After losing a job, this 28-year-old is faced with a dilemma: should they focus solely on finding a job or use their investments to fund a side hustle?

Often, when people lose their jobs, financial panic sets in. But in the case of a Reddit user, their situation is different. With about six to eight months of emergency savings, no rent payments and deferred student loans, they described a rare opportunity to think strategically about their next steps.

The 28-year-old said he had two goals in mind: getting a new job to protect his emergency fund and exploring the possibility of starting a side business, presumably funded through a separate investment account, in the meantime that job applications are successful.

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“Everyone talks about ‘making your money work,'” they wrote on November 21.

They also shared that friends suggested they use funds from their portfolio to invest in businesses such as an apartment complex, a laundromat, or a drop-shipping business — ideas that all carry risks.

What’s a seated Redditor to do?

Looking for a job or side hustle?

Deciding whether to focus on a job search or dedicate your funds to a side hustle comes down to finding a balance between security and opportunity.

A new job can provide long-term stability and financial predictability, but it requires patience and perseverance. A side hustle can offer increased long-term cash flow and entrepreneurial potential, but carries risks that could leave you worse off if things don’t go as planned.

Many other Reddit users have warned against starting a new business without a stable income.

“Now is the time to experiment with new businesses and investments when you have a stable job to fall back on,” one person advised.

Learn more: 82% of Americans do not have a savings account that earns more than 10 times the national average

Even for successful side hustles, income is not always substantial. The median U.S. business brings in just $250 a month, according to Ted Rossman, senior industry analyst at Bankrate. This amount is by no means enough to live on, but can help a person get out of debt or save for a major expense.

“It’s become a bit of a stagnant situation,” he told CNBC’s Make It. “I wish more people would move forward, pursue that passion project or maybe save and invest more.”

The author of the Reddit thread didn’t provide any solid numbers on their finances, but they also don’t appear to be in a situation where they need money immediately. At least they now have time to do research into starting a small business, or even learn skills and knowledge that can improve their earning potential.

Importance of an emergency fund

Emergency funds can be a financial lifeline for anyone who suddenly experiences a loss of income. Many experts suggest keeping three to six months of expenses aside. Some recommend saving up to 12 months of expenses.

According to a Fidelity Investments study, lack of emergency savings is a major source of stress for many Americans, with 8 in 10 Fidelity participants saying inflation and the cost of living cause them stress.

“This money will keep you off the streets and hungry,” another Reddit user noted.

Having six to eight months of emergency savings may seem substantial, but there’s really no telling how long a job search will last. Even if you are in a good situation, it is essential to spend your savings wisely in order to maintain long-term financial security.

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This article provides information only and should not be considered advice. It is provided without warranty of any kind.