Whether playing music gigs on the weekends, running a small YouTube channel, or selling custom artwork on Etsy, pursuing a side hustle helps cultivate new skills. Those skills can help you make a career change down the road.
Having multiple income streams also adds some wiggle room to your budget. Here are some of the top benefits of a side hustle:
Increased Income
A side hustle’s most obvious benefit is the extra money that it brings in. Having an extra source of income can help create some wiggle room in your budget and make it easier to meet savings or retirement goals.
Taking on a side gig can also give you a taste of entrepreneurship, which may help you build your confidence if you’re considering a business. Working for yourself requires learning how to find clients, negotiate work contracts, and manage your time effectively — valuable skills that can apply to any career path.
Save any earnings from your side hustle in a tax-friendly place like an online savings account with competitive APY. And be sure to keep track of your side hustle earnings throughout the year to have a more accurate picture of how much you owe at tax time. If you’re unsure how much to set aside, talk with other entrepreneurs with similar businesses and consult this U.S. Small Business Administration video on estimating start-up costs.
Tax Breaks
If you treat your side hustle like a business, some significant tax breaks come with it. You can write off expenses like a home office, a laptop, software for business use, a smartphone, and internet that you only use for your side gig, as well as any professional development costs.
For those with debt or who want to work toward financial goals, income from a side hustle can be used to pay off credit card bills and build savings. Some people even put their extra cash into a high-interest savings account to help it grow faster.
Beyond the monetary gains, many side hustlers develop skills they can take into their full-time job and life. For example, if someone is working weekends at their local coffee shop, they’ll likely learn customer service skills that will serve them well no matter what their career plans are down the road.
Emergency Fund
The financial benefits of a side hustle are many. For starters, it can provide an emergency fund if your primary source of income is suddenly cut. It can also be an opportunity to learn skills you might use in your career.
If you cook meals on the weekends, your business can teach you how to meet a client’s needs and deliver excellent service. Likewise, working the register at your local bakery can help you hone customer relations.
It’s essential to avoid over-investing in your new venture, though. Putting you in the red may only take one lousy project or a few clients. Plus, investing too much can move you into a higher tax bracket. Having a plan to save for taxes and expenses is critical. It’s helpful to consult with an experienced accountant who understands the ins and outs of small businesses. They can help you identify the best ways to stash your profits for the future.
Personal Growth
One of the most significant benefits of working a side hustle is that it helps you grow. You learn new skills and gain confidence, which can help you be a better person in your everyday life.
Creative people can also find fulfillment from a side hustle by expressing their creativity in productive ways. For example, if you love to cook, you can make extra money by prepping and delivering meals for busy families.
When assessing a potential side hustle, you should weigh earning potential against scheduling flexibility. Some jobs, such as pet sitting or driving for Uber, have good earning potential but don’t offer much flexibility in your schedule. Others, such as baking gluten-free cakes or selling vintage clothing, have great earning potential but require a lot of time commitment. Whatever you choose, set clear goals and prioritize your needs. Then, start putting your earnings in a high-quality savings account like the SoFi Money Market Account to help it grow faster.
