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8 ways your side hustle can be costing you

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If income is tighter than you would like, you might consider taking a side hustle to add money to your bank account. There are many ways to work, from carpooling to consulting and many gigs in between. However, before jumping into anything new, consider the hidden or unexpected costs that may be associated with such a gig. Experts rate eight ways your side hustle can really cost you, so you can be prepared.

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start-up costs

Depending on the type of secondary hustle, most of the time there are initial start-up costs, says Kamyar Shah, Fractional Operations Manager at Kamyar Shah business consulting. “Many incur thousands of dollars in debt, especially if they want to start a service business. Interest rates to pay off these debts are recurring expenses that can hinder the rapid growth of a business.

Tools or equipment

If your scramble requires you to purchase any kind of tools or equipment, ranging from a new computer to inventory of any kind, or even a vehicle, you need to factor in those costs. “Even for the smallest jobs, you can’t live without them,” says Amy Wampler, financial consultant for Spartan Mechanical. “For example, if you’re a photographer, you need a professional camera, lens, tripod, lighting equipment… Even a writer needs a laptop. This equipment will cost you money and repair and maintenance costs.

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Trip costs

Cary Hastings, Content Manager at Bonsai, says, “You’ll need to factor in travel costs if you’re not working from home and have clients in your area,” especially if you’re not a remote worker.

Taxes

One thing a lot of people may not think about when side hustle income starts rolling in is the taxes you have to pay on that money. As an employee, your employer deducts taxes from your salary. Alone, you have to make quarterly tax payments on anything over $600 earned in a year, says Logan Allec, CPA and owner of personal finance site Money Done Right. “If you don’t make your quarterly tax payments…you could be subject to an estimated tax penalty from the IRS and possibly your state tax department as well.”

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Create and maintain a website

Even a side hustle may require maintaining an online presence, and depending on whether you have the skills to build your own website, it could cost you money in both web design and web hosting. .

Pay a mentor

If you’re entering a secondary hustle where you have even more to learn, you may need to take a course or find a mentor in that area, says Steffa Mantilla, certified financial education instructor and founder of personal finance website Money Tamer. . “While investing in continuing education is important, it can be easy to fall victim to gurus selling overpriced courses that promise easy riches.”

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Secondary agitation can interfere with your primary work

Allec cautions people with secondary agitation to make sure it doesn’t interfere with your regular work. “I’ve seen a lot of people get so distracted by their side business that only brings in a few extra dollars a month that they stop excelling in their main business, their career,” he says.

Secondary agitations can lead to burnout

According to Sally Stevens, co-founder of FastPeopleSearch, a non-financial cost of a side hustle is that it can contribute to burnout and low levels of productivity in your primary job. “Working extremely hard on your side hustles, which is often the case with most side hustles, plays a key role in increasing burnout,” she says. “People often forget the boundaries of work and rest…Slowly, secondary agitation can end up inhibiting your focus and productivity.”

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Before starting a Side Hustle…

Lauren Kendzierski, adjunct professor of entrepreneurship and innovation at Clark University in Massachusetts, suggests that before starting a side hustle, you ask a few key questions:

  • Could you pay someone to do this task and earn money from it?
  • Can you afford a reasonable hourly rate?
  • What are your expenses?

“Every hustle is plagued with the same challenges of any business. Decide how much you want to receive and work it backwards. Set up and define clear customer policies. And budget your time.

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Last update: October 27, 2021

About the Author

Jordan Rosenfeld is a freelance writer and author of nine books. She holds a BA from Sonoma State University and an MFA from Bennington College. His articles and essays on finance and other topics have appeared in a wide range of publications and clients including The Atlantic, The Billfold, Good Magazine, GoBanking Rates, Daily Worth, Quartz, Medical Economics, The New York Times , Ozy, Paypal, The Washington Post and for many commercial customers. As someone who had to learn a lot of her money lessons the hard way, she enjoys writing about personal finance to empower and educate people on how to make the most of what they have and how to live. a better quality of life.

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