If you want to pay off debt, save (more) money, or build you financial resilience, you have to spend less than you earn. You can do this by cutting your spending, but if the problem lies with the amount of money coming in, you may need to consider ways to bring in more income. A side hustle is a great way to do this.
So let’s take a look at the potential benefits and the drawbacks.
The Benefits of Starting a Side Hustle
- Additional income: The reason most people start side hustles is to supplement their primary income. A side hustle can provide an extra source of money to help you achieve your financial goals.
- Exploring your passions: Side hustles offer an opportunity to pursue passions and interests outside of your main job. Whether it’s crafting, photography, writing, or teaching, a side hustle allows individuals to explore their creative or entrepreneurial aspirations.
- Skill development: Running a side hustle can provide you with hands-on experience that will enhance your professional skills and knowledge.
- Flexibility: Side hustles often offer flexibility in terms of schedule and location. This flexibility can be particularly appealing if you have a busy schedules or a lot of commitments. If you are a student, parent, or if you already work full-time, this may be true for you.
- Networking opportunities: Running a side hustle can expand your professional network and connect you with like-minded individuals in your industry or niche. Networking can lead to new opportunities, partnerships, or collaborations that can benefit both your side hustle and main career.
- Testing business ideas: A side hustle can serve as a testing ground for business ideas or concepts before fully committing to them. It lets you validate your ideas, assess market demand, and refine your business model without significant financial risk.
- Personal fulfillment: Building and growing a side hustle can bring a sense of fulfillment and accomplishment. It can allow you to pursue your ambitions, express your creativity, or make a meaningful impact in your chosen field or community.
Things to consider before you start
While side hustles offer numerous benefits, they are not right for everybody. Here are some factors to consider before starting one:
- What kind of capital do you need? Money is not the only kind of capital. Have you considered that money may not be the one you need more of?For example, time and social capital can make a huge contribution to your happiness. If it’s not money you’re in need of, a side hustle may not make you happier.
- Time constraints
Starting and running a side hustle takes time and commitment. This may be difficult if you already have a busy schedule. Balancing a side hustle with work, family responsibilities, or other commitments can be challenging and may lead to burnout. - Financial risk
There may be financial risks, including upfront costs for equipment, supplies, or marketing. Depending on the side hustle and your situation the potential financial investment and uncertainty could outweigh the potential benefits. - Lack of passion
Pursuing a side hustle solely for financial gain, rather than out of genuine interest or passion, can lead to disengagement and dissatisfaction. Without a genuine passion for the work, staying motivated and overcoming challenges may be more difficult. - Impact on Health and Well-being
Running a side hustle in addition to a full-time job or other commitments can take a toll on your physical and mental health. Long hours, stress, and lack of rest can lead to burnout, fatigue, and overall decreased well-being. - Work-Life Balance
Starting a side hustle can tip the balance between work and personal life in the wrong direction. This can lead to strain on your relationships, hobbies, and self-care. Maintaining a healthy work-life balance is essential for overall well-being. - Legal and Tax Obligations
Starting a side hustle may involve legal and tax obligations, like registering a business, obtaining permits or licenses, and reporting income. Navigating these requirements can be complex and time-consuming, especially if you haven’t started a business before. - Limited Growth Potential
Some side hustles may have limited growth potential or scalability, particularly if they are based on personal services or time-intensive activities. If you can’t scale the business or increase revenue significantly, the long-term viability of that side hustle may be limited. Of course, if you are looking for a temporary way to increase your income, this may not be a concern. - Opportunity Costs
Pursuing a side hustle may mean you miss out on other opportunities, like career advancement, education, or fun and family time. You have to weigh the potential benefits of the side hustle against the opportunities you may miss out on.
Ultimately, whether to start a side hustle depends on your unique circumstances, aspirations, and values. Although side hustles present many advantages, you need weigh your needs( money and otherwise!) against the potential obstacles and drawbacks before diving in.