In today's fast-paced and ever-changing world, the concept of financial stability has taken on a new meaning, especially for millennials and Gen Z. With the Cost of Living Crisis, student loan debts, limited job opportunities and the financial repercussions of a post Coronavirus world, the the need for an additional source of income has become almost crucial. This is exactly why, according to a report from Deloitte, 46% of Gen Z and 37% of Millennials have a second job - isn't that alarming?!
In this blog post, we will delve into the importance of extra income for young adults, exploring its benefits (apart from money alone) and offering invaluable tips backed by research to help secure a brighter financial future.
So, who's ready to unlock their financial freedom?
One of the primary reasons why extra income is of utmost importance for Millennials and Gen Z is the need for financial security, and we know what you might be thinking; is the need for financial security not shared by most generations? Yes, however, with unpredictable economic landscapes (the 2008 recession was the deepest since the Second World War and the recessions of 2020 wasn't great either!) having only one source of income can leave individuals vulnerable to financial hardships. By diversifying their income streams, young adults can create a safety net that provides stability during challenging times. A study conducted by the Federal Reserve Bank of St. Louis found that individuals with multiple income sources were more likely to weather economic downturns successfully.
Millennials and Gen Z often find themselves burdened with student loan debts, credit card balances, or other financial obligations such as your mobile phone contract, Spotify, the Adobe suite, Amazon Prime, Netflix, Canva, Youtube Premium; the list is endless, right?! So this is exactly why extra income can be a game-changer for people trying to pay off their debs. The facts are simple: by getting a side hustle or a second job, young adults can reduce interest payments and ultimately become debt-free sooner. Research conducted by the Urban Institute reveals that individuals who pursued extra income opportunities were able to pay off their debts at a significantly faster rate compared to those relying solely on their primary income.
Investing in one's future is a crucial aspect of financial planning, and extra income plays a vital role in this regard. Millennials and Gen Z can utilise their additional earnings to start building wealth through investments. Whether its stocks, real estate, or retirement accounts; having extra income allows young adults to take advantage of compounding returns and secure a financially prosperous future. According to a survey by Bankrate, 42% of millennials who pursued side hustles invested a portion of their earnings, compared to only 28% relying solely on their primary income. It would also appear that the younger generations (Gen Z in-particular) are much more cautious when it comes to spending. A big part of this is down to the financial crash of 2008. Lots of financial experts have outlined that during this time, as Gen Z were enjoying their teen years, they become accustomed to seeing parents, family, and loved ones lose their jobs, homes and university funds. This is seen a whole generation of frugal spenders, and just as well, as we are in the midst of the Cost of Living Crisis...
Beyond financial benefits, extra income can provide millennials and Gen Z with opportunities to pursue their passion projects or invest in personal growth. Whether it's starting a small business, taking online courses, or travelling; having additional funds can unlock doors to personal fulfilment and self-improvement. Research published in the Journal of Career Development highlights that individuals who engage in side hustles often report higher levels of job satisfaction and overall well-being.
In a world where financial stability is increasingly uncertain, millennials and Gen Z must recognise the importance of extra income. By diversifying their income streams, young adults can enhance financial security, accelerate debt repayment, build wealth, and pursue their passion projects. Through research-backed tips and insights, this blog post aimed to shed light on the various benefits that come with earning extra income. Empowering young adults to take control of their financial future, extra income serves as a stepping stone towards achieving financial freedom and leading.
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