How a side hustle can help you reach your financial goals
Canada Life - Jul 10, 2023
Is starting a side hustle worth it? There can be personal, professional and financial benefits
Your time and your talent can help get you to financial freedom faster.
What is a side hustle?
A side hustle, a gig, a contract, a passion project or freelancing: any of these terms can be used to describe a side hustle. It’s an income-generating venture that you do outside of your regular 9-to-5 job. It could be a smaller contract for a different employer, or it could be your own project of turning a hobby, such as making jewellery, into a business.
Types of side hustles
Side hustles can be small, short-term agreements or hourly contracts where you’re paid for your services by multiple people or companies. Examples of side hustles include:
- Home renovation work
- Selling art or homemade goods online
- Providing childcare or pet care
- teaching online courses
- Writing or graphic design
- Managing a social media account on behalf of someone else.
The benefits of having a side hustle
You might be asking yourself if starting a side hustle is worth it. There can be personal, professional and financial benefits, depending on how much time and energy you’d like to put into a side venture. You could hone a special talent, which could give you professional experience that might be useful if you’re considering a career change.
How to take advantage of a side hustle
Before starting any new venture, it’s important to review your contract with your primary job to ensure your side hustle won’t run afoul of your current employment. Your side hustle shouldn’t compete with your day job for your time or for your clients.
Consider how much time you’d like to invest in any new project that you take on. You may want to have a weekly limit to how many hours you want to invest. It’s important to protect your time off so you can continue to be creative and energetic.
It’s a good idea to set physical and electronic boundaries between your personal life and your side hustle. You may want to have a dedicated space in your home and use a separate phone or social media account to avoid work from your side hustle creeping into your designated days off.
You may need software, tools or other supplies to begin your side hustle. Always keep receipts so you can track whether your side income pays for the cost of start-up equipment. If your side hustle grows significantly, you’ll need the receipts for tax deductions. Be wary of any outside opportunity that asks for an upfront investment or purchase of items for resale. These are sometimes referred to as “pyramid schemes” or “multi-level marketing schemes” and are best avoided.
You’ll need to declare your side-hustle income on your annual tax return (link: https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-income.html). This may seem daunting, but you’re not alone. I can help answer your questions or help you find expert help.
What you can do with extra income from a side hustle
Pay down debt
Reducing credit card debt, student loans, car payments or mortgage is an excellent way to feel the immediate rewards of a side hustle.
Build an emergency fund
It’s generally recommended that you have three to six months of income easily accessible in case of an emergency, such as an unexpected car or home repair, or to cover living expenses in case of unemployment.
Save up and enjoy
Once you’ve paid off your debt and have a comfortable emergency fund, consider what else you’re saving for. A weekend getaway? A tropical winter vacation? A home down-payment? That kitchen reno that you’ve always wanted? Be sure to set goals ahead of time and prioritize your savings goals.
Invest in a TFSA or RRSP
You may decide to pay your future self by investing the money in a TFSA, an RRSP or another investment vehicle. I can help you choose what works best for you.
Re-invest in side hustle upgrades
Like any business, you may need to make investments in your side hustle to make it more efficient for you to conduct business. Replacement tools, an upgraded laptop, a software subscription or renting space are some examples of how you might use side hustle income.
Give back to your community
If you’ve chosen a side hustle in lieu of volunteering in your local community, you may want to choose a percentage of your income to donate to a special cause that’s meaningful to you.
Contact me today to discuss how your side hustle can help you meet your financial goals.