More than 1 in 3 Americans have a side hustle, but they’re spending that extra cash right away. Financial experts say that’s the wrong approach.  

In a recent 2,300-person survey, more than one in three U.S. adult respondents (36%) told Bankrate they have a side hustle. The side-hustle craze is only becoming more lucrative. In 2023, extra work aside from one’s primary income resulted in an extra $810 per month; this year, it’s up to $891. 

Not everyone is equally invested in the practice: Men are bigger side hustlers than women, and younger workers are more likely to side hustle than older folks. (Men also outearn women in side hustles, as they do in the primary job market; the average male side hustler earns $1,034 per month, while women $735 on average.) 

By a wide margin, Gen Zers are leading the pack: Nearly half (48%) of 18- to 27-year-old respondents told Bankrate they have a side hustle. Just a third of Gen Xers said the same—and fewer than 1 in 4 boomers. 

Perhaps it’s no surprise that workers of all ages and backgrounds are continually invested in extra avenues for spending money. After all, despite tiny dips, painstakingly high inflation is set to remain stubborn this year—regardless of which presidential candidate is elected in November. 

That means the price of basic cost-of-living essentials like rent, gas, and groceries will continue to shock, and respite for the roughly half of American workers living paycheck-to-paycheck may remain ever further off. (Parents were markedly more likely to report having a side hustle than non-parents, Bankrate found.) 

However, Ted Rossman, a senior analyst at Bankrate, told Fortune that respondents aren’t actually using their side hustles to support their basic necessities. Rather, they’re using the extra cash for discretionary purposes—shopping for non-essentials. 

Almost 40% of respondents with a side hustle said they use at least some of their extra earnings to fund their discretionary spending. Close behind was regular living expenses, and only 31% said they save at least some of their side-hustle money. Only 1 in 5 hustlers say they’re using their extra cash to pay down debt.  

The non-essential spending conundrum

Perhaps that habit of spending right away is what’s keeping workers working so much. All told, about a third of side hustlers told Bankrate they expect they’ll “always” need to have a gig on the side in order to make ends meet. But they also seem to recognize the precarity of their position: Only 16% said they actually want their side hustle to become their primary source of income. 

Everyone wants more money, but the efforts haven’t always been this widespread. In 2017, only 19% of Americans had a side hustle, compared to today’s 36%, Bankrate senior analyst Ted Rossman told Fortune. “We see a lot of people doing this out of necessity, feeling they need extra income to make ends meet,” he said. “But this year, most people said they were doing it for discretionary money.”

That’s not always been the case. Last year, essential spending was the number-one use of side hustle earnings—and last year there was slightly more side hustling going on than this year, Rossman pointed out. 

“It’s a tenuous situation,” he added. “Even though, on the face of it, the economy has been good, i do worry a bit if this many people need a side hustle now. It makes me worried for the future.”

Rossman then rattled off other concerning stats: The majority of households live paycheck-to-paycheck, and most Americans couldn’t pay for a surprise $1,000 charge. Even so, Rossman said he wishes “more people were getting ahead, using this [side hustle] money for savings and investments and debt payoff.”

To illustrate the problem, Rossman noted how half of people carry a credit-card balance from month to month. Those people, saddled with a 25% or 30% interest rate, are in a starkly different boat than those who pay off their bill each month and reap the rewards in cash back, hotel points, or airline miles. “That can be very systemic,” he said. “And I actually think a side hustle is a great way to fix credit-card debt.”

But for those who use their side-hustle earnings to buy new shoes or take a fancy trip, is the juice worth the squeeze? The most valuable asset humans have is time—and side hustles like driving for Uber or delivering for DoorDash can take hours each week. Perhaps an alternative would be to nix the side hustle altogether, forgo the spending, and double down on saving and investing—an especially good choice for the younger workers who side hustle the most. 

“Money saved early becomes a mountain of money later,” George Ball, chairman of Sanders Morris, a Houston, Texas-based investment firm, told Fortune. Ball encourages young workers to save between 10% and 20% of their earnings for investments—even if they feel the squeeze. “If it takes a side hustle to stash away that much cash to invest, it’s worth it. A dollar invested today becomes a comfortable lifestyle in the decades to come.”

Clark Bellin, president and chief investment officer of Nebraska-based Bellwether Wealth, said the same, down to the 10% savings benchmark. “Even if you can only set aside $50 per month at first, that’s better than delaying your investing journey until your 30s and 40s,” Bellin told Fortune. “Investing returns can be so powerful over long periods of time, that it does justify working a side job in your twenties if that’s what it takes for you to be able to start investing early on.”