Considering a Side Hustle? 5 Tips to Decide If You Should Hop on The Trend - The Genius Wallet

Considering a Side Hustle? 5 Tips to Decide If You Should Hop on The Trend

Cassandra Ortega
Cassandra Ortega
June 26, 2023
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Considering a Side Hustle? 5 Tips to Decide If You Should Hop on The Trend

In today’s fast-paced and dynamic world, many individuals are seeking alternative sources of income to supplement their primary jobs or explore their passions. Side hustles have emerged as a popular means to achieve these goals. 

In this article, we will provide an overview of side hustles, discuss their history and recent statistics, explore popular types of side hustles, analyze their advantages and disadvantages, shed light on tax and legal implications, and help you determine if pursuing a side hustle is the right choice for you.

Understanding Side Hustles

Side hustles refer to additional income streams pursued alongside a full-time job or other commitments. They are typically flexible, allowing individuals to explore their interests, leverage their skills, and generate extra income. 

Side hustles can be almost anything: freelance work, online businesses and creative endeavors, to consulting services and various gig economy opportunities. The concept of side hustles is not new. Throughout history, people have engaged in various entrepreneurial ventures to secure additional income or fulfill their creative pursuits.

However, with the rise of digital platforms and technological advancements, side hustles have become more accessible than ever before. Recent statistics reveal the growing popularity of side hustles. According to a survey conducted by Bankrate, 45% of American adults currently have a side hustle. The rise of the gig economy and the increasing number of freelance opportunities have contributed to this trend.

  1. Freelancing: Providing services such as writing, graphic design, programming, or virtual assistance on a project-by-project basis.
  2. E-commerce: Running an online store, dropshipping, or selling products through platforms like Etsy or Amazon.
  3. Blogging and Content Creation: Creating and monetizing a blog, YouTube channel, or podcast.
  4. Consulting and Coaching: Sharing expertise in areas like finance, marketing, career development, or personal growth.
  5. Rental Properties: Generating passive income by renting out properties or rooms through platforms like Airbnb.
  6. Arts and Crafts: Selling handmade goods, artwork, or crafts online or at local markets.
  7. App Development: Creating and marketing mobile applications.
  8. Ride-Sharing and Delivery Services: Working as a driver for platforms like Uber, Lyft, or delivering food through services like DoorDash or Postmates.

How to Decide if a Side Hustle Is Right for You

Evaluate Your Motivations

Before delving into a side hustle, take the time to reflect on your motivations. Understanding why you want to pursue a side hustle will help you set realistic expectations and align your efforts with your goals. 

Ask yourself the following questions:

  • Do I want to supplement my primary income or create a new source of income altogether?
  • Am I seeking personal fulfillment or professional growth?
  • Do I have a specific financial goal in mind, such as paying off debt, saving for a major purchase, or building an emergency fund?
  • Is there a passion or interest I want to explore further?
  • Is my ultimate goal to quit my job and pursue my side hustle full-time?

For many people, earning extra income is one of their reasons for starting a side hustle. But how much can you earn? 

According to a survey conducted by Bankrate, the average monthly income from a side hustle in the United States is around $686. However, it’s important to note that this figure can vary significantly depending on various factors such as the type of side hustle, the amount of time invested, and individual skill levels.

The same survey also revealed that 25% of side hustlers earn over $1,000 per month, while 10% generate $2,000 or more. These high-earning side hustles often involve specialized skills or entrepreneurial ventures that command higher rates.

By clarifying your motivations, you can better evaluate if a side hustle is the right path to achieve your desired outcomes.

Assess Your Readiness

Embarking on a side hustle requires commitment and dedication. Consider the following factors to assess your readiness:

  • Time Commitment: Evaluate your current work and personal schedules and determine how much time you can realistically allocate to a side hustle. Are you willing to devote evenings, weekends, or spare hours to your venture?
  • Energy and Work-Life Balance: Assess your energy levels and ensure that taking on a side hustle won’t lead to burnout or neglect of your personal life.
  • Risk Tolerance: Understand that starting a side hustle involves inherent risks. Are you comfortable with the uncertainty and potential challenges that may arise along the way?

Being honest about your readiness will help you make an informed decision and set realistic expectations.

Consider Your Skills and Resources

Assess your existing skills, knowledge, and resources that can be leveraged for a side hustle. Consider the following:

  • Transferable Skills: Identify skills from your primary job or previous experiences that can be applied to a side hustle. For example, if you have marketing expertise, you might consider consulting or freelance marketing services.
  • Personal Interests: Reflect on your passions and interests. Is there a particular field, or activity you enjoy that can be monetized as a side hustle?
  • Resources: Determine the resources you have available, such as access to a computer, specialized equipment, or a network of potential clients or customers.

Explore Side Hustle Options

Research and explore different side hustle options to find the right fit for you. Consider the following:

  • Market Demand: Investigate which side hustles are in demand and have the potential to generate a sustainable income.
  • Personal Interests: Choose a side hustle that aligns with your interests and passions to maintain motivation and enjoyment.
  • Skills and Learning Opportunities: Select a side hustle that allows you to leverage your existing skills while offering opportunities for growth and learning.
  • Flexibility: Assess the level of flexibility offered by various side hustle options. Determine if it aligns with your lifestyle and existing commitments.

Start Small and Test the Waters

Before fully committing to a side hustle, consider starting small and testing the waters. This approach allows you to assess the viability and feasibility of your chosen side hustle before investing significant time and resources. 

Start by offering your services or products to a limited audience or taking on a few clients. This initial phase will provide valuable insights into market demand, customer preferences, and the scalability of your side hustle.

Pros and Cons of of Pursuing a Side Hustle

Pros

  1. Additional Income: Side hustles can provide financial stability, allowing you to save, invest, or pay off debt faster.
  2. Skill Development: Exploring a side hustle can help you develop new skills or enhance existing ones, contributing to personal and professional growth.
  3. Pursuing Passions: Side hustles provide an opportunity to pursue hobbies or interests that may not be feasible in your primary job.
  4. Flexibility: You have control over when and how you work, allowing for a better work-life balance.
  5. Networking Opportunities: Engaging in a side hustle exposes you to a broader network of professionals and potential collaborators.
  6. Diversification: Relying solely on a single source of income can be risky. A side hustle offers diversification and reduces dependence on one income stream.

Cons

  1. Time Commitment: Side hustles require additional time and effort, which may affect your work-life balance and personal commitments.
  2. Uncertainty and Risk: Side hustles can be unpredictable, with fluctuating income and potential business risks.
  3. Stress and Burnout: Juggling multiple responsibilities can lead to increased stress levels and potential burnout if not managed effectively.
  4. Tax and Legal Implications: Side hustles may have tax obligations and legal considerations depending on your location and the nature of your work. Consult with professionals to ensure compliance.
  5. Skill and Education Requirements: Some side hustles may require specific skills, knowledge, or certifications. Assess if you have the necessary qualifications or are willing to invest in acquiring them.
  6. Tax and Legal Implications: The tax and legal implications of side hustles vary depending on factors such as your country of residence, the amount of income generated, and the nature of your work. It is crucial to understand the tax obligations, potential deductions, and any legal considerations associated with your side hustle. Consult with an accountant or tax professional to ensure compliance and avoid any legal issues.