Finance Friday: 8 Reasons the Side Hustle Might Not Be for You
It seems like everybody has a side hustle these days. In addition to a regular job, they're making money doing freelance work, or knitting sweaters, or walking dogs. And you are so ready for a boost in your budget. But is a side hustle right for everyone?
A side hustle, no matter how small, is a business. Are you ready to run a business?
You might be, and it could be a great way to save money for a down payment, a trip, a renovation on your house, or just about anything. But before you lean in, ask yourself these questions.
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Will your side hustle affect your relationships with family, friends, and co-workers in a negative way?
No matter what people say, there are a lot of us who hate being approached to buy something or pay for a service from a friend. It's hard to say no, no matter how low pressure you think you are.
Make sure that your side hustle, whether it's dog walking, product sales, or sculpting, won't depend entirely on people you already know.
Sure, some of your friends will be glad to sign up for a few personal training sessions, and at least one of your co-workers may be thrilled to have you knit a baby blanket for his new godchild, but you should make sure you have the ability to sell your service or product to people outside of your personal network.
Is it a labor of love?
Will you have trouble charging people for your work?
Let's say you make beautiful cakes. If a young couple comes to you and can't afford your fee, will you cave and lower it because they're so sweet and you just want them to have the best possible product for their wedding day?
Can you afford to fail?
No matter what your side hustle is, you'll probably have to spend something to get started, whether it's money for supplies, or time to get it off the ground.
If you start the business and it doesn't work out, can you afford to lose what you put into it? If not, and it's money, spend a few months saving before you give it a go. If you spend so much time that you miss opportunities to move ahead or make more money at your regular job, you may be doing more harm than good to your financial bottom line.
Are you ready to meet customer demand?
What will you do if you promised to make the floral arrangements for someone's wedding but you wake up with the flu?
"Sorry" just won't cut it.
Do you have a plan of action to meet your deadlines when things go wrong? For some jobs, this means working ahead of deadline. For others, like flower arranging, dog walking, or babysitting, this means having some back-up folks ready at hand who can help if need be.
Is your side hustle allowed where you live?
Check to see what kind of licenses you might need, including a business license or professional certification. You'll also need insurance in case something goes wrong.
In a lot of areas, there are rules about conducting business out of your home. Make sure your side hustle doesn't break those rules. Your neighbors who thought your yoga habit was super cool might not like it as much when there are ten cars parked on the street for the class you're teaching in the garage.
Will income from your side hustle bump you into the next tax bracket?
If so, the potential earnings might end up being less than you think.
Speaking of taxes, make sure you've crossed all the Ts and dotted all the Is with the IRS. Self-employed income is taxed differently.
Make sure you're paying what you need to pay, because tax penalties are expensive. And audits are a real thing.
Are you being realistic about the time commitment?
You'll be working a lot more, especially if you do well.
Are you ready to take more time away from family and friends? Will you need to outsource, and pay for, some of your unpaid jobs, like house cleaning, cooking, and running your own errands?
Will your side hustle get you fired?
As lucrative as a second job can be, if you end up taking time off from your day job to do it, you might end up in hot water.
If your side hustle involves doing something you also do as an employee, make sure you don't have any kind of non-compete agreement, written or unwritten, that conflicts with your job. Though your employer may not say it explicitly, it will bother her that you work for her catering company but hustle a few side jobs on your own, using her recipes.
Make sure what you're doing is okay with your employer. Even if it becomes a full-time job, which many people hope it will, you don't want to burn any bridges. Keeping secrets at work, or anywhere else, is exhausting. So don't put yourself in a position where you have to.
Do you have a side hustle? What are your tips to get started? And how can you keep it going?