So you’re looking to increase your net worth and might start a side hustle. Maybe you’ll offer consulting services or start a dog walking company.
That’s when Bob at your regular 9-to-5 asks if you’ve considered saving yourself the hassle of starting something brand new and just putting in some serious overtime at the job you already have. Wouldn’t that be a faster avenue to building wealth?
Is Bob onto something? GOBankingRates chat with experts to discover which actually builds wealth faster: Working overtime or starting a side hustle. And, as it turns out, the results were unanimous.
The Verdict: Start a Side Hustle
Sorry, Bob. When it comes to short-term cash flow, overtime can be great — but it’s less likely to build wealth and much more likely to simply help with bills.
The Numbers
Lacey Kaelani, CEO and founder at Metaintro, stated that, when it comes to side gigs, offering something like consulting services could provide approximately $75,000 extra per year while offering your own marketing services, for instance, could provide another $75 to $150 per hour. Meanwhile, overtime is typically time and a half, which Magical Butter CEO, Mark Coffie, translated to $30 to $60 more per hour.
Not only are the side-by-side hourly rates lower for overtime, but many companies have internal caps which state employees cannot work more than 10 to 20 additional hours per week. That wouldn’t yield anywhere near Kaelani’s estimated $75,000 a year consulting business.
Consider This: Here’s How To Use AI To Quickly Start a Side Gig, According To Codie Sanchez
Find Out: 8 Unusual Ways To Make Extra Money That Actually Work
The Big Picture
While side hustles do often involve some extra time and startup costs to get off the ground, once established, side hustles can scale up and potentially earn more than salaried jobs. Overtime pay isn’t even part of the conversation on building wealth. Yes, it’s fast cash — but it’s not fast (or any kind of) wealth building.
“Working overtime increases income on the next paycheck, but not lasting prosperity,” said Dr. Katy Dubinsky, CEO and founder at PostGigs. “It’s still an exchange of hours per dollar, limited by the clock; when the shift ends, the money ends. A side hustle carries more uncertainty, but it has the capacity to expand, generate repeat revenue and accumulate equity — and that equity is the element that produces enduring prosperity.”
But, hey, while you’re waiting for that side hustle to take off, no shame in double dipping. Andrew Bahlmann, founder at Deal Leaders International, said it best: If you’re hard up for cash, use overtime to reduce your financial stress in the short-term “while simultaneously creating a side hustle capable of scaling” and building wealth.
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This article originally appeared on GOBankingRates.com: Working Overtime vs. Starting a Side Hustle: Which Builds Wealth Faster?
