It seems like everyone is talking about side hustles these days. From freelancing to Uber driving, you probably know someone who's pulling in extra income on the side. Maybe you're even thinking about doing the same.
Most people could benefit from more money in their pockets. But before you commit to a second job or even launching your own side business, make sure you know what you're getting into.
Why start a side hustle?
The reality is, many people feel overwhelmed by debt. Others want to stop living paycheck-to-paycheck. Starting a side hustle can help you get on your feet, stash away extra cash toward your goals and might even turn into a full-time job some day.
As with so much in life, though, a side hustle isn't one-size-fits-all.
Before you get started, here are seven questions to ask yourself:
1. What are my goals?
Any financial decision should start with writing down your goals and priorities. What do you want to accomplish by starting a side hustle?
Maybe you want to pay off student loans faster. Perhaps you just want a little extra spending money. Is it going to be temporary, or are you hoping to turn it into full-time income and become a digital nomad?
Before you start your side hustle, think about what it will help you accomplish and how much you'll need to earn to get there. Your expectations for your side hustle are vital to the direction you take.
2. What are my strengths and skills?
The right side gig for you depends on your skills and abilities. If you are a good writer, you can start a side gig as a freelancer. Craft skills translate well into a side gig selling handmade items on a site such as Etsy. Your love for animals can lead to a pet-sitting side hustle.
Think about what you do well. Perform a skills inventory and identify the things others might be willing to pay for. From an ability to manage social media to your good driving skills, chances are you can offer something valuable to others.
3. How much time can I devote to my side hustle?
Now it's time to get real about the situation. How much time do you have available outside of your day job and other commitments? Figure out how many hours each week you can devote to a side hustle.
One of the easiest ways to do this is by keeping a time diary for a few days. Note how much time you spend on various activities and identify those that result in “wasted” time.
For example, Americans spend almost three hours a day watching TV, according to the American Time Use Survey, put out by the US Department of Labor.
That's a good place to start if you're looking to free up some time.
4. What equipment do I need to get started?
Different side hustles have different requirements. For some, all you need is a reliable internet connection and a computer. For others, you might need to buy supplies, get special insurance or a license or purchase specific software.
Make a list of what you need to start your side gig and estimate costs. Figure out if you have the necessary financial resources. If not, it might be possible to get started with a smaller amount and then expand as your business succeeds.
In some cases, you might need to revise your side hustle idea. Don't be afraid to change direction or tweak your idea if needed.
5. How much money do I want to earn?
Look back at the goals you initially set for your side hustle and realistically estimate how much money you need to earn. Keep in mind that you'll probably start off slow and gain a more consistent income stream over time.
Plenty of people are happy making enough money to help them pay off student loans or save up a little faster. They don't worry about replacing their day jobs with side hustle income.
On the other hand, if you want to make enough to get rid of your day job eventually, you'll need to work toward a different monthly income. Figure out how much money you need to make at your side hustle to make it work (and make it worth it).
6. What's the quitting point?
No one wants to be a quitter, but there are times when it simply makes financial sense to move on. Many successful entrepreneurs have failed at projects in the past. The important thing is to learn from your mistakes and move forward.
Before you start, decide on some realistic benchmarks that can help you figure out if you should continue to pursue your side hustle.
If you aren't making the progress you reasonably expect, it's time to move on. Quitting one side hustle doesn't mean you can't succeed at another.
7. Do I have a good support system?
Finally, ask yourself if you have a good support system. A side hustle can be time-consuming; you need to know that your loved ones are on board. If you have a significant other, he or she needs to be supportive of your efforts.
Don't forget that relationships need nurturing. Your side hustle needs to be balanced with your children, parents, partner, and friends. It's a lot to consider and you need to know that you can count on help in your life to make your side hustle successful.
You also need to know when it's time to stop working on the side gig and spend time with your loved ones. Striking that balance is vital to maintaining your support system.
A side hustle can be a great way to get ahead (and stay ahead) financially. Once you know what you want from it, and know the answers to these questions, you can start accomplishing your goals that much faster.