The past few months have shown some signs of a slowdown in the U.S. job market, such as slower job growth, downward revisions to previous months’ job stats from the Bureau of Labor Statistics, and fewer job openings. Even though the official unemployment rate is still low (4.1% as of September 2024), there are a few reasons to worry that more layoffs could be on the horizon.
If the job market gets tighter, it can be bad news for employees. Companies might be less likely to offer generous pay raises; promotions might get put on hold. But a tight job market can be good news for entrepreneurs, and can even put extra money in your bank account.
If you’re flexible and can adapt to the latest conditions in the economy, here’s why right now could be a perfect time to start a side hustle — or even launch a new business.
1. Build up your emergency savings
Even if you aren’t worried about getting laid off anytime soon, a slowdown in the job market can be the first signal of bigger job losses to come. In case your job becomes less secure, it’s a good idea to build up your emergency savings.
The best side hustles can help you earn hundreds of dollars per month. What if you could stash away an extra $500 per month in a high-yield savings account? After one year, you could save an extra $6,000 — plus interest.
Sometimes in tight job markets, there is still plenty of “work” but not as many full-time jobs — so being flexible can be an advantage. For example, companies might decide to lay off a few full-time employees, or leave a few full-time positions vacant, only to discover, “Oh yeah, we still need to do the actual work that those employees would have done.”
Why a Business Credit Card Could Transform Your Small Business
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Additionally, business cards can provide valuable perks such as rewards points, cashback, and expense tracking tools, enhancing financial management and the potential to help save money in the long run.
This is where starting a side hustle as a consultant, freelancer, or solo entrepreneur can help. By being flexible and available for projects, you can fill in the gaps when companies need to complete urgent work but without the costs of hiring employees. It’s a win-win.
3. Diversify your income in case of job loss
One of the best reasons to start a business or side hustle is that it gives you more than one source of income. Instead of 100% of your income coming from one job, one company, one boss, you can make multiple streams of revenue that help pay your bills in a safer, diversified way.
You shouldn’t put 100% of your life savings into one stock, right? So why do so many people feel fine betting 100% of their income on one company?
You might find that your personal finances feel more comfortable and secure if you spread out your earnings among multiple clients, companies, and projects. Side hustles can help make this happen.
4. Create your own “job” for the future
Not enough jobs in your city or industry? Create your own! If you love making extra money on the side, you might discover that you want to try building your side hustle into a full-time small business.
Here are a few reasons why starting a side hustle is such a powerful opportunity to create your own job.
Try new things
Your side hustle might help you discover new business ideas or new ways of making money, like starting an e-commerce website or providing online coaching services.
Learn new skills
Starting a business based on a side hustle is a 24/7 learning experience. Great online tools are available to help you run your business, do outreach to customers, learn new technologies and marketing tactics, and more.
Meet new people
By working on your side hustle, you might discover that you really love collaborating with your new clients and meeting people in your industry. This can be an inspiring way to expand your professional network.
Bottom line
Don’t assume the job market is going downhill and you’re helpless to do anything about it. Even if unemployment goes up and jobs get more scarce, flexible, hard-working, adaptable people can find a way to make extra money with a side hustle. You might even use this time of uncertainty as an opportunity to create a new job of your own, working for your own small business.
