The U.S. Bureau of Labor Statistics reported inflation continues to rise. With prices increasing at an 8.3% annual rate, it makes sense to investigate what strategies you can muster to counter this trend.
What is the best way to beat inflation?
Inflation means the cost of living increases. As your expenses rise, you need solutions to increase your revenues. You don’t have a lot of choices. If you’re working, your company raise represents the best way to fight inflation. But is an 8.3% raise realistic?
“With the value of your savings and earnings being eroded by inflation, one immediate action you can take is to earn more,” says Nick Loper, Founder of SideHustleNation.com in Sammamish, Washington. “If an inflation-matching raise at your job isn’t feasible, it’s only natural to turn to a side hustle or home-based business.”
And what if you’re no longer working or close to retirement? It turns out, the answer might be the same whether you’re working or retired. AARP cites recent research that suggests the percentage of new business start-ups from the 55-64 age group rose from 14.4% in 1996 to 25.8% in 2018. If you consider how easy it is for recent retirees to pick up where they left off as independent contractors, you won’t be surprised by these numbers.
“As the nature of work has shifted toward knowledge work, people retiring from such work can return as consultants more easily and continue to earn while not working full-time,” says Dr. Aleksandar (Sasha) Tomic, Economist and Associate Dean for Strategy, Innovation and Technology at Boston College in Chestnut Hill, Massachusetts. “As such, they are attractive to companies as they bring knowledge and experience and are not looking for a full-time position with all the extra cost that can bring. Also, people are staying healthier and living longer, so they are more likely to pursue a business of their own in retirement.”
How do people survive high inflation?
While not new, this trend toward the gig economy has rapidly expanded. This tendency likely alleviates much of the inflation-induced financial stress.
“Over the years, I’ve had many clients employ side hustles to bring in extra cash, but never as many as I’ve seen over the past 18-24 months,” says Charles Catania, Principal of Branding with Chuck in Vernon, Connecticut. “For many, the extra income helps make ends meet. The burden of inflation still exists. Side hustles just make life more manageable.”
It doesn’t take much to ease the pressure of higher prices. The near double-digit inflation rate represents the historic extreme and may not bode well if sustained.
“The inflation rate over the last year was 8.3%,” says Kari Brummond, Accountant and Content Manager at TaxCure.com in Trumbull, Connecticut. “This means that on average, most people spend 8.3% more than they did a year ago for the same purchases. A lot of people have to dip into savings or resort to credit cards, but if you earn enough at your side hustle, you can use that money to cover the increased cost of living.”
However, the numbers may be more manageable than you might fear for the immediate future, especially if you embrace your inner entrepreneur.
“By starting a small home-based business, you can help to beat inflation even if you only make a small profit,” says John Bergquist, managing member of Lift Financial in South Jordan, Utah. “For example, if grocery expenses have gone up 10%, and let’s assume your grocery budget was $1,000 per month, then your overall expenses in that category only increased $100 per month. While that is disheartening every time you go to the store, if your side business ‘only’ profited $100, then you’ve effectively covered that cost. The same is true of the monthly gas bill. So even if you only made a couple of hundred dollars extra a month, it could cover the extra costs to your household. That may not seem to be very much money, but as you can see, it’s worth it even if it’s not a large sum.”
In fact, you can be an “Entrepreneurial MVP” with just a modest amount of elbow grease. To accomplish this, you must appreciate what “MVP” represents when looking to start a side hustle. Here’s a brief summary of three factors to consider when building a home-based side hustle that will help you beat today’s inflation worries.
“M = Money”—More Cash Means Less Stress
This represents the bottom line. You’ve got to pick a gig that generates positive cash flow, no matter how small.
“Having a side hustle helps to counter inflationary pressures by bringing in a second source of income,” says Corina Layton, a Registered Dental Hygienist in Philadelphia who has a side hustle as an Influencer. “By having more income from my side hustle, I don’t have to stress as much about price increases taking my entire paycheck. I know that I have more than one way to make money, so it takes the pressure off of my main job.”
The money problem is especially acute if you’re retired and living on an unchanging stream of revenue. Any activity that adds a few more dollars to your wallet goes a long way to fighting inflation.
“The biggest problem with inflation is that it eats away at money, so to speak,” says Tomic. “So, if someone is on a relatively fixed income, their income will likely not adjust fast enough to catch up with inflation and might not adjust highly enough either. This is where a side hustle can help as the price of the goods or services provided would likely adjust more closely in step with inflation.”
Would you like to learn more about “Finding the Money”? Read this article for a deeper dive into discovering the process.
