Money & Culture | Volume 1 • No. 2
The internet has tried to convince you that the path to financial success requires financial ADHD - operate five side hustles, manage three startups, own an airbnb, become a content creator, and own the Gucci store on 5th Avenue. (Shout out to Daejon Love) But what if the problem isn’t that you need more income streams?
The internet has led us to chase more income streams when we should be chasing more value for our time. We’ve become so obsessed with making an extra $500 on the side that we’ve stopped asking why we’re not making another $20,000 from the main income stream(s) we already have.
What is Your Time Worth
If you aren’t making enough money the advice you receive is almost like an automated message, ‘get a side hustle’. But there’s a problem with that advice. If the side hustle requires your direct involvement to generate revenue, you’re still trading time for money. You have not built another income stream, you have taken on another job - one that doesn’t have health benefits, a retirement plan, or paid time off.
The goal isn’t to sell more of your time for income. It’s to increase the price of the time you’re already selling.
Here’s an example:
You make $75,000 from your main income source. You add a side hustle that generates another $10,000 annually. Congratulations. You now make $85,000 but only by creating another claim on your time.
But what if you found another main source of income that paid $95,000? You just increased your income by $20,000 without adding another job.
This is the part of the conversation that no one discusses. Know the cost of your time. Before you start a side hustle, calculate how much you earn per hour from your current income stream (include commuting time). This gives you a baseline for what your time is worth and what income a side hustle needs to generate to justify the opportunity cost.
A side hustle has to make cents to make sense. If your side hustle pays you $25 an hour while your other income sources could pay you $75, you’re not diversifying your income. You’re discounting your time.
People are constantly bragging or evangelizing about side hustles such as running Airbnbs, dropshipping stores, Amazon FBA, etc. I don’t care what the side hustle is. I only care about what it pays relative to the amount of time it consumes. Is this the highest and best use of your time? The number of income streams is not the scorecard. The scorecard is how much wealth your time is creating.
$150,000 earned in 40 hours by one income stream isn’t economically equivalent to $150,000 earned in 80 hours by seven income streams. Income should be measured not just by dollars earned, but by the time required to earn them.
The Untapped Power of 9-to-5s
You are probably underutilizing your most valuable income stream, the 9-to-5. For many people, 9-to-5s generate the most cash flow that funds wealth-building and financial stability relative to other income streams. Yet a lot of commentary on social media shames people for having a 9-to-5. Go figure.
A $15,000 salary increase can potentially do more for your personal finances than a side hustle requiring hundreds of hours, a year, of your time. A higher salary can mean larger retirement contributions, more investment capital, faster debt repayment and more money available to acquire assets.
Don’t confuse making money with building wealth. To build wealth with a 9-to-5 you have to look beyond the salary. As an example, take the current employees of tech companies or early employees at companies before they IPO’d. Many of these employees have become millionaires through being compensated in equity by their employer.
The lesson isn’t that you should go work at a company and hope to become a millionaire. The lesson is that a job can become a wealth-building vehicle if you maximize the compensation components, such as stock options, when available to you. You don’t have to be a founder or in the c-suite to build wealth through a 9-to-5.
When a Side Hustle Makes Sense
Simply put, the math has to math. Sometimes the most profitable side hustle is job hunting for a better-paying version of your current job. Before adding another income stream, ask yourself:
Can I make more money from current income stream?
Do I need to change companies?
Can I move into a higher-value function or industry?
Can I acquire skills that increase my market value?
Can I make the same 40 hours worth more?
When the side hustle economics beat your alternatives, it’s worth pursuing. When thoughtfully planned and executed, side hustles are a great source of supplemental income. A good side hustle has these two characteristics that should be prioritized:
Pays significantly more per hour than your 9-to-5. Your time is generating a higher rate of return.
Has scalability. Revenue is not permanently capped by the number of hours you personally have available.
In summary, a great side hustle should increase your income without significantly increasing your time spent working.
What This Means for Your Money
Before you add another hustle to your plate, take a hard look at your current income streams and see if you are maximizing the opportunities. Here are some practical steps to take to determine the best approach to increasing your income.
1. Show Me the Money. Before adding another income stream, figure out what it would take to get paid more for the work you’re already doing. Raise your rates? Ask for a raise?
2. Time is Money. Know your hourly economics. Calculate your hourly return for every income stream or job you have. Then shift your focus to the one that produces the greatest economic return on your time.
3. The “E” in Money is for Equity. Look for income streams that offer ownership. This can be equity grants, stock options, profit sharing, and meaningful retirement investment contribution/matching.
4. Make Money While You Sleep. If you establish a side hustle, prioritize something that can eventually make money without requiring a proportional increase in your time.
The Bottom Line
We have become obsessed with creating more income streams and adding side hustles when we should be obsessed with whether we’re getting enough return from how we currently spend our time.
Your time is your most valuable asset. Stop selling more of it just because you haven’t figured out how to charge more for it. Make your time more valuable before you make yourself busier.
About the Author: Femi F. is the Founder of Hustle & Finance and a personal finance expert. He is a disciplined student of markets, money habits, and long-term wealth creation. Femi combines institutional-level market expertise with a culturally relevant, real-world approach to wealth building. His principals are based on living your best life today, while managing your money responsibly for tomorrow.
Disclaimer: This article is intended for educational and informational purposes only and should not be construed as financial, investment, legal, or tax advice. The views expressed are solely the author’s opinions and are not recommendations to buy, sell, borrow, invest, or take any specific financial action. Financial decisions should be made based on your individual circumstances, risk tolerance, and consultation with a qualified professional. Readers are solely responsible for any actions or decisions they take based on this content. Neither the author nor the platform assumes any liability for losses, damages, or outcomes resulting from the use or application of any information, opinions, or strategies discussed.