- After I got out of debt, I focused on increasing my income. I started the side hustling and made over $ 100,000 in 2020.
- Now I’m using my extra income to build generational wealth and support my family in three ways.
- I’m speeding up my retirement savings so I can leave lots of money behind, building a college fund for my niece, and helping my parents retire.
- This article is part of Money That Lasts, an on-going series about the generational wealth of Personal Finance Insider.
- Sign up to receive the Personal Finance Insider newsletter in your inbox »
When it comes to building wealth and passing it on to future generations, many people think of investing in things like real estate or the stock market. But did you know that outside employment can be part of building generational wealth?
Financial professionals place great value on paying off debts and saving money to get ahead financially. This is useful when you are living on a paycheck to paycheck cycle. But there is also a lot of power to increase your income.
I believe that wealth is built by adopting an abundance mindset, not by focusing on scarcity and deprivation. So if you want to create wealth, your focus must be on increasing your income, not just paying off debts and saving money.
I don’t think sideline jobs get enough credit for the power they can give you to build wealth. I made over $ 100,000 in extra income in 2020 doing sideline jobs, and all of that extra income helps me build generational wealth for my entire family.
Sideline jobs were an integral part of being able to repay my student loans and fully fund my emergency fund. Now that I’m debt free, I use my extra income in a variety of ways to build generational wealth.
1. Accelerate my retirement savings
Before I started standing on my side, I only contributed 6% of my income to retirement, not nearly enough to build a comfortable nest egg. I went debt free in 2020, and now I’m using my extra income to maintain a comfortable standard of living while accelerating my investment and retirement goals.
I was able to take full advantage of my 401 (k), IRA, Solo 401 (k) and HSA workplace for the first time last year. I plan to continue this every year to harness the power of the stock market and compound interest. If I invest consistently over time, I plan to build a large nest egg and leave an inheritance to my children or nieces and nephews.
I want to create wealth that can be passed on to future generations. I make sure that beneficiaries on all of these accounts are named and regularly reviewed so there is an easy way to transfer assets to my spouse, children, or loved ones.
2. I help my niece through college so she can graduate with no debt
I also use my extra income to prepare my niece for future success. I opened a 529 account and a UTMA account for her, and I contribute money monthly to help her avoid debt that can delay important life milestones.
529 accounts save you pre-tax income on eligible education expenses. With a UTMA account, you can invest on behalf of a minor. This will take over the account at the age of 18 or 21, depending on your state guidelines. If she is given the opportunity to graduate from college with little or no debt, she will have a head start on her own wealth-building journey as she goes out into the world.
3. I take care of my parents as they approach retirement
The biggest advantage of my extra income is that I can look after my parents who are about to retire. I’m in the process of buying a retirement home for them, which would be impossible without the additional income from my part-time job. I really enjoy the ability to do this; This way I can ensure that my parents have a safe home when they are no longer employed. I have also opened a separate family emergency fund so that I can help my family financially in the event of unexpected emergencies.
Sideline jobs are the unsung heroes in creating generational wealth, and I would argue that they had the greatest impact on my wealth creation journey. Paying back, saving, and budgeting debt focus on reducing, spending less, and accepting frugality. While it is useful, there is also a lot of financial power that comes with growing your income and diversifying your income streams. A good side business can help you reach your financial goals faster, and who doesn’t want that?
More personal financial coverage
Disclosure: This post is made available to you by the Personal Finance Insider team. Occasionally, we highlight financial products and services that can help you make smarter decisions with your money. We do not provide investment advice and do not encourage you to pursue any particular investment strategy. What you do with your money is up to you. If you take action based on one of our recommendations, we will receive a small portion of the sales from our trading partners. This has no influence on whether we offer a financial product or a financial service. We work independently from our advertising sales team.