“V = Void”—Do What You’re Already Doing
Finding the money is one thing. Finding the void is the key. This is learning to zig when everyone else is zagging. That’s usually where the opportunity lies.
“Many think that starting a business in light of a recession is risky,” says Dr. Travis Fox, Co-Founder of AllRealms in St. George Utah. “With an increase in inflation, those with business ideas are less likely to act upon them, opening the door for you to succeed (and make more money) with less competition.”
To find the void, take what you already do and see where it’s most needed. This gives you the clout to multiply the value (see “money” above) of that skill.
“The earning opportunity side hustles and home-based businesses present during uncertain economic times is enormous; it just requires you to think outside the box and embrace a new way of earning,” says Kelly Mosser, Consultant and Coach for Entrepreneurs at Kelly Mosser Consulting in New York City. “The key to a side business that boosts your income without adding additional stress to your day to day is to start a business that has low overhead and leverages skills you already have. Owning your own business can help foster a sense of personal empowerment, freedom, and security that your day job might not offer you. Diversifying your income by introducing a low-stress side hustle is a great way to fortify your financial position against inflation or a potential recession.”
Would you like to learn more about “Filling the Void”? Read this article for a deeper dive into discovering the process.
“P = Pivot”—Tax Savings
Finally, realize things are not always as they seem. Sometimes your first attempt fails. That’s when you pivot to turn lemons into lemonade.
But pivoting isn’t limited to your product or service. It can also apply to the types of benefits you accrue from your side hustle. In fact, while you focus on increasing revenues, you may discover you’re also cutting expenses.
“Home-based businesses are a quick way to reduce your personal expenses,” says Micah Stateson, President & Founder at Optimized Waste Removal in Fort Worth, Texas. “The tax savings alone can beat inflationary pressures. Expensing your phone, internet, home office, gas, etc., are all great ways to leverage your small business to your advantage.”
Of course, you’ll want to double-check with your tax advisor to discover how this applies to you.
Would you like to learn more about “The Power Pivot”? Read this article for a deeper dive into discovering the process.
Pros vs. Cons: What are some side hustle ideas?
Be warned, though, that a small gig can turn into a money and time pit if you’re not careful.
“A side business is a business,” says Ted Wolf, Co-founder and CEO at Guidewise in Lancaster, Pennsylvania. “If you can’t fully commit to starting and running a business, then I encourage you to keep your day job. Remember, when you start a side hustle, there are so many things to learn and things that can go wrong. So if your financial situation is in flux, it may be prudent to consider other options. By working a full-time job and running a side hustle, you are creating a situation ripe for making yourself become mentally, emotionally and financially overextended, which could take away from your day job, earning potential and family time. A side hustle or home-based business in some cases may work, but you really have to weigh the risk versus benefits and the longevity of your decision.”
This may be a concern if you have a full-time job, but not if you’re retired. Yet, the side hustle options available remain similar whether you’re working or living in retirement.
“I would certainly imagine it’s top of mind for the retiree population,” says Mosser. “Here’s some strategic advice for seniors looking to diversify with a side hustle: Lean into the skills you already have, especially the ones you mastered during your career, and explore the opportunities to freelance remotely. If an employer paid you for a skill, there’s a market for it now, too. Start a profile on platforms like UpWork or Fiverr and find quality freelancing gigs right away, shop your skills among your circle of friends and family, or consider renting out your home on Airbnb or Vrbo the next time you’re visiting overnight with family. An ideal side hustle for a retiree is one that fits into your routine, rather than disrupts it, and one that leverages the decades of experience you already have.”
That’s not to say there aren’t any risks for retirees.
“If you’re tackling a retirement side hustle out of excitement and desire—rather than financial necessity—I’m all for it,” says Loper. “It’ll keep your mind sharp and let you feel a sense of progress toward something meaningful to you, a critical ingredient in long-term happiness. So, what’s the drawback? The pursuit of ‘more’ for the sake of more runs the risk of damaging your relationships and truly enjoying your retirement years.”
Even so, you cannot deny the power of the side hustle. It has the advantage of providing a path to defeat inflation.
“Financial burdens are often the biggest stressors in everyone’s lives,” says Fox. “Why not combat economic stress by embracing your entrepreneurial spirit, becoming your own boss and making some money while pursuing a personal passion?”
Ideally, you don’t want your passion getting in the way of your success. You don’t want to work harder; you want to work smarter. That’s where the value of becoming an “Entrepreneurial MVP” stands out.
Money. Void. Pivot. Pay attention to those three factors, and your little gig can deliver fun, invigoration and profits.