So many young professionals are working more than one job, whether it is freelancing, consulting, or even working on starting their own business – maybe the next Instagram or Uber?
In March, CNBC reached out to me because they were writing a story on the top things you should consider when thinking about starting a side gig.
"Make sure the side job, or side hustle, is fairly compensating you for the time you are investing, " said Leach. On the flip side, it isn't all about the money though. If you are gaining "valuable experience that can help you excel in your current career, it is well worth it," he said. – CNBC, “How to make a side job work”
Here is my take on the top three things to consider when taking on a side gig from a financial planner’s perspective:
1) “Time is money” – Your time is worth something so make sure the side job, or side hustle, is fairly compensating you for the time you are investing. Don’t always think of compensation as dollars though. If you are gaining invaluable experience that can help you excel in your current career it is well worth it. Think of it as being paid to be educated!
2) Taxes, taxes, taxes – If your side job involves any sort of upfront investment for materials or equipment talk to your accountant to see if you can deduct it against your earnings. Here is an example – if you are crafty and opened up an Etsy shop for custom greeting cards you design. There is a cost associated with acquiring the materials needed to create your product and there is a cost for the computer/software you use to create your product. Let’s assume this cost is $5,000 for the year and your earnings were $15,000, and your accountant says you can use all of that $5,000 as a business expense well then you only need to pay taxes on $10,000 of earnings!
3) Earmark your earnings – When starting or working a side gig, be sure to earmark the earning to either pay down debt or save towards meeting a certain goal – whether that be a special vacation, a new car, or retirement savings. Spending a significant amount of your time working a full time job and a side job better be helping your financial situation! Logistically, if you are afraid of spending your side job earnings on things other than your goals – you can open up another checking or savings account for your side job earnings.