John Manyike | Head | Financial Education | Old Mutual | mail me |
Many people around the world are turning to the gig economy and side hustles to make ends meet, especially as the economy continues to take further knocks from the COVID-19 pandemic.
Cash strapped South African consumers are taking strain from debt collectors with limited options to manoeuvre their existing budgets but very few have spotted the opportunity or potential of the gig economy.
In our internal consumer insight survey conducted in Q4 2020, it showed that 23% of individuals in South Africa are already active in the gig economy and building second streams of income.
Having a supplementary income
We are seeing that some people are having to turn to having a side hustle in addition to their day job, just to pay off debt, whereas some are turning to the side hustle approach to have another stream of income just to make ends meet.
Having a supplementary income is no longer deemed as a luxury and is likely that we will see many others pursuing this route to try and keep afloat in these tough economic times.
Ultimately, taking extra time to work and investing the results gained through your talents is a way of ensuring not only the future but the chances that if something unexpected happens, you have the resources to survive and prosper.
A sobering statistic relating to the growing need for additional income streams is that 40% of South Africans admitted that if they lost their jobs, they could only survive for a month or less, 15% said they could last for two months, 17% said they could live on savings for three months. Only 27% said their money would last more than three months. (As reported in our July 2020 Savings & Investment Monitor)
The driving force around taking on a side hustle is primarily about making extra money. Having a side hustle allows you to delve into whatever you are passionate about and maybe always wanted to do and earn extra money to create wealth.
Having a side hustle positively help with financial wellbeing
Pursuing your side hustle, it is a great way to develop yourself, learn more and increase your earning potential and give you more control over your financial future. How can having a side hustle positively help with your financial wellbeing?
Having these additional income streams can:
- Help you reduce debt by paying off debts and reducing money spent on interest
- Help you bring your revolving credit under control
- Put you in a better position to start a short, medium, and long-term savings plan that can offer many benefits such as tax-free savings investments.
- Help you, in partnership with guidance from a financial expert or your financial adviser, find optimal ways of investing for the future so that the family is financially safeguarded. This can include savings vehicles such as starting an education fund, investing in life insurance, preparing an investment for retirement
It is important to note that the gig economy also has a positive national impact on the South African economy.
The gig economy internet platforms
It is known that small and medium enterprises are the engine to economic recovery and successful side hustlers should see themselves not only as entrepreneurs, but also as businesses that are innovatively contributing to the South African economy.
Despite many gig economy internet platforms being panned by critics for low pay rates, people still urgently need additional income streams and will accept this downside factor.
Some of the internet-based platforms available that individuals are utilising include:
- Uber: lets you use your personal vehicle to start earning money through its Uber Partners app. This is a very flexible platform that allows you to choose when and where you drive and set your own schedule.
- Airbnb: What Uber does for your car, Airbnb makes possible for your property. Whether it is a single room or your entire apartment, condo, RV, or home, you can use this app to rent it with a free listing.
- Amazon Flex: You can now deliver packages from Amazon and make money per hour. Amazon Flex lets you set your own schedule using the company’s app and make as much or little deliveries as you want seven days a week.
- Freelancer.com: Freelancer has posted almost 11 million jobs for tens of thousands of its members. This is a platform that has given experts in website development, graphic design, programming, Internet marketing, content producers, translation and much, much more.
Looking to venture into a secondary income stream and the gig economy?
Here are some examples of side hustles that individuals have taken on:
- Freelance Writing
- Affiliate Marketing
- Virtual Assisting
- Photography
- Graphic design
- Clean or organise houses
- Create YouTube tutorials
- Become a personal shopper
- Sell digital products online
Demonstrating that taking on a secondary job may or may not work for you, our internal consumer insight survey showed that 42% of working metropolitan households state that they don’t have the time to take on a second job even though they need the money whereas 63 % say then enjoy having more than one job.
A side hustle must not compromise the main job
What should never be forgotten, though, is that if a second income is to be built, it should not be at the cost of primary employment.
A secure job is precious in these times of COVID-19-induced job losses. It is vital to keep family finances balanced and endangering a steady job in favour of additional income should be avoided, as should conflicts of interest. Working for a direct competitor of your employer and on similar projects is unethical and could lead to problems from both parties using your services.
As with all decisions of this nature, there are do’s and don’ts’ involved. The current times require careful planning and making informed decisions.
Some of the guidelines we would suggest when embarking on a side hustle include:
- Do make use of all the platforms available to you. This includes various freelance platforms where you can advertise your gig and social media platforms where you can advertise for free or cheaply.
- Do invest, save, or spend the money from your side hustle well. The second income stream can only help you grow if you use the money wisely.
- Don’t neglect your primary job. A side hustle should be just that — something on the side. Performing at your primary job is still key to ensure you secure your main income. Your employer has the right to object to your side hustle if it interferes with your ability to do your primary job well. Don’t forget to always abide by your primary employment rules around operating another business. Be sure to check in with your Human Resources/ Human Capital teams and declare and discuss your side-line business.
- Don’t do something you are not qualified for or not good at — not only will this turn your side hustle into a side hassle, but it may have some negative consequences. Do something you know you’re good at.
- Don’t just use a single site to build a presence. By using as many freelance platforms as possible and advertising as widely as possible, the chances of making meaningful income increase.
- Don’t be tempted when making extra money to regard it as money ‘you never had’ and go on a spending fee.