Is Your Side Hustle Worth It?
A few years ago, the phrase " side hustle " wasn't even in most people's vocabulary, but these days, you hear it everywhere. It seems everyone has had one at some point, whether it was driving for Uber or walking their neighbor's dog. The internet is full of articles touting the most popular side hustles and their benefits. But there's one question few people seem to be asking: Are they actually worth it?
Unfortunately, there isn't a simple yes or no. Not all side gigs are created equal. Plus, you have to think about how much time you can devote to it and whether the gain is worth all of the extra time and effort. Here are a few things to consider before you jump on the side-hustle bandwagon.
How much money will you realistically make?
If you've ever read an article on, say, the "99 best side hustles," you'll know that at least 75% of them pay peanuts and require a lot of work from you. If you're going to invest your time in a side hustle, it's important to make sure it's actually worth the effort.
Think about how much time you can devote to the side hustle and how much work it will take you to get started. Yes, you can make money selling your things online or monetizing your blog. But if you've never done it before, you'll be putting in a lot of effort for potentially not much reward, at least at first.
If you're uncomfortable with that, you're better off going with something a little more traditional that pays an hourly or per-job wage. Think about how much money it will take to make the work feel worthwhile, and then ignore any options that pay less.
How comfortable are you with calculating your own taxes?
Just like the money you earn at your regular job, your side hustle income is taxable. But unlike the income from your regular job, your side hustle income probably won't have taxes withheld automatically, which means you're responsible for paying a portion of that money back to the government come tax time.
That portion may actually be larger than the percentage taken from your pay at your traditional job, because you could also have to pay self-employment taxes for Medicare and Social Security if you're working for yourself. These are 15.3% in 2018 -- and that's on top of your income tax. At your regular job, you and your boss split the cost of the Medicare and Social Security tax, but when you're self-employed, you bear the full burden on your own. In exchange, you get to deduct business expenses from your taxable income.
A side hustle will make your taxes a little more challenging to file, but it's definitely doable as long as you have a strategy and remember to set aside a little bit of that money each month for Uncle Sam.
What are the unexpected expenses?
Many side hustles come with unexpected costs that may eat into your profits. If you're driving for Uber, you're spending a lot more money on gas and putting more wear and tear on your vehicle. If you're selling jewelry online, you have to factor in the cost of materials and any money you have to pay for listings.
And then there are the unintended expenses that don't directly relate to the side hustle. Maybe you start working so much that you no longer have time to cook for yourself, so you start to eat out more. It may only seem like a few dollars here and there, but it adds up over time, and unlike business expenses, you won't be able to deduct these extra costs come tax time.
It's a good idea to periodically stop and evaluate the amount of money you're putting into your side hustle to ensure that it's still worth what you're getting out of it.
How to make your side hustle a success
If you want to make sure your side hustle is worthwhile, it helps to choose the right one. You should look for something that plays to your strengths. For example, if you're artistic, you may want to try selling your artwork. If you're good with people, go with something that gives you a chance to interact with the public.
Before you jump into it, do some research to learn about any potential challenges or pitfalls of the side hustle. Consider reaching out to others, either in person or online, who are doing the same thing. This can be a great way to avoid problems and network with people who may be able to connect you to other clients.
Once you get started, work on building up your social presence by spreading the word to friends and family. You may also want to consider building a website or advertising your services on your social media profiles. This can help bring in new business opportunities and connections that can help your side hustle grow.
Side hustle alternatives
Side hustles aren't a great fit for everyone. If after doing the math you decide they're not right for you, there are still ways to ease the strain on your wallet.
If you were looking to side hustles to help you cover the bills each month, you might want to think about coming up with a budget and cutting back on unnecessary spending. If you're paid hourly, you can also think about taking on some extra hours at your regular job. That way, you're earning a consistent wage, and you won't have to worry about setting aside money for taxes.
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