The Pros and Cons of Starting a Side Hustle
Starting a side hustle sounds like it's all sunshine and rainbows on the surface, but things aren't always what they seem. As with anything that has an inherent upside, it must have a downside too, right?
Pros of Starting a Side Hustle
First things first, let's talk about the pros of starting a side hustle. And trust us, there are quite a few...
1. Extra Income
The most obvious advantage of a side hustle is the additional income. It's good to have a little extra cash, especially if you`re saving for something big like a down payment on a home, paying down debt and other expenses, or just to have some extra spending money.
2. Flexibility
A side hustle also provides a level of flexibility that traditional employment cannot provide. When you have free time, in the evening, weekends or on your lunch break at work, you can knock out tasks for your passion project. This is especially helpful if you have a busy schedule or other commitments that prevent you from working a traditional 9-5.
3. Skill Development
Taking up a side hustle can also be a great way to develop new skills. Perhaps you've always had an interested in graphic design but never had the opportunity to pursue it. Starting a side hustle that involves designing logos or creating illustrations for small businesses can give you an opportunity to develop those skills and add them to your resume.
4. Entrepreneurial Experience
If you've ever dreamed of starting your own business one day, you can get a taste of entrepreneurship through your side hustle. You`ll learn how to market yourself, manage your finances, and make tough decisions – all skills that will come in handy if you decide to start a full-time business in the future.
Cons of Starting a Side Hustle
As with anything, there are positives and negatives. Side hustles are no different...
1. Time Committment
Starting a side hustle does require a significant time commitment. You'll have to put in work on your business during the off-hours of your primary income source (your day job). Couple that with other life obligations and it can be exhausting. You'll need to be prepared to sacrifice some leisure time if you want your side hustle to be successful.
2. Financial Risks
There are some financial risks inherant to buidling and running a side hustle. You will typically have to invest some money up front to get your business off the ground (raw materials, marketing, travel expenses, etc.) and there`s is always a risk that you may not get that investment back. You don't have the security of a regular salary like a traditional job so if things don't go your way, you might be left out to dry.
Unless you're thrilled with your day job (and let's be honest, you wouldn't be here if you were), it's much easier to get excited about your side hustle than your daily grind. This can lead to decreased interest in your primary source of income and if you're not careful... that can lead to worse things. If you lose your day job and you're not ready to run on your side hustle full-time, you're in trouble.
3. Legal and Tax Issues
When you start a side hustle, you need to make sure that you comply with all the necessary legal and tax requirements in your area. Depending on the type of business you're starting, this may involve registering your business with the government, obtaining necessary licenses or permits, and filing taxes as a self-employed individual. This process can be tricky to navigate, and if you get it wrong the IRS typically isn't very forgiving.
4. Burnout
Finally, starting a side hustle can lead to mental and emotional burnout if you're not careful. Balancing a full-time job and a side hustle can be extremely challenging, and it`s important to make time for self-care and relaxation.
Key Takeaways
Pros
- Make extra money
- Develop new business skills
- Gain entrepreneurial experience
Cons
- Significant time commitment
- Some financial risk
- Legal and Tax complication
Before starting a side hustle, make sure you've thought through the potential pitfalls and made a plan to manage your time, finances, and legal obligations. And as always, don't forget to take care of yourself!
We can close with one of our favorite Buffett quotes:
"Someone is sitting in the shade today because someone planted a tree a long time ago."
So, if you're willing to put in the work now and plan for the challenges ahead, your side hustle could be the tree that provides shade in the future.