Here’s the Best Way To Invest $100 From Your Side Hustle
Written by
Cindy Lamothe
Edited by
Zuri Anderson
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If you’re in the enviable position of making money from a side hustle, then knowing how to spend it can mean a world of difference to your finances.
The best place to put an extra $100 depends on each person’s individual circumstances, but experts recommend several ways to go about it. Below are the top ways they advise spending that extra cash.
Top Off Your Emergency Fund
According to Thomas Maluck, certified financial education instructor and owner of Financial Flock, you should top off your emergency fund if it doesn’t have at least three to six months’ worth of expenses in it.
“You want to have some just-in-case money where you can easily access it in case you lose your main source of income or an emergency happens,” he noted, adding where you store that money matters.
“Compare savings rates across different banks and credit unions to make sure your savings earn more than the paltry 0.01% offered at some places.”
Maluck said 4% would be a healthy rate at the moment.
Reinvest Back Into Your Side Hustle
“If there is an opportunity to invest back into the side hustle, go for it,” said Maluck. “The side hustle already earned an extra $100, how much more could it earn if that $100 bought a new piece of equipment or marketing exposure?”
Contribute To a Roth IRA
For long-term investing, Maluck advised using that earned income to contribute to a Roth IRA.
“A Roth IRA is one of the best vehicles for retirement investing, as your gains are tax-free once you pass age 59 1/2 and have had the account for at least five years,” he explained.
“Assign that money to a good, long-term investing strategy and get to work on the next $100 for your future self.”
Pay Down High-Interest Debt, Invest the Freed-Up Cash Flow
“Before you think this is just basic advice, hear me out,” said Chris Heerlein, CEO of REAP Financial. “While many people immediately look at investing their side gig earnings into stocks or ETFs, they may overlook the critical opportunity to put that money to work in a different way.”
He said paying off debt that’s accruing interest at 18%, 20%, or even higher is often a better use of extra cash in the short term than putting that money into investments that could return lower rates.
“Let’s say you’re carrying a credit card balance with a high interest rate. Using your $100 to pay down that balance saves you the high-interest charges you’d otherwise face in the coming months,” Heerlein explained.
He noted it also effectively earns you a return equal to the interest rate on that debt.
“For example, if you have a credit card charging you 20% interest, paying off $100 of that balance is essentially like earning a guaranteed 20% return on that $100,” the expert added.
Once you’ve reduced that high-interest debt, Heerlein said you now have more disposable income available each month.
“Instead of sending all that extra cash back to the credit card company, you can reallocate it to savings or investment. It’s like giving yourself a raise but without any new work,” he advised.
Over time, he said this strategy can help you build up a solid base of investment capital, and it comes with the added benefit of freeing up cash flow to make larger, more meaningful investments down the line.
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