7 Smart Moves To Make With Your Side Gig Money
Side gigs have become a significant part of the American economy in the past decade. As many as 36% of Americans report having one, according to NBC News, with the average side gig netting as much as $891 per month. That is not chump change!
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While it might seem like there’s no downside to bringing in extra money, there is one problem that comes with extra income — overspending. If you’re lucky enough to have a lucrative side gig on top of your regular income, rather than fritter it away, consider making one or more of these smart money moves.
Retirement Planning: Whether you're planning for retirement, dealing with a significant life event or simply looking to make smarter financial decisions, a financial advisor can offer the expertise and guidance you need. Here are some compelling reasons why you should consider a financial advisor -- even if you're not wealthy.
Open a High-Yield Savings
If your side gig funds aren’t yet earmarked for something specific, and you don’t need them to pay bills, consider parking them in a high-yield savings account where you can typically earn anywhere from 4% to 5% in interest while you figure out your next steps.
Regular savings accounts don’t usually pay a decent interest rate, and thus, you essentially lose buying power as your money doesn’t keep up with inflation. A high-yield savings will pay you back, literally.
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Pay Down High-Interest Debt
If you’re carrying high-interest debt, you’re living with one financial foot in the past, weighed down by the interest you’re paying on top of your actual debt. Credit card companies are notorious for charging ridiculously high interest rates and burying rate hikes in small print.
As soon as your debt is paid off, you can begin using your supplemental income to seriously grow your wealth or invest in yourself.
Invest in a New Skill
There are lots of skills that can contribute to building your wealth and are worth putting a little money in to get started. Money expert Jaspreet Singh recommends learning how to sell things, learning digital marketing, and learning how to write.
Also, depending on your current job or side gig, there might be a certification or way to level up your work that will net your more money.
Increase Any Investment Contribution
Do you have tax-advantaged retirement accounts or other investment accounts? If you’re still within your limits for the year, consider adding an additional contribution. You’ll be likely to earn a better return on the money you put in there than almost anywhere else.
Start or Increase an Emergency Fund
By now, you’ve hopefully established an emergency fund, which keeps three to six months’ worth of income liquid in case anything serious happens (and yes, this should be in a high-yield savings or money market account). However, if you haven’t done this yet, this is the perfect thing to do with your extra income.
Improve Something in Your Home
Even if you don’t have plans to sell your home any time soon, even small improvements can increase its value for the day you do. If you don’t think you’ll ever sell, consider energy-efficient improvements, such as replacing appliances or old windows. Over time, this will reduce your energy and heating/cooling costs.
Invest in the Next Generation
If you have kids or grandkids — and you don’t need your side gig income to live on — you might want to consider opening a 529 account, a tax-free way to save for education. If your child or grandchild doesn’t ultimately go to college, this plan can be converted to a Roth IRA. There are some rules you have to abide by if you choose a rollover, but at least that money won’t go to waste.
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This article originally appeared on GOBankingRates.com: 7 Smart Moves To Make With Your Side Gig Money