Never heard of a side hustle? You probably have and didn’t realize it. A side hustle is the newest term used to describe a way to earn extra money on the side of a full-time career.
Side hustles come in many forms such as driving for ride shares, renting out your in-law suite, running errands for strangers, selling product for a third party, and building a small business from scratch part-time (at first).
Earning some extra money each month to put towards loans or savings goals sounds awesome, but what do you need to consider when starting a side hustle?
Are you going to be the boss or be employed by someone else? It’s important to envision your end-goal, as the balance of required time, resources, and money is different for both scenarios. If flying solo, you make the rules but you also must secure any start-up funds, make necessary professional connections, and create the back-end business structure. If you report to someone else, control is lost, but already-established tools and structure are gained, allowing you to focus strictly on the money-making aspect.
When will your side hustle happen? Some side gigs are more passive than others. Determine the type of side hustle you can manage from a time-standpoint. Before firmly committing yourself to dedicating 2-3 hours each evening to your hustle, consider the following:
- Commute time (work to your side hustle; traffic)
- Transition time (changing clothes; dinner; dog duties)
- Unplanned hiccups (late meetings; computer trouble)
- Missed social time with family, friends, and pets
What? You’ll owe taxes on this money too? Yes. Believe it or not, you owe income taxes on all earned income. Depending on the type of side hustle you pick up, your earnings will be reported differently. For example, you might receive a 1099 vs. a W2. Does this matter? It can. Small business owners have some great retirement savings options available that regular W2 employees aren’t privy to. Be sure to talk to your tax professional regarding your new venture.
If you find the perfect side hustle to complement your lifestyle, the positive financial possibilities are endless.