Achieving Financial Freedom Without Side Hustles: Sustainable Tips for Millennials

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Why many millennials feel they need a side hustle for financial freedom

Millennials, defined as those born between 1981 and 1996, are entering their prime earning years burdened by multiple financial constraints that make it difficult to feel financially secure or pursue financial freedom without taking on additional work. Here are some of the key factors driving many millennials to believe that a side hustle is essential:

Stagnant Wages and Rising Costs of Living

Over the past few decades, average wages have not kept pace with the rapidly rising costs of major expenses like housing, healthcare, and education. When accounting for inflation, typical salaries have remained relatively stagnant since the 1970s and 80s. However, key costs like housing, childcare, transportation, food, healthcare, and especially higher education have increased dramatically in price. This combination of stagnant real wages and skyrocketing living costs squeezes disposable income and makes it hard for millennials to get ahead financially on a single income stream.

Housing Costs

Rent and home prices have been rising faster than wages in many urban areas


Down payments required for homes are very high due to prices


It is hard to save for a down payment when much income goes to rent

Healthcare Expenses

Insurance premiums, deductibles, and out-of-pocket costs rising rapidly


Chronic illnesses can be financially devastating without good insurance


Hard to afford co-pays, prescriptions, procedures, and medications

Education Costs

Average college tuition is up over 200% since 1990


Textbook prices up 88% in the last decade alone


Grads face over $30,000 of debt on average

Burden of Student Loan Debt

Speaking of rising education costs, staggeringly high student loan debt is perhaps the biggest millennial-specific financial challenge. As college tuition rates have grown exponentially higher than inflation over recent decades, more and more students must take on large debts to complete their degrees.


Average student debt is now over $30,000 per borrower


Total student loan debt tops $1.5 trillion in the US


Debt payments consume 20-30% of monthly income for many


This significant monthly expense makes it harder to get ahead financially in other areas like saving, investing, or buying a home. It can feel nearly impossible to pursue financial freedom goals on an entry- or mid-level salary while saddled with high student loan payments.

Desire for Financial Independence

Finally, millennials have a strong desire for financial independence and flexibility compared to previous generations. After witnessing their parents and older cohorts struggle through layoffs, company closures, health crises, and economic downturns largely out of their control, many millennials prioritize self-determination over job security or traditional linear career paths.


Common financial freedom goals for millennials include:

. Not living paycheck-to-paycheck

. Having a good work/life balance

. Saving or retiring early to pursue other dreams

. Having the flexibility to switch jobs or career fields

. Building enough wealth to weather unexpected emergencies or periods of low-income


However, these aspirations seem out of reach to those bogged down by flat paychecks and mounting mandatory expenses. Thus millions turn to side hustles, side jobs, freelancing, and bootstrapping additional income streams outside of traditional 9-5 employment in hopes of taking control of their financial destinies.


But this common strategy has many downsides...

Problems with relying on side hustles for long-term financial freedom

While busting out a side hustle seems like a straightforward way to boost income and achieve financial goals faster, this route has some significant drawbacks. Here are a few of the top reasons building financial freedom solely around side jobs can backfire:

Unpredictable and Unreliable Income

One major issue with tying your financial future to a side hustle is that the income tends to be extremely variable and unreliable. Especially in the early stages of building a freelance business or monetizing a passion project, earnings will fluctuate dramatically from month to month. You may have killer sales one quarter then struggle to get any clients the next. This rollercoaster income makes budgeting and managing your finances difficult.

Major Time Investment Early On

Takes most side hustles over a year to generate decent revenue


May need to invest significant time without paying first


Hard to know whether the idea will eventually pan out

Market Whims Drive Volatile Revenue

Demand for offerings waxes and wanes


Economic cycles impact discretionary purchases


Hard to predict or control external factors

Increased Stress and Burnout

Trying to balance a full-time job with the demands of getting a freelance operation or side gig off the ground is extremely taxing, both physically and mentally. When every minute of your precious free time is spent on your hustle instead of relaxing, it leads to mounting stress and eventual burnout.

Hard to Switch Off

Constantly working erodes mental breaks


Blurs work/life balance boundaries


This leads to exhaustion and feeling overwhelmed

No Time for Self-Care

Neglect health, relationships, hobbies


Causes anxiety, insomnia, irritability


Decreased life satisfaction

Not a Scalable Long-Term Strategy

Here's the kicker about relying on side hustle income to achieve financial freedom: it’s just not a scalable or sustainable strategy in the long run. There's a finite amount of additional income you can realistically generate from gig work or pet projects while still working a full-time job. And constantly running this exhausting double-duty routine will take a toll over the years.

Limited Earning Potential

Only so many hours to go around


Income reaches a plateau eventually


Still, have income caps from the main job

Doesn't Address Root Issues

Does not boost savings or passive income


Salary is still limited long-term


Just a short-term bandaid solution

So while supplementing with side hustles can help ease financial constraints, it’s not a path to lifelong financial freedom. The key is finding ways to increase income more passively and sustainably...

Sustainable alternative strategies for achieving financial freedom

Rather than resign yourself to a lifetime of burning the candle at both ends, prioritize building sustainable income streams that don't require actively trading your time for money at an unsustainable pace. Here are several alternative strategies to achieve financial independence without relying solely on backbreaking side hustles:

Build Multiple Sources of Passive Income

The key to true financial freedom is generating significant income from sources that don't require you to actively work for it. This type of "passive income" can be created through assets and systems that produce earnings automatically with minimal ongoing time investment on your part.

