Are you spending strategically on your side hustle costs? Here’s how to find out.
An FKD Feature exclusive

There’s no business in the world that’s 100 percent pure profit, and your side hustle is no exception. How much your side hustle costs depends entirely on you and your chosen hustle, and it’s to your benefit to know what those costs are — and how to optimize them.

First, what kind of side hustle do you have?

The types of costs you can expect to run your side hustle will vary based on what it is you actually do as part of your hustle. If you design digital wedding invitations, you probably don’t need to lease a car to run your hustle, but if you drive for Uber, that car might be a non-negotiable cost of doing business.

One vital metric to keep track of for your side hustle, no matter what kind it is, is how much you’re committed to spending on a monthly basis. If you’ve got car payments, or software subscriptions, or freelancers you work with on a regular basis who are critical to your side hustle, tally up how much they cost on a monthly basis.

That number is your monthly overhead, and you want to make sure it’s not creeping up and eating more than 20 percent of your side-hustle income each month. If it is, that’s a big chunk of your earnings that aren’t staying in your pocket or in your business.

Second, what kind of things will help you earn more money?

All costs are not created equally.

There are some basic costs of doing business. For example, if you run a website as your side hustle, you’ll need to pay for website hosting, which is a basic cost of doing business.

For that same website, however, you could pay a designer to optimize your site and help you sell more widgets. It might be a high upfront cost, but in the long run, it could also help you make even more money.

It can be tough to evaluate whether a cost of doing business will ultimately help you make more money, but when you’re spending on your side hustle, it’s important to keep in mind. Even something as simple as hiring a cleaning service could, in theory, help you make more side-hustle cash if you spend the time you would have spent cleaning working on client project.

That is, of course, assuming you make more in an hour side hustling than you’re paying your cleaning service. Basic math, you guys.

Third, how much do you cost?

Your time is valuable, which is something I probably don’t have to convince you to believe.

But how valuable is it, exactly?

When you’re looking at your side-hustle costs, you want to keep in mind that the hours you spend on your hustle should be worth something. If you’re pulling in just enough money to cover your costs, but there’s nothing left over for you at the end of the day, that’s a problem.

In that case, you’ve got a hobby, not a side hustle. A side hustle — in an ideal world — will make you at least some money.

Last but not least, how will you keep track?

To figure out any of these really key things — like whether your side-hustle spending is helping you earn more or how much you’re actually earning from it — you need a tracking system in place.

At the very basic level, you could use a simple Excel spreadsheet to record how much money you’re earning, and how much money you’re spending on keeping your side hustle going. If this is your chosen tracking system, you’ll need to keep a close eye on your receipts and make sure they all end up in one place (and yes, a shoe box is acceptable as a filing option). You’ll need all those details when it comes to tax time.

If you’re ready to burn your spreadsheet to the ground in frustration, and you’re pulling in enough side-hustle cash to justify it, it might be time to look at upgrading to accounting software. There are plenty of options out there, such as Xero, Freshbooks and Wave, that will suit different kinds of side hustles.

The one thing that they all have in common is that having all of your financial details in one place will make keeping tabs on your side hustle money situation so much easier — both now and at tax time.

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Header image: Adobe Stock

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Posted 04.04.2017 - 01:39 pm EST