3675: Are Side Hustles Worth It? by Madison Block with Women Who Money on Side Hustles

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[00:00:56] This is Optimal Finance Daily. Are Side Hustles Worth It? By Madison Block with WomenWhoMoney.com. And I'm Justin Malek. Welcome back to the podcast where I read an article to you every day of the year, with permission from the authors. So with that, let's get right into it as we optimize your life. Are Side Hustles Worth It? By Madison Block with WomenWhoMoney.com.

[00:01:26] Whether you want to stop living paycheck to paycheck, stash more money in your emergency fund, or boost your retirement savings, earning extra income is top of mind. You know it will require trading time for money, and you wonder if it's worth it. Everyone seems to have some kind of side hustle, but you're still not sure it's right for you, and questions are swirling in your head. What side gig would be best to pursue?

[00:01:54] Would contract work or getting a part-time job make more sense? And what about side hustles and taxes? Will all the extra money you earn just go to Uncle Sam? Let's take a look at side hustles. Who has them, why they're so popular, and any tax implications they may have. Then you can better decide if it's a good idea for you to take on a side gig to make more money. What is a side hustle?

[00:02:21] A side hustle is any work you do to generate extra income beyond what you earn at your full-time job. Examples of everyday side hustles include driving for Uber or Lyft, making and selling jewelry online, babysitting, and freelancing. How many people have side gigs? Roughly 40% of Americans have side work of some sort, and half of all millennials report having a side hustle.

[00:02:51] It makes sense that millennials are more likely than other generations to have side hustles, given that millennials, in general, have more student loan debt and less financial security than their parents had at the same age. There are several different reasons people might hustle on the side, but for many people, it's a necessity. American Consumer Credit Counseling's recent survey on second incomes

[00:03:15] found that 43% of survey respondents have a side gig just to keep up with their bills they cannot pay with only one job. The survey also found 22% have a side hustle so they can pay off credit cards. 74% of respondents make $0 to $200 a week working their side hustle, while 10% earn $500 or more.

[00:03:42] 71% of respondents list a part-time job as their side gig, while 16% offer freelance services. 12% work a gig economy job, for example, driving for Uber. And 1% sell old items. It's troubling that so many people rely on extra income from side hustles to cover everyday expenses, because income from side work is often irregular.

[00:04:08] So if you're selling crafts online and you have a slow month, your finances could suffer. If you can't pay the rent with the income from your full-time job, and you had a bad month with your side hustle, you may have to resort to using credit cards to get by, digging yourself deeper into debt. How do taxes work if you have a side hustle? If you have a second income from a side hustle, you already know what that means. Taxes.

[00:04:38] How do taxes work for side hustles? It depends on the work you're doing. If your side gig is a part-time job, like waiting tables or bartending, then you'll get a W-2 at tax time. If you're self-employed through your side hustle, it can get a little more complicated. Instead of a W-2, you'll get a 1099, and you also will have to pay quarterly taxes on your self-employment income.

[00:05:04] For these quarterly taxes, you use Form 1040ES. While self-employment taxes may seem complicated at first, you can find plenty of online tools to help, and the more you do them, the easier it will get. Just take your time when doing your self-employment taxes. And if you have friends or family who have side hustles, don't be afraid to ask for help. Chances are they were probably just as confused as you are when they first started.

[00:05:33] Is a side hustle right for you? Before you jump into the side hustle life, there are some things you should consider. First, do you have the time? Side hustles can require a lot of time and energy, and if your full-time job is already demanding, maybe side work isn't for you. It's not worth compromising your physical and mental health if you end up overtired, overworked, and stressed out.

[00:06:02] Alternatively, if you find you have a lot of spare time after work and on weekends, why not do something to make a little extra cash? Fill those hours with a side job you love, and it's a win-win. If you love dogs, start getting paid to walk dogs during your free time. You'll have fun hanging out with some furry new friends and get paid for it. Another thing to consider is your skill set. Do you have skills you don't use at your full-time job

[00:06:31] that could be making you money elsewhere? Maybe you work a full-time job in accounting, but you also know how to make some killer cocktails. You could try bartending in the evenings after work or on weekends. The bottom line is, if you have skills you aren't currently getting paid for, use them to make more money. Ask yourself this important question. Finally, the most critical question to ask yourself before you start hustling is this.

[00:07:01] Why do I want to start a side hustle? If you are like the 43% in American Consumer Credit Counseling survey that need a side hustle to pay the bills, take a step back and look at your whole financial picture first. Remember, income from side hustles is not always regular. So you could be working an extra job and still be unable to cover all your expenses. Are there areas of your budget where you can cut back?

[00:07:30] Once you have corrected any errors in your budget and cut back all the expenses you can, then you can seriously consider a side hustle if you're still coming up short. Try to find a side hustle that's relatively stable. Selling crafts online or occasionally walking other people's dogs is probably not for you. Waiting tables, nannying, or some regular part-time job is probably your best bet. Of course, for some people,

[00:08:00] side hustles are hobbies that happen to make money. If you love knitting sweaters and can make a side business out of it, go for it. Many people don't feel fulfilled by their full-time job and their side hustle is a way of pursuing their passion they can't do at their regular nine to five. Final thoughts on deciding to side hustle. Even though you might not need the extra money to cover your everyday expenses, you should still be responsible with it.

[00:08:29] Put it into your IRA or an emergency fund. Ideally, you should have three to six months worth of expenses in an emergency fund to cover things like unexpected home or car repairs, medical bills, or family emergencies. Now that you've learned about the ins and outs of side hustles, are you ready to start yours? You just listened to the post titled, Are Side Hustles Worth It?

[00:08:59] by Madison Block with womenwhomoney.com. And I'll be right back with my commentary. Support for today's episode comes from Square, the system powering what feels like half the places I go. If you've ever tapped to pay and thought, whoa, that was fast, it was probably Square. Payments, point of sale, inventory, payroll, invoices, all connected in one system. My favorite bagel spot down the street runs on Square, and businesses that use it just feel more put together

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[00:09:55] Right now, you can get up to $200 off Square hardware at square.com slash go slash OFD. That's S-Q-U-A-R-E dot com slash G-O slash O-F-D. Run your business smarter with Square. Get started today. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle

[00:10:24] from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required, compatibility and availability varies 18+. Thank you to Madison. I was surprised to hear that stat that said most people doing side work are only making somewhere between $0 and $200 a week.

[00:10:50] That's not nothing, but it's a lot of hours for not a lot of money. And I don't think we hear that part enough. But I'm glad she asked why you want one in the first place. Because if the answer is just to cover the bills, she makes a great point that the side hustle might not fix the real problem. Sometimes the bigger move is to really look at the budget first before adding a second job on top of an already busy life.

[00:11:19] I'm not here to tell anyone what to do. And for plenty of people, a side hustle is a great fit, especially if it's something you actually enjoy. But I'd just move her question to the front of it all. Not can I make extra money, but why do I want to? And is this the best way to get there? So if a side hustle has been on your mind, maybe start with that question this week and see where it leads. But with that, thank you for being here.

[00:11:48] Have a great rest of your day and I'll see you tomorrow where your optimal life awaits.