2. Add an Extended Controls widget to your home screen (look for the widget called "Extended Controls (1x1)"). When you add the widget, the app will automatically prompt you to configure it. In the setup, select "Add new toggle," then select "Hotspot Wi-Fi" and tap the "Apply" button at the bottom of the screen.
(If you want to customize the look of the widget, you can do so by tapping the "Theme" button before selecting "Apply." If you want to put additional toggles on the widget, meanwhile, start with one of the larger Extended Controls widget options -- 1x2, 1x3, or 1x4 -- and set it up as you wish.)
That's it! You can now activate a Wi-Fi hotspot on your phone anytime you want; just tap the new widget on your home screen to toggle the function on or off.
(Note: This setup may not work on all devices. If it doesn't do the trick on your phone, a free app called FoxFi is a good alternative to try. FoxFi doesn't function with Android 4.1, unfortunately, so it's a short-term solution -- and some carriers appear to be taking steps to hide it from users on their networks -- but if you're able to find and download it, it should have you covered for now.)
Android Wi-Fi hotspot: Some perspective and words of warning
How's this little workaround work, you might be wondering? In short, Wi-Fi hotspot functionality is a feature that's built natively into Android; some carriers, like Verizon, modify the software so that it prompts you to pay extra when you try to activate it via the phone's main settings menu. The hotspot functionality itself, however, is still present; this process just activates it directly, circumventing any menu-level modifications.
Speaking of which, you should know that some carriers may not love the idea of you using your phone as a hotspot without subscribing to their special plans. It may even be a violation of the fine print in some 70,000-word usage agreement. Your carrier may scream, cry, issue a nominal fee, or string you up by your toes if they discover you're doing it.
Just between you and me, as long as you don't suddenly start burning through copious amounts of data, the odds of anyone noticing are probably pretty low. People (erm, no one in particular, of course) have been doing this for a long time without any problems. Still, you should read through your carrier's usage agreement and make sure you understand its policies before deciding if you want to proceed. Like with all non-officially-endorsed procedures, this is an adventure you'll have to embark on at your own risk.
Finally, remember that data used with a Wi-Fi hotspot still counts as data used from your plan. In other words, if you havea limited data plan for your phone, keep track of how many bytes you're using; whether it's on your phone or via a hotspot, it all comes out of the same pot -- and you don't want to hit your monthly cap too soon.