A side hustle can, under the right circumstances, help you put your financial house in order. Taking on a gig-based second job gives you flexibility, extra money, and a responsible way to fill some free time.
In theory, that extra cash can help pay off debt, build an emergency fund, or save for a major expense. Side hustles, however, don't always work in the way you think they will, so it's important to consider these three traps before you decide to take one on.
1. Expenses eat your profits
Some side hustles involve using your vehicle. You might be considering working for a ride-share platform or making deliveries for one of the many companies operating in that space that use gig workers.
When you consider your income from those jobs, it's important to look at the full picture in order to know your hourly rate. That means you need to consider how much you spend in gas and added maintenance, and whether your insurance went up. You also have to factor in any downtime and whether that's a sunk cost or you can fill it profitably (maybe you're waiting between deliveries but can study for an upcoming test).
In some cases, the numbers don't work out and expenses make the side hustle much less lucrative than it seems. Remember, it's not how much you take home, but the full economic reality that matters.
2. You're slacking on your main gig
Your side hustle might be paying off, but if it's keeping you from doing a good job at your normal place of work, then it's probably a bad idea. You don't want to get fired from your main gig or get passed over for special projects or a promotion because you show up tired or keep leaving early.
One major factor in deciding on taking a side gig is whether you actually have the bandwidth to pull it off. If you don't, you're better off passing and finding something that fits the amount of time you have to give.
3. You don't use the money as planned
If you're going to work two jobs, you want to benefit from that in a tangible way. It's OK to spend some of your side hustle cash frivolously, but make sure you stay focused on any goals you set. You probably don't want to work multiple jobs forever, so have a plan for where the money should go and at least mostly stick to it.
Stay on target
A side hustle can be a back door into a new field. It can help you make a career switch or give you the cash you need to solve financial problems (or to take that trip you always dreamed of).
No matter what the reason for your side hustle is, keep your goals in mind. It's easy to be seduced by extra money, but working multiple jobs takes a toll on your body and your relationships. Keep your eyes on the prize and work toward making sure that taking on a second gig actually makes your life better in the long term.