria, Va., spun a random hobby into a legit side gig that paid for most of her 2012 wedding.
‘A side gig paid for my wedding’
Bruce is living proof that your greatest interests might also be your best income generators. A longtime lover of antiques, she took to Etsy in 2012 and began selling vintage lamps;it’s a task she absolutely loved.
“The overhead is very low, so at times it brings in as much as $1,000 net income a month,”said Bruce, who combs antique malls, thrift stores and estate sales for unique finds. After factoring in all her costs, she typically nets about $65 per sale.
This wasn’t the first time she dipped her toes into the gig economy. From 2012 to 2013, she took on an adjunct professor position at a community college on the side, where she earned roughly $450 per month. She put the money toward her car payments, adding some wiggle room to her monthly budget. This, combined with her Etsy earnings, allowed her to kick in about $10,000 toward her November 2012 wedding.
And she isn’t slowing down. Her next goal is to use side gig money to help pad her home-buying fund.
A side hustle, and a career change
It’s no secret that a healthy emergency fund is the foundation of financial success, but actually building up three to six months’worth of expenses is no small feat, especially on an average income. This is exactly why Hilary Murrell, a 27-year-old campus visit coordinator at a Birmingham, Ala., university, is upping her side gig game. A little over a month ago, she began tutoring student athletes in the evenings and on Sundays for $11 an hour.
“Side hustling is very new to me, but very welcome since I’ve been looking for an online side gig for months,”said Murrell, who draws a $35,000 salary with her 9-to-5 job. “My big financial goal is to save up enough money, plus emergencies, to live for three months while my husband quits his full-time job to be a full-time Realtor.”
Tutoring serves double duty, as it also gives Murrell more teaching experience, which will come in handy for her next side gig: teaching at a local community college next semester. Her goal is to bring in around $700 per term.
Side gigs and your taxes
Got a side gig, or even more than one? Just be sure to report your additional income to Uncle Sam. Paying taxes comes with the territory, regardless of how much cash your side hustles bring in. Uber and Lyft drivers, for example, are considered independent contractors, not company employees. As such, paying federal and state income taxes falls on you. Come tax time, those who earn $400 or more will likely be on the hook for a self-employment tax, too.
In addition to filing an annual tax return, self-employed folks are generally required to pay estimated taxes on a quarterly basis. (Failing to do so could result in a big tax bill when tax time rolls around.)
But wait, there’s good news, too. Many self-employed workers are also eligible for deductions to help offset their tax burden. If you use part of your home for business, for instance, you might qualify for the home office deduction.
In the end, every case is different, so it may be in your best interest to seek out a professional to help answer your individual tax questions.
In the meantime, the gig economy appears to be going strong. According to the annual Freelancing in America survey put out by the Freelancers Union and Upwork, the freelance economy grew to 55 million Americans in 2016;that’s 35 percent of the U.S. workforce. The way we work is changing, and the side gig revolution seems to reflect that, as multiple income streams gradually replace the traditional “9-to-5 till you die”way of life. The takeaway? The rewards can be big for those who are willing to hustle.
Featured Accounts AD
Barclays 12 Month Online CD
Goldman Sachs Bank USA High-yield 12 Month CD
HSBC Direct HSBC Direct Savings
Barclays Online Savings Account
* Sponsors listed are Member FDIC or NCUA insured.