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What Is Side Hustle

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 8 minute read

According to a 2017 survey conducted by CareerBuilder, 32 percent of all working adults juggle multiple sources of income by working additional jobs, gigs, or businesses on the side.

Oftentimes entrepreneurial in nature, these activities promise, if not always provide, substantial additional money. Common examples of side gigs include dog walking through Rover, babysitting, disc jockeying, driving for DoorDash or Instacart, and blogging.

Workers at lower pay scales often have no choice but to combine various sources of income in order to make ends meet, making them more likely to engage in side jobs.

But many high earners also keep up lucrative side businesses, such as consultancy or moonlighting gigs that put their skills to good use and boost their profile in the professional world.

No matter where you lie on the socioeconomic scale, you probably have friends who are doing genuine work on the side to supplement their income. Can you see yourself fitting in with them?

Should You Launch a Side Business?

That is dependent on a number of factors, the most prominent of which is the urgency with which you require the additional funds and the availability of time and energy to devote to the venture.

There are benefits and drawbacks to having a side hustle that isn’t immediately apparent. Do yourself a favor and think this out well, weighing the benefits and drawbacks, before rushing in headfirst.

Advantages of Starting a Side Job

Earning money on the side can have both obvious and less obvious rewards.

1. It Will Probably Raise Your Income

Surely all of us have room to increase our income. The money you earn from your side gig can be put to good use in a variety of ways, including helping you pay for large one-time expenses like a wedding, honeymoon, home renovation project or housing, funding a vacation, saving for a rainy day, or any number of other worthwhile endeavors.

The value of your new source of money can quickly be eaten away by the hazards of lifestyle inflation.

2. It broadens your income sources and might provide tax advantages.

What’s the point of putting all your financial hopes on a single strategy? A layoff or reduction in hours worked would hurt less if one had other sources of income to fall back on.

Instead of collecting unemployment, you could use the money from your side gig to support yourself while you hunt for new full-time work, or you might double down on your efforts to turn your side gig into your primary source of income.

Meanwhile, if your side gig meets the criteria for self-employment, you may be eligible for standard tax breaks available to sole proprietors, such as the deduction for use of a home office.

3. It might increase your clientele.

If your side hustle is similar to your 9-to-5, building consulting or freelancing contacts outside of work can help you build a client portfolio that is independent of your boss’s whims or connections.

The negative of having a side hustle that is similar to your day job is that it can cause friction and competition with your regular work.

4. It might improve your professional standing.

Your professional standing, job chances, and edge over the competition in your field may all improve as your client base expands owing to your side work.

Having a supplementary side gig might help establish the groundwork and give you the confidence you need to one day strike out on your own if you have aspirations beyond your current day job, such as starting your own business.

5. It Might Assist You Develop or Sharpen Professional Skills

It’s possible to be content with your current job while also yearning for more responsibility. If you want to advance in your career but aren’t getting the chance to take on more responsibility at your day job, picking up extra work on the side can help you learn and hone the skills necessary to do so.

If any of those positive things happen, you may find that you no longer need the side work in order to achieve your financial goals or have a satisfying profession.

6. It Might Aid You in Developing or Improving Skills Unrelated to Your Current Job

Maybe you’re just killing time before making a big move like a job or career shift. Or perhaps you just enjoy learning new things, even if they have no immediate practical application for you.

No matter what the future holds, having a side hustle may be a great way to learn new skills, express your creativity, and get some much-needed perspective on life.

7. It might encourage you to take on new interests and challenges.

It cannot be overstated how many people who work full-time do not feel satisfied or happy in their jobs. It’s crucial to follow your passions, even if they don’t directly contribute to your current financial situation, so long as they don’t get in the way of other, more pressing professional or personal commitments.

It’s not necessary for your challenge to pay off in the long run. Numerous lawyers, for instance, gladly take on pro bono cases in their spare time.

8. It Might Become a Full-Time Business

A lot of people who make money on the side also want to start their own proper businesses. In doing so, they seek to set the stage for future development. Why not incubate your new company idea in your spare time instead of trying to quit your day job and devote yourself to it full-time right away if you can’t afford to?

If you decide the side gig isn’t for you or if you need more time to build it into a business that can replace your 9–5, you still have your day job to return to.

