Earning more is great—but trying to bring in more can end up costing you money if you're not careful.
That’s a mistake people often make when picking a side hustle, warns Alissa Quart, author of “Squeezed” and executive director of the Economic Hardship Reporting Project. To succeed, it helps to go in understanding the time commitment and hidden start-up costs.
“You may wind up at the end of it having learned something and having worked really hard, but not necessarily being in a better place economically than you were when you started,” she says.
Nearly 4 in 10 Americans have a side job, according to a 2018 survey from Bankrate.com. That represents an average $686 in additional income per month, or around $8,000 a year.
Beware of surprising hidden costs that could eat into that potential income. For example, driving for a ride-share might mean spending more frequently on car repairs. You’ll need to buy supplies for that crafting business. And some businesses might merit shelling out for classes or certifications.
“I just would want anybody considering this, having multiple jobs, to recognize that you’re going to have these ‘sinking in’ costs,” Quart warns.
So how can you plan for those bills? While you’re brainstorming potential side hustles, talk to other people in similar lines of work about what they spend money on for their business, what expenses surprised them, and what kind of money they take home after accounting for all those expenses. The Small Business Administration also offers guides and a calculator to help you assess start-up costs for online, brick and mortar, and service businesses.
Do keep track of what you spend pursuing your side hustle. Another hurdle of running a business is figuring out taxes—and many of your expenses could be deductible.
Check out Grow’s video with Quart, above, for more of her tips to avoid common side hustle mistakes.