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How People Lose Money With Their Side Hustle

October 12, 2022 by Susan Paige

A side hustle is an excellent way to bolster a bank account. And in this day and age, it couldn’t be easier to get one underway. However, while there’s plenty of potential to make a fair amount with a side hustle job, it’s also true that it can also cost you money. Some people end up in a worse financial situation than they were in before they got their business underway. Even if it’s not that extreme, many people end up hurting their potential profits by making mistakes. The good news is that if you’re aware of these mistakes, then you can avoid them — and improve your bank balance in the process. In this blog, we’ll run through some of the most common errors, and offer advice on how you can overcome them. 

They Overspend At the Beginning

 

Excitement can sometimes get the best of us. When we’re getting a new venture underway, it’s easy to fall into the trap of spending thousands of dollars, just because we think that we need all the items we purchase. In doing so, we put extra pressure on ourselves — if the business is a failure, then those thousands of dollars are unlikely to come back. Rather than spending cash on top of the line tools, focus on what you’ll be offering the public. 

 

You’ll likely find that you’re more than able to get by with basic tools. If you experience plenty of success, then you can buy the expensive goods. But doing so beforehand is risky. 

 

They Fail to Invest

 

On the other end of the spectrum, there’s also the matter of underspending. It’s wise to avoid spending too much cash on things. But if you’re not spending money on anything, then you can’t be all that surprised if you don’t reach the level of success that you’d like to reach. It’s a good idea to read up on the essentials that you’ll need for your side hustle, and then make sure you’ve got them. If that means spending some money, then so be it! 

 

You should also look at investing once you’ve achieved some success, too. You might have gotten off the mark with limited money, but that doesn’t mean you’ll keep on rising to the top. When the time is right, throw that money in. 

 

They Forget About Taxes 

 

It’s nice to look at a high income figure. But is that figure the true amount that you’ve earned? It’s possible that it’s not. It’s highly likely that you’ll need to pay taxes on your income (a few exceptions exist, but not many), and as a self-employed worker, it’ll be up to you to make sure your taxes are all in order. Be sure to put money aside so you can pay your taxes when they’re due. 

 

…And What They Can Write Off

 

As we’ve just said: there’s no avoiding the fact that you need to pay taxes. Not paying your taxes is bad, and paying more taxes than you need to is also bad! There are plenty of ways to reduce your tax obligations, including expenses. If you’ve invested in your business, then you could have a tax write-off. If you’re not sure what you can include, hire a tax expert. If you don’t, then you could lose money unnecessarily — and for taxes, which is about the most annoying way to lose money!

 

They Have an Incident

 

Everything could be going great with your side hustle. But if you suddenly have an incident, then the wheels could well and truly fall off. If you don’t have adequate insurance, then a single incident could be enough to close your operation for good. So make sure that you’re well-protected by buying an insurance policy that covers against unexpected issues. The type of insurance you’ll need will depend on what you’re doing. If you’re working as a driver, then delivery driver insurance could be appropriate; if you’re giving massages at home, then liability insurance could be the way to go. 

 

They Put All Their Eggs in One Basket

 

You never know what’s going to happen. People who put all their eggs in one basket are more likely to lose money than those who diversify their holdings. It’s a good idea to continue innovating and looking for new opportunities, so you can earn money in multiple ways rather than just one. Who knows, just by keeping your eyes open, you might find that you fall into a side hustle that helps to generate even more money than before. 

 

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