Do you ever feel like a hamster on a wheel? Constantly running to keep up. Yet the money you earn seems to come in one hand and go straight back out the other? If you aren’t one of those fortunate trust fund babies then:
Welcome To Adult Life.
While you might be tired of running to stand still, have you ever considered what you would do if the wheel got removed out from under you?
Maybe it’s a restructure or your company has gone bankrupt. For readers in the UK, there are warning signs about job security in many foreign-owned businesses due to the impact of Brexit on trading with the EU.
Or maybe the workplace has become so toxic that you decide the anxiety of walking away is less harmful to your health than the stress of staying.
Whatever the reason, you should always have a plan in the back of your mind for what to do if your previously stable income suddenly disappears.
Let’s go bigger picture for a second.
The Financial Crash of 2008 seems like a bad distant memory for many parts of society. The cheap money and government support for failing banks helped to quickly refloat many of us back into a buoyant economy.
Rock bottom interest rates can’t last forever though. We’ve already seen the Fed and European Central Banks rates start to inch back up in the past year. The less optimistic economists are already sending out warning signals that the next recession could make the last one look like a raindrop in the ocean.
The run-up to 2008 suggests most economists are about as reliable as a coin toss when it comes to predicting the future.
But it’s scary stuff nonetheless.
Recent figures from the Federal Reserve’s Survey of Consumer Finances show that 50% of adults under 35 in America have less than $1,500 in savings. This drops even further for POC and women. How far would that amount of savings take you if the worst happens? Not far is the obvious answer. So what can you do to get back on your feet and earning as quickly as possible?
Depending on your location, the government might help out with unemployment benefit / welfare while you try to get back on your feet. It might be enough to keep food on the table but will it be enough to meet your monthly nut when mortgage / rent, utilities, education, loan repayments etc. come into the equation? Doubtful.
The nature of your departure from the realms of a steady paycheck might mean that you got some kind of severance payment or redundancy package. Keeping a tight eye on your budget and outgoings each month should be a no-brainer for everyone. Divide one into the other and you’ll know what kind of runway you have to keep the wolves from the door. One-off emergencies like car repairs or broken down appliances needing replaced can eat into that unexpectedly so be conservative with how long it gives you.
I’ve read that a basic rule of thumb for the expected length of the average job search should be 1 month for every $10,000 of expected salary. That’s a frightening prospect for someone with big ticket debits coming out each month. If you’ve let your lifestyle run away with you each time you got a pay-rise in your career so far, it might be worth looking to rein that in before the worst happens. Lower the nut, lessen the anxiety to keep meeting it.
My number one recommendation for surviving the sudden loss of a main income is to set yourself up with a SIDE HUSTLE.
You want something flexible to fit around your job search which will likely be taking up the bulk of your newly found free time. Any time spent getting yourself set up to hang out your freelance side hustle shingle has to be viewed as an investment. With that in mind, cut right to the point when it comes to planning your attack.
Look at your skills or hobbies and, realistically, review whether you can make some money from them. Back before my days in banking, I was self employed as a web and software developer. When my main client went under without any warning, my monthly income went from ‘paying the bills’ to ‘screwed’ in the space of one phone call.
If I wanted to keep paying my mortgage and eating I knew I had to start hustling. Along with the development work, I had been writing for a football website that I’d started the year before. It wasn’t making any money at that time so was definitely more in the hobby bracket. But it gave me two valuable things:
I started applying for freelance writing jobs specialising in sports writing. I joined blog network b5media as a writer and used that to help get a job as World Soccer Guide for About.com. At the time About was one of the most highly visited sites on the web and was owned by the New York Times Company. The monthly paychecks from them certainly kept my bank manager happy and it was a great piece of social and professional proof for my abilities as a freelance writer.
After a while I did get back into full-time employment. My side hustle had worked a treat though in giving me a regular source of income and helping keep my house.
It can be easy as full-time salaried employees to get complacent and not think about what might possibly be around the corner. It’s a dangerous game to play though as we’ve seen.
My advice is to follow these steps to getting your emergency side hustle plans in place. Even if you don’t plan on chasing side hustle work right now, it will help immeasurably to have the infrastructure and building blocks in place. Just in case.
I’m a firm believer in everyone setting up at least five streams of income. It’s without doubt the best way to help weather the potential risks of losing a main source of income. I’ll cover the thinking behind that and the different sources we can use in another article.
Using a Side Hustle as one of them can be the best investment you make for relatively small amounts of time and effort. If it takes off maybe it’ll flourish into a new full-time career for you. Or at the very least provide a few hundred extra per month to take a well deserved holiday.
Either way, it’s my top tip to keep up your sleeve to hedge against the risk of losing your main source of income. Give it some good consideration and who knows where it could wind up taking you.
Chris Guillebeau - Side Hustle School
Nick Loper - Side Hustle Nation
Both have very good sites and podcasts. Well worth a listen to see what other folks have been up to in their successful side hustles.
Chris also wrote a great book called “Side Hustle: From Idea To Income In 27 Days” which is well worth a read.