Disadvantages of Beginning a Side Business

Starting a side hustle isn’t risk-free, especially not when it conflicts directly with your day job or exposes you to professional or personal risk. Weigh these potential downsides carefully before committing to a new gig, however lucrative or professionally rewarding it seems to be.

1. Your full-time job can be in competition with it.

The potential for direct competition with your regular job is a major drawback to being your own boss on the side.

For instance, if your employment agreement contains noncompete language that forbids you to solicit your employer’s clients outside of your official capacity or engage in any consulting work inside your employer’s business, you would be prohibited from doing either. 

The connection with your employer could be damaged if you did this. The idea of competition can be interpreted in a number of ways, so if you have any outside work that could put you in a position of conflict with your employer, it’s better to be up and honest about it.

2. Your full-time work quality might be impacted by it.

A detrimental impact on your performance at work is possible even if your side gig has nothing to do with your main job. If your employer finds out about your second job, you could lose your job or at the very least your performance bonus, both of which would be devastating to your money and career.

3. Your career trajectory could be negatively impacted by it.

It’s possible that your side gig will negatively impact your career in more subtle ways, and that you won’t even notice it happening until it’s too late.

If, for instance, your employer stops viewing you as a high performer at your day job because of your dedication to your side gig, you may miss out on promotions, increases, and other chances to advance in your career.

As a result, consulting, a frequent post-retirement job for accomplished professionals may become a less lucrative option for you and your career as a whole.

4. It might not be as profitable as you think or anticipate.

Most part-time occupations don’t have the stability of a regular paycheck, and the potential benefits of a side hustle can be much smaller than those of regular employment.

For a job that requires driving around and picking up clients, you’ll need to include the cost of gas, oil changes, repairs, and wear and tear when estimating your take-home pay.

These activities certainly have the potential to generate a profit, but you should always calculate your potential earnings after deducting all operating costs.

5. It Might Consume Your Free Time

How committed are you to your part-time job? Truthfully, you may not be able to answer every if your daily work is extremely taxing on your body or spirit and you have a long list of responsibilities waiting for you when you get home each day.

It is perfectly OK for you to take advantage of your downtime by relaxing, recharging, and spending quality time with loved ones.

6. Your personal relationships or family life can be impacted.

You shouldn’t feel pressured to take on too much by saying “I can do it all” when it comes to your career and personal life. At least, not if you consider the people who owe you favors outside of work to be of any importance.

If the benefits of your side gig outweigh the potential strain on your personal relationships or home life, it may be a good idea to have a sit-down with your significant other and anyone else who would benefit from knowing about your side hustle to discuss setting boundaries, defining roles, and trying to make some proactive compromises to help you manage your time between your side gig and your other responsibilities.

7. Your Physical or Mental Health May Be Affected

Even if the work itself isn’t dangerous—for example, driving for a ride-hailing app after bars close or moonlighting in an emergency room—your side hustle could badly affect your mental or physical health in ways you don’t anticipate.

In my own experience, this is true. I used to spend my off-hours and weekends trying to launch my writing career while working fifty to sixty hours a week at a restaurant.

Reflux, which I had never experienced before and haven’t encountered since getting enough sleep (I averaged four hours per night if that) and maintaining a stable diet.

For the most part, I was young and healthy, and my work schedule was intense, but I wouldn’t want to go back to that time.

8. It might not provide the same level of legal or financial security as traditional employment.

There may be a lack of legal and financial safeguards associated with your side gig if it entails self-employment or participation in the gig economy rather than part-time wage employment, such as unemployment benefits, workers’ compensation payments, and freedom from certain types of workplace discrimination.

You shouldn’t expect your side gig to provide benefits anytime soon despite ongoing federal and state initiatives to increase protections for gig economy workers.

Bottom Line

Whether or not to start a side business or do freelance work in addition to your day job is probably not going to be one of the most difficult decisions you’ll ever have to make.

Whether or not you should pursue a side hustle will likely become clear once you weigh the benefits and drawbacks of doing so and figure out the best way to apply your skills and interests to the endeavor.

Actually getting your new side hustle off the ground may be more difficult depending on your plans and the amount of time you have to spend on the business. That’s especially the case if your regular employment keeps you busy for most of your waking hours.

The success of your side business depends on your ability to figure out how to run it alongside your day job, if at all possible.

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