The myth of multiple income streams (or how side-hustle culture is killing us)

Why side hustle culture is a bad idea and the "multiple income streams" theory is a myth

Welcome to this week’s edition of Second Guess. Did you know that one glass of water has more atoms in it than there are glasses of water in all the oceans on earth?

If you missed last week’s edition of this newsletter, catch up: I wrote about how companies don't care that much about employees anymore... and that's okay.

And now, to today’s story.

Early this week, an acquaintance reached out to me regarding a full-time role for which I was hiring. He told me he was comfortable at his remote job but he needed something on the side. I was stunned because this guy works for a notable US company, earns a decent sum and was comfortable. Why would they want to take another full-time job that pays in naira to support their dollar-denominated income?

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All the lies we’ve been told about side hustle

You may have been taught that working long hours and sacrificing rest is what it takes to succeed, but here’s why hustling to reach your goals is a terrible idea.

Today, you can’t go three swipes on the internet without being bombarded with the gospel of side hustle. Social media is rife with Elon Musk fanboys selling you dreams of making millions in your spare time, with fake deep quotes about hard work and hustle, and how millionaires don’t sleep for more than four hours a night.

These people make a lot of noise about remote work, freelancing, being your own boss, and earning money for multiple streams.

The hype of side hustle is s sexy because you’ve come to hear it so much, from so many social media career coaches hammering it down your throat. And yes, the idea of a side hustle is ideally quite appealing for people who’re currently making extra income from monetising their hobbies.

Anyone would love to be paid for something they’d have done for free anyway, right?

In reality, side hustles are becoming a way of life, such that surviving in today’s world is an increasingly uphill battle.

A side hustle, by definition, is a piece of work or a job that you get paid for doing in addition to doing your main job. In 2023, let’s be honest: nobody actually wants a side hustle. You don’t close at 5. pm after a long day at work looking forward to navigating Lagos traffic, driving people from the mainland to the Island and back until midnight while giving away part of your earnings to the company. 

People do side hustles because they need them. Over time, they end up convincing themselves they don’t totally hate these side gigs.

We’ve heard financial advice like the best way to be successful is to build multiple streams of income. But there’s something very different about teaching an evening class because you like to teach—and can do without it, no pressure—and working extra hours at a logistics warehouse just to squeeze a few more bucks to solve a family problem or pay your rent.

Privileges exist and very few people actually want to do extra work in the time they’re supposed to be resting or connecting with friends and family. In reality, people are taking side hustles to escape poverty.

The constant horns of hustle culture keep blaring in our ears, tricking us into thinking it’s normal, but it isn’t. If you can get by without your side hustle, congrats! You’re in the privileged minority. Because, if you make more money from your side hustle, why not just make it your full-time job? If you make less money from your side hustle, then you’re just signing up for paid torture.

The best way to build wealth is to specialise in one skill, make the most of your career and get paid well for it, then use that money to buy assets that can generate passive income. This strategy usually involves a long dedicated career, hard work, and a bit of luck. A software developer is likely going to make more money than someone who runs errands for some extra cash after your day job.

The seven streams of income myth

In the early 2000s, the IRS conducted a study where they tracked over 6,000 rich people who’d died between 1996 and 2002. They studied the tax returns of these deceased rich folks and found seven distinct forms of income: 

1. Earned income

2. Investment income

3. Capital gains

4. Rental income

5. Profits

6. Royalties

7. Interest income

After that report was published, personal finance influencers oversimplified the findings, and thus the popular saying that most millionaires have seven streams of income was born. On a closer look, it’s not difficult to note that these incomes simply existed because their owners were already rich in the first place, not from side hustles. 

The part of the study that was conveniently left out was that most of these rich people built wealth by building highly successful careers or focusing on one business, which they would later use their compensation to buy assets that would provide diversified income streams. Oh, and also, only 29% of millionaires in the study had more than three income streams.

Nobody gets rich by juggling seven jobs.

Many of these soundbites like “you can’t get rich from a 9-5” or the myth of the seven income streams come from highly oversimplified (to the point of outright lying) summaries of important research. For example, those rich people in the IRS study were already dead. So at the time of the study, these were people who had reaped the fruits of long careers of hard work and careful planning.

Personal finance gurus on Twitter might argue that there are young millionaires. Granted, but that’s just selection bias. Most young people who achieve financial success do so from maximising one income stream—that or good old family inheritance and a little bit of nepotism.

So why the heck do these myths exist?

It’s simple: most people peddling these lies need to believe them. The economy is shit; salaries have stagnated for decades amidst rising inflation and people need to survive. Millennials entered the workforce during the worst downturn since the Great Depression. Saddled with debt, unable to accumulate wealth, and stuck in low-benefit, dead-end jobs, millennials (and now Gen-Zs) don’t have the financial security our parents, and grandparents enjoyed.

We’ve faced two once-in-a-lifetime recessions in our short careers: the 2008 Great Depression put us on a worse lifetime-earnings trajectory and blocked many of us out of the asset market. The pandemic dried our paychecks just as we entered our peak-earning years. There was a time when having a backup income in case you got fired anytime used to be doomsday preparation; now, it’s just normal advice—except, your main salary is probably barely enough for you to lead a comfortable life.

According to The Atlantic: 

Millennials had no chance to build the kind of nest eggs that older generations did—the financial cushions that help people weather catastrophes, provide support to sick or down-on-their luck relatives, start businesses, invest in real estate, or go back to school. Going into the 2008 financial crisis, Gen Xers had twice the assets that Millennials have today; right now, Gen Xers have four times the assets and double the savings of younger adults.

We don’t have side hustles. We’re just working multiple jobs. Calling it “side hustle” is just a feel-good buzzword to sugarcoat an unhealthy financial situation. Let’s tell it like it is.

Oh, and many of these loudmouthed personal finance influencers encouraging side hustle are often trying to sell you some bullshit course on developing your extra income streams.

This isn’t to say side hustles don’t exist or that people don’t realistically earn decently from multiple streams of income. This is to say, let’s not exaggerate the privilege only a tiny percentage of people enjoy. Side hustles aren’t supposed to take much time or effort because it’s something you do on the side; in reality, if you want to actually make enough money from “side hustles”, you need to put in full-time effort. Something is broken in our economy, and working extra jobs won’t fix it.

Side hustle culture is not the silver bullet it’s made to look like. Instead, it sucks you in with its #keepgrinding and #girlboss hashtags, 18-hour workday humblebrags, and an elusive promise of the life you’ve always wanted for the small price of your time, energy, relationships, health, and self-worth. This is simply not a life to aspire to.

When you peel beyond the veneer of rich smiling people recommending “easy” side hustles and passive incomes, you’ll see most “side hustles” pay shit wages, have unregulated work conditions, and are generally highly risky and rarely rewarding. 

There are stories of cab drivers who turned millionaires. But there are also chilling stories of Uber drivers who got robbed at night or DoorDash vans that got stolen with two kids inside them. In reality, the latter is much more common.