Types of Passive Income Sources

Examples of passive or semi-passive income sources include:


Rental real estate property cash flow


Dividends and interest from investing


Royalties from books, courses, products


Affiliate marketing through a blog or website


Selling digital products like templates, apps, etc


YouTube ad revenue from an audience of subscribers


Peer-to-peer lending returns

Automate to Accelerate Passive Earnings

The key is building scalable assets and leveraging automation technology so that most of the tedious work associated with these income streams is handled in the background without daily active effort on your part. The internet has made building passive income systems and gaining financial freedom more accessible than ever before.

Acquire High-Income Skills and Education

Beyond passive income from assets, another proven path to sustainable financial freedom is maximizing your earning ability. Choose a career field that offers abundant opportunities to develop specialized niche skills and expertise that is highly valued and thus highly compensated in the job market.

Continual Learning is Key

Take certifications and courses annually


Attend conferences and training programs


Get active in associations and peer groups


Learn adjacent skills to expand the scope


Options include sales, marketing, technical skills like coding or data science, financial services, engineering, law, medicine, consulting, specialized trades and many more. Continually expanding your skill set and network in a field with high-income potential is critical.

Budget to Maximize Savings

Building wealth boils down to a simple formula - spend less than you earn. However, optimizing your saving rate and cutting unnecessary expenses takes diligent budgeting and an investor mindset.

Live Below Your Means

Audit monthly expenses


Cut subscriptions, dining out


Downsize housing, vehicles


Travel hack and minimize shopping

Automate Savings

Pay yourself first


Set up auto-deposits


Funnel surplus into investments


Tax advantage retirement accounts


Implementing a lean, optimized budget frees up capital to funnel into assets that generate compound returns over decades. Consistently saving even 20% of income supercharges wealth building.

Negotiate Raises and Promotions

For those earning an hourly wage or salary at a traditional job, boosting that base pay is also key. Research typical pay at your experience level and press for fair cost of living increases each year. Earning a promotion to the next level early on speeds up salary growth exponentially thanks to compounding over a career.

Making finances a priority now sets you up for long-term freedom

Pursuing financial independence is very much a marathon, not a sprint. Reaching complete freedom from mandatory work may take a decade or more. However, starting early with consistent effort leads to compound growth that builds substantial momentum over time. Here are principles to guide your journey:

Start Early and Stay Consistent

Develop good habits in your 20s


Invest early and often


Let compound returns snowball


Building wealth doesn't require brilliant tactics so much as daily discipline applied over decades. Start saving even just 10% of your income, budget to maximize investing capital, and continually expand your skill set or business offerings to drive income higher over long time horizons.

Have Reasonable Expectations

True freedom takes 10-15 years


Prepare for ups and downs


Stay focused on incremental progress


There will be turbulent economic cycles, job changes, and major life expenses that force temporary setbacks. But sticking to reliable wealth-building strategies without getting distracted by "get rich quick schemes" wins out.

Do What Works For You

No universally best path


Continually educate yourself


Combined approaches strongest


Experiment to discover capital sources and career options best aligned to your talents and interests. Blend multiple income streams. Continual learning and course-correcting based on results lead to custom strategies with the highest odds for long-term success.


The key is avoiding burnout and maintaining the capacity to optimize finances through ever-evolving economic conditions over decades. Sustainable passive income alongside career development is the surest path to millennial financial freedom.

FAQs

Here are some frequently asked questions about achieving financial freedom as a millennial without relying on side hustles:


How much money do I need to invest to be financially independent?

To generate enough passive income to cover your living expenses without working, a good rule of thumb is to have 25-30 times your annual spending invested. So if your annual budget is around $40,000, you would aim to build an investment portfolio of $1 - $1.2 million. This could generate $40,000 - $48,000 per year at a sustainable withdrawal rate of 4%.


What are the best sources of passive income?

Some top passive income sources include investing (index funds, real estate), building online assets (blogs, courses, affiliate sites), royalties (books, music, patents), and peer-to-peer lending. The right mix depends on your specific skills, interests and risk tolerance. Aim to diversify across multiple streams.

How long will it take to become financially independent?

Assuming you invest 50% of your after-tax income, it would take approximately 10-15 years to build a portfolio large enough to generate your full-time income passively at a 4% withdrawal rate. But you can reach partial financial freedom like covering some expenses much sooner. Getting started early and consistently investing over decades speeds up your process exponentially due to compound returns.


What should I invest in to become financially independent?

The best investment portfolio for passive income consists primarily of stock index funds, which provide reliable market returns over time. Consider globally diversified, low-cost index funds like VTI and VXUS. Allocate a small percentage (<20%) to bonds for stability and rebalance annually. Supplement with alternative assets like real estate when possible.


How can I increase my income fastest?

The quickest ways to substantially increase income involve developing high-income skills like sales, marketing, technical certifications, specialized training, or earning advanced credentials like graduate degrees with strong ROI. Switching companies every 2-3 years can also speed salary growth. Optimizing your finances can help you afford education and career investments to boost earning potential.