Starting a side hustle can be a great way to boost your income, improve your skills, and save more money.
A study done by Zapier found that one in three Americans currently have a side hustle. That number is expected to grow this year and beyond. While this kind of opportunity can be great for your finances and life, you want to make sure that you’re prepared. Doing your research and knowing what to expect can help you avoid frustrating hurdles along the way.
Do you want to begin a side hustle? Here are some mistakes to avoid when starting out.
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1. Choosing a side hustle that requires a big financial investment
Some side hustles require no financial investment or almost no money to start. These opportunities can provide a great way to bring in extra funds without having to spend a lot upfront.
Unfortunately, some people don’t do research and choose opportunities that require a significant financial investment. This can make the whole process more stressful, and for some, it may result in wasted money if they don’t continue to pursue the side hustle long-term.
2. Ignoring marketing efforts
Many side hustles require you to handle your marketing and sales efforts. If you’re working through a platform, there may be a lot of other people offering the same services as you. That means it’ll be harder to get noticed. You need to consider what marketing and sales strategies you will use to bring in more business. Additionally, you need to allow time in your schedule for marketing efforts. If you ignore marketing completely, you may struggle to get business, or your extra income may not amount to much.
3. Charging too little
You may decide to freelance or do consulting work as a side hustle. Doing this can be an excellent way to use your skills and knowledge to bring in extra income. But you should consider your level of experience and charge accordingly. If you charge too little, it can be challenging to bring in enough extra money, and you may end up feeling burnt out too quickly. Charge enough to make your time worthwhile. If anyone has a problem with your higher rates, remind them that they get what they pay for, and they’re paying you for your expertise.
4. Overworking yourself
Some people struggle with managing their time when they have a side hustle. They may get too excited about the prospect of an extra work opportunity and overbook themselves. It’s important to give yourself plenty of time for your regular work commitments, family and friend responsibilities, and enough time to rest.
5. Choosing a side hustle that you don’t love
You want to choose a side hustle that you enjoy. Otherwise, it will become a chore, and you won’t want to devote your time or energy to it. Consider your passions and interests and see if you can find a side hustle that brings you joy. If you don’t, you may give up quickly and not reach your personal finance goals.
6. Never starting
You may find that you’re overwhelmed by the idea of actually starting a side hustle or freelance business, or you may have so many ideas that you don’t know where to begin. If you continue to let that feeling of being overwhelmed stop you from starting, you may never make your goal a reality. While you do need to research and develop a solid plan, you don’t have to be perfect to get started. Start somewhere — starting small is fine!
Increasing your income can be rewarding. But you should consider what you’re doing with the money that you make. If you spend all of the extra money that you bring in without starting an emergency fund, saving for a future vacation, or spending some of that money on necessary expenses, that may not be the smartest idea. Think about where your extra money is going so that it can better your life.
8. Not considering taxes
Many side hustles and side gigs result in a 1099 contractor experience. That means that taxes aren’t automatically deducted from the money that you earn. If you don’t set aside enough taxes throughout the year and don’t pay quarterly self-employment taxes, it could result in a big, surprise tax bill in April. Ensure that you understand the tax rules before getting started and set aside the appropriate funds for your taxes.
9. Giving up early
You may get frustrated on your side hustle journey and give up too quickly. Most side hustles require a bit of time to get into the flow and to truly test out before you can decide if it’s the right fit for you. If you give up early, you may end up missing out on a great opportunity. Give it some time and remind yourself that it’s a learning experience.
A side hustle can provide a fantastic opportunity for you to pay off debt, save extra money, and try something new. But you want to research, plan, and choose a side hustle that makes the most sense for you and your goals. If you need help with money matters before starting your side hustle, check out our personal finance resources.