Here are smart ways to use your side hustle income. Our easy guide helps you handle extra cash smartly and reach your money goals!
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Earning extra money through a side hustle can be exciting and empowering.
It’s not just about the extra cash – it’s about what you can do with it to improve your financial situation.
Imagine watching your savings grow, feeling the relief of being debt-free, or enjoying the rewards of your hard work without guilt.
Whether you’re saving for a dream holiday, spending on something for your home or a treat for yourself, or investing in your or your kid’s future, these tips will help you make every penny count.
Saving for the future
One of the wisest things you can do with your side hustle income is to save it.
This could be for a variety of reasons:
- Emergency fund: Life is full of surprises, and not all of them are pleasant. Building an emergency fund can give you peace of mind.
- Big spends: Maybe you’re saving for a new car or laptop, or you are starting or expanding your family. Watching your savings grow towards these goals can be incredibly rewarding.
- Holidays: Perhaps you want to save for a dream holiday, weekend getaways, or visits to family and friends.
- House: You could be saving towards your first home deposit, want to move to a new place, or put money aside to carry out a loft conversion, extension, or even renovations and decorating.
Paying off debts
Using your side hustle money to pay off debts is another excellent choice.
It could be credit card bills, loans, or even your mortgage.
The sooner you’re debt-free, the sooner you can start putting your money towards your future.
The fun stuff!
It’s important to celebrate your hard work too!
I find it’s important to use a portion of your side hustle income for treats. It’s a great way to reward yourself and incentivise me to keep motivated.
This could be anything you want, from family outings to make new memories with your loved ones or a personal indulgence. This could be something as little as a fancy tub of ice cream to a new gadget, luxury toiletries, or a meal at your favourite restaurant.
Adding to your regular budget
If your primary income doesn’t stretch far enough, your side hustle money can help ease the day-to-day financial strain.
Perhaps you can use it to cover:
- Groceries and utilities: Keeping the essentials covered (see how to save money on groceries and ways to save money on energy bills.)
- Little luxuries: Maybe it allows for a slightly nicer brand of coffee or some extra ice cream (ok, that’s twice I’ve said buying more ice cream…!).
Building a child-related fund
For parents, setting aside money for your children can be a top priority if you have spare cash each month.
Whether you want to generally save for them in a JISA or their own Premium Bonds, or you want to save for something specific such as:
- University costs
- First home
- Driving lessons
- First car
Your side hustle can make a significant contribution to this.
Creating a buffer for lean times
Freelancing, being self-employed or having irregular income can be unpredictable. Some months, you may have more, but others can be a bit of a stretch!
Using extra money as a buffer for slower months can reduce stress and provide stability.
Funding a hobby or passion project
Your side hustle might even fund a hobby or a personal project that you’re passionate about.
It’s a way to explore new interests without financial guilt.
Reinvesting in your side hustle
Sometimes, you need to spend money to make money.
Reinvesting in your side hustle could mean:
- Upgrading equipment: New tools or technology can increase efficiency and quality.
- Education and training: Improving your skills can lead to more lucrative opportunities.
Investing for growth
Investing your side hustle income can be a way to grow your money over time.
This could be in putting your money aside in an ISA, which is a long-term investment strategy with no tax on your interest, adding cash to the NS&I Premium Bonds for a chance to win tax-free money each month or contributing more to your pension for your retirement savings.
Supporting a cause
If you’re in a position to do so, using a portion of your side hustle income to support a charity or a cause you believe in can be very fulfilling.
But, if you don’t have the space cash, there are ways to give to charity without donating money.
You may need to pay tax on your income from side hustles depending on how much you earn.
The first £1,000 is known as the Trading Allowance, but for anything after this, you’d need to register for self-employment and pay taxes each year.
Track what you earn, and put some money aside each month, just in case. As a bonus, if you earn less, you’ve got a pot of savings at the end of the year.
Your side hustle can be more than just extra cash – it can be a tool for achieving financial stability and fulfilling your dreams.
Whether it’s building an emergency fund, reducing debt, investing in your future, or simply enjoying the fruits of your labour, every decision can significantly impact your financial well-being.
The key is to make a plan that aligns with your personal goals and stick to it.