How To Know If Starting A Side Hustle Is Right For You
Many of us are feeling the sting of the rising costs of goods and services — otherwise known as inflation — per Forbes. Though the cost of living may be increasing, our paychecks have, for the most part, stayed right where they were. Saving is becoming more important than ever, with heaps of Americans promising themselves they will be better with money for their New Year's resolutions in 2023. While we could all benefit from implementing savings strategies, like opening a high-yield savings account (via HerFirst100K), you may consider getting some extra income with a side hustle.
Even some of the most successful celebrities have side hustles that you likely never knew about. Whether you are wanting to garner more spending money, pad your emergency savings, or fight off the effects of inflation, a side hustle could be the option for you. However, science says that you should only work so many hours a week. That said, before committing time, energy, and resources to a side gig, you should take into consideration these questions.
Why do you want to do a side hustle?
Intentionality is perhaps the most important thing to remember when considering a side hustle. The reasons why you want to start a side hustle will inform your next steps, according to Harvard Business Review. Do you want some extra quick cash? Are you hoping to boost your child's college savings funds? Is retirement the top priority that comes to mind as to why you're looking into having a side gig? Before diving in too deep, identify the reason you feel urged to start a side hustle.
For some wanting "short-term" cash, gig apps like Uber, Doordash, or Instacart could be the side hustle for you, money experts Jannese Torres-Rodriguez told Harvard Business Review. "I feel like everybody's bartender," said Uber driver Chris Lozano (via the Denver Post). "They can talk to me about anything." But if your goal is stability and long-term financial well-being, the job insecurity of a gig app may not be a fit for you, per another Denver Post article detailing Colorado's attempts at labor reform.
Once you have the reason why you want to do a side hustle, let that serve as a guiding light throughout the process of starting your own business.
How much time can you commit to a side gig?
The second most important question is all about time management. How much time do you have available to devote to a side hustle? Depending on the gig you choose, you may be able to spend less time actively working while getting your side job off the ground. No matter what, you don't want to overwhelm yourself and risk getting burnt out before you have even begun.
However much time you plan to spend on your side hustle, ensure that you can depend on yourself to stick to that commitment. "I think an important thing for side hustlers to be prepared for before starting their work is the willingness to be consistent," Dana Bull, a real estate investing side hustle expert, told Real Simple. "In my opinion, the ability to be consistent can help position you for success. It's better to take action — even if it's scrappy, messy, and awkward at first. Just start, keep taking action, and improve."
Another option? Think about what you won't do with your free time, not what you will do. Per Side Hustle School, making a "to-stop-doing list" will allow you to see what tasks are wasting your time. From there, you can "disappear" (or outsource) duties that don't take up much importance.
What are your skills, interests, and talents — and how can you use them to make more money?
Perhaps the best-case scenario for an up-and-coming side hustler is to have a hobby that will be easily marketable and profitable. According to Inc., if you prefer doing your hobby over anything else — like your "real" job — you may have the makings of an entrepreneur. Hobbies that translate well into side hustles are everywhere, and online retailers have made it easier than ever to sell things that you create just for fun. Shopify and Etsy allow you to connect directly with customers who would want to buy your creations.
But artists are not the only ones who can turn their interests into side hustles. Think of the things that you enjoy doing for fun that others hate and offer your services. If you love writing, English, and grammar, consider tutoring high school students for the ACT or SAT (the same goes for math and science). If you are the kind of person who consistently is updating your resume and checking LinkedIn, you could market yourself as a career consultant on top of your day job, reading over and editing resumes for others while guiding them through the job market.
How will you market yourself and your side hustle?
Knowing your unique interests and skills will set you apart from others, and, in turn, make you more marketable. "Develop a niche with flexibility," Brittni Kinney Ratliff, vice president of Influence & Co., advised Vox Magazine. "Try not to be all things to all people." Marketing your side hustle starts with finding that skill that makes you stand out and putting a spotlight on it for others to see.
From there, you will need to consider how this skill helps others. That's why potential clients or customers would be paying you anyway, right? "[M]ost importantly ask yourself 'What problem am I solving and what emotional needs do I satisfy?'" Ratliff said. Once you answer that question, you will have the message you need to share with your audience, according to Harvard Business Review.
Then, post that message on platforms where potential clients will find you. Making a website is a great start, per Coast Capital Savings. Creating a website using templates from companies like Squarespace, Wix, or Shopify will ensure that customers searching the Internet could land on your products or services. Social media — like Instagram, Facebook, and Twitter — are great for getting the word out about your side gig, too. But don't just depend on your personal profiles to get an audience's attention. "You need to have something that lives out there in the [I]nternet that is not just your social media," Ratliff said (via Vox Magazine).
Where will you set up a bank account for your business?
Once your side hustle takes off, you'll face another reality come each April: taxes. You can save time (that can be devoted to more side hustle tasks) by setting up a bank account specifically for your business. According to US Bank, opening a bank account dedicated to your side hustle will make tax season more seamless since you won't have to go through all your personal finances to find the important details of your business' income and deductions.
While your hobby can also be a side hustle, you will need to structure your gig like a business in order to qualify as a small business, per the IRS. The IRS defines a hobby as "an activity not done for profit," so keeping track of your earnings, overhead, and the money you have left over is vital for the success of your company.
Having a bank account for your business could save you lots of headaches if you are ever audited by the IRS. "[I]f you are ever audited by the IRS, you will have a paper trail of business spending in your business checking account," said personal finance expert Andrew Lokenauth (via Real Simple).
With enough time, passion, and organization, you can get a second stream of income through a side hustle. You could be doing what you love while being your own boss (and making some extra cash in the process).