So, before launching yourself into the gig economy, it’s important to think through your options and create a plan that will work for you. To determine a side hustle that will be lucrative and compatible with your lifestyle, ask yourself these three questions below.
How much time do you have to dedicate?
Some side hustles are more time-intensive than others. Setting your availability is a boundary that must be established early on. Without it, you’ll never be able to create consistency. “I think an important thing for side hustlers to be prepared for before starting their work is the willingness to be consistent,” says Dana Bull, a realtor and real estate investing side hustler. “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.” Based on your personal and professional commitments, determine how many hours a day or week you actually have to dedicate to your new gig. If it’s just one hour a day, then something like blogging might work better than driving for a rideshare app. If you have longer stints of availability, then you might find more value in something like personal shopping or working for hire on fiverr.com. If you feel you have no time at all, then consider charging for services you already do for free—babysitting, meal prep, pet- or house-sitting, etc. No matter how much time you do (or don’t have), there is a side hustle out there to fit your schedule. The most important factor, however, is finding a way to consistently engage in your new venture, so that your opportunity to make extra income doesn’t fall by the wayside.
What skills do you already have?
It might seem counterintuitive to think that your side hustle should be easy, but that’s the goal. While many budding entrepreneurs accept “grinding” or “hustle culture,” which entails long hours of arduous work for a long-time before making a lucrative breakthrough, some of the most sustainable side hustles play to your strengths. Think about your existing network of contacts and your current skills. Find a way to use both to unleash a side hustle worth keeping. You’ll know you’re onto something when the time you put in feels invigorating, not stressful. That could be blogging about something you already love to do, offering your vacation photos on stock sites (like Adobe Stock, Shutterstock, and more) that will pay for use, or even teaching friends and neighbors a skill you’ve already mastered. Anyone who thinks they need a long certification or expensive degree to acquire completely new skills is probably gearing up for a total career overhaul. Side hustles should be something you can start today with minimal startup costs.
How soon can you set up a business bank account?
By definition, side hustles assume that you already have money coming in from one source. This means you’ll need to keep these pots of money separate—for tax, budget, and banking purposes. Andrew Lokenauth, personal finance expert and founder of the financial education platform Fluent in Finance, says that a major mistake side hustlers make is using personal bank accounts for their business banking purposes. If you’re a gig worker, you may be inclined to just open a separate personal bank account to collect your side hustle stash but, because you’ll need to pay taxes, it could be useful to establish a simple limited liability company (LLC). Afterward, you will need to apply for an Employer ID number before opening your business checking account. “If you are a business owner, it makes sense to own a separate checking account for your business due to strategic tax planning and tax simplification,” Lokenauth says. The separation makes deducting business expenses much easier. “Additionally, if you are ever audited by the IRS, you will have a paper trail of business spending in your business checking account,” he says. Similarly, he advises creating a budget to track how much money you plan to dedicate to your side hustle. This can be done through a simple spreadsheet or an online application, but Lokenauth says that it is vitally important to set and maintain a budget to know how lucrative your efforts really are. Another crucial factor in staying on top of your side hustle finances, Lokenauth says, is managing debt. “If you borrow money or have a loan or credit card debt for your business, a big mistake is not paying off the debt with the highest interest rates first,” he warns. His suggested method will result in paying less interest over the life of the loans. You might wonder which side hustles would ever require working capital. The reality is that many side hustles have the potential to turn into profitable businesses. Whether your side hustle involves braiding hair on the weekends or washing cars at the nearby parking lot, every gig requires supplies (tools, instruments) and support services (transportation, delivery). Even if you’re starting your side hustle without plans to turn it into a full-fledged business, you never know what kind of success you could have, and it always helps to be organized and financially prepared.
