The Truth About Side Hustles

Taking on extra work for extra cash seems like a no-brainer. But some side gigs just aren’t worth it.

Zina Kumok

This is the age of the side gig. With automation eating up jobs, rent prices soaring, and student loan debt plaguing millions, many have started looking to supplement their income. A recent study found that in the past 20 years, the gig economy has increased 27 percent more than traditional jobs. With sharing services like Uber and digital marketplaces like Etsy flourishing, earning an extra buck seems easier than ever. Others still rely on old business models like selling Cutco knives or Mary Kay makeup to earn some dough. I know the allure well, here’s a brief list of my own forays into side hustles: conducting online surveys, selling plasma, selling makeup and clothes online, dog sitting, and, of course, freelance writing.

But just because the side hustle is more popular than ever doesn’t make it a sure thing. Plenty of people fail to realize any kind of significant earnings from their extra job, and the ubiquity of side hustlers has also opened up the market for scams and sketchy “opportunities.” As easy as it is to make some cash, it’s just as easy to waste your time or end up being swindled.

Moonlighting as an Ebay maven, bartender, virtual assistant, or seasonal salesperson can feel like the answer to all your money problems—but there’s often more effort involved than you may realize.

Indianapolis residents Allie and Ryan Stahl recently started boarding dogs at their home through DogVacay, which lets people book dog-walking and pet-sitting services. Allie and her husband have two dogs of their own, and take on canine clients while owners go on overnight trips and vacations.

The Stahls were surprised at how much time the whole process takes. Allie said they meet all the dogs before they agree to board them to determine if they’re a good fit for their current pups. All “meet and greet” time is unpaid, which eats into their hourly price. Some dogs also leave accidents in their home, which adds more clean-up time. After website fees and taxes, they earn about $15 a night.

“I think it’s a good way to earn extra money if you like dogs, aren’t needing to make a ton of extra money, and don’t want to do much,” Allie said. “It’s kind of like the Uber of pet sitting, where if you put in a lot of effort you can make decent money, but casual users won’t be rolling in the dough.”

On the upside, time spent side-hustling is time you aren’t spending your own money. Allie says that because their new job requires them to spend more nights at home than at the bars, the dog-sitting jobs have a more positive effect on their budget than what their net earnings might suggest.

At least, that’s how it should work. But some “easy money” gigs can end up costing you.

Author and blogger Lauren Greutman, who chronicled her debt-free journey in The Recovering Spender, said she was sucked into selling cosmetics for a multi-level marketing company in an effort to earn money on the side.

She spent thousands of dollars trying to become one of the firm’s top sales people. She was dazzled by the possibility of earning enough money to make it a full-time career and initially earned six times what she expected to in one month. Unfortunately, she didn’t realize that was almost impossible to sustain.

“What people don’t understand is that in an MLM, you are the first customer of the company,” she told me earlier this fall. “The company will try to sell to you first and there is so much pressure for you to reach certain milestones so that you get rewards and prizes.”

Most multi-level marketing companies require you to buy a certain amount of the products that you then sell to other people, putting a lot of pressure on you to make up those out-of-pocket costs with sales. Many encourage selling to friends and family first, and hosting regular product parties where you invite anyone you know. For many, making these requests can be awkward and uncomfortable, and quickly leads to burnout.

“To make a good living in an MLM, you need to spend a lot of money and also a lot of time,” Greutman said. “Many of the top consultants are doing it and not making a ton of money.” MLM expert Robert Fitzpatrick has claimed that 99 percent of MLM participants do not make a net profit.

So how does an aspiring hustler evade the pitfalls and build a legitimate source of income? Read ahead for tips and tricks from yours truly, someone who’s been making a steady income on the side for over a decade.

What to Know Before You Start

Starting a side hustle is like starting a new job. Before you can get the ball rolling, you have to know if it’ll be a good fit. Will you like the atmosphere, the work-life balance, the co-workers, the customers? Do your research before jumping in.

  • You’ll owe taxes. You’re required to pay taxes on any income you earn. Your employer automatically pays them for you when you have a traditional job, but self-employed folks have to take care of this themselves. Even if you work for cash, you’re legally required to report your income. Set aside 20-30 percent of that income so you’ll be prepared when the tax man comes.

  • You may have to pay quarterly taxes. You may need to make quarterly estimated tax payments if you expect to pay more than $1,000 in taxes on your side hustle. These payments have specific due dates, and you may face a fine if you pay late or don’t pay enough. Go here to find more information from the IRS on making these payments.

  • Your boss may have a problem with it. Some employers require their workers to sign contracts prohibiting a second job. You may have also signed a no-compete clause in that contract disallowing you to work for competitors. Talk to your supervisor about your side hustle so you don’t risk losing your main form of employment for a few extra bucks a month. I’ve had this chat every time I started freelancing so my bosses would have a heads up.

  • Realize how much time it will take to get running. If you pick up some shifts delivering pizza, for instance, you’ll make money quickly. You’ll soon learn what days are the busiest, how to get the best tips, and what nights are the worst for driving. But other gigs require more effort and can take longer to pay off, though they may yield more money in the long run. For example, driving for Uber requires little to no setup, while starting a home daycare will take much longer.

  • Estimate how much time you’ll spend on customer service. Anyone working with other people also spends time dealing with customer service problems, like hounding clients for invoices and making requested changes to submitted work, among other issues. Make sure you charge enough to cover most of these unpleasant surprises.

  • Remember you have a life. A side hustle is a great idea … if it doesn’t take over your life. After working your regular job, running errands, seeing friends, and caring for family, do you have enough time to start another business? A ride-sharing job could work because you can scale back easily, but a part-time gig in retail isn’t as flexible.

When a Side Hustle is a Good Idea

While it can be frustrating and grueling to build a business, it can also be truly rewarding. Here are some traits of a successful side gig:

  • When you’re an expert. It’s one thing to get a seasonal gig at Target during the holidays, but the most lucrative side hustles often depend on expertise in a particular field. For example, web designers can average around $60 an hour while translators can earn $30 an hour. The more experience you have and the more sought-after your field, the more you’ll earn.

  • When the upfront costs are minimal. They say no risk, no reward, but you can find a side hustle that doesn’t involve buying pricey supplies or tools. Many digital jobs, such as writing content, graphic design, or web development, fall into this category. All you need is a basic website and an email address.

  • When there’s no rigid time requirement. One of the most appealing aspects of side hustles is the flexibility. Being able to work when you want to is perfect for those with fluctuating schedules. However, jobs with set schedules often have the benefit of providing a steadier income.

  • When it relates to your current job. Streamlining the work you do can be an effective and efficient way to ensure success. For example, someone working at a pet store would have an easier time gaining clients as a dog sitter or walker. A personal trainer may be an appealing part-time hire for an athletic shoe or equipment store. But be careful to keep your day job separate from your moonlighting. Don’t steal clients or do personal work on company time.

  • When you have a connection. One of the best ways to get started with a side hustle is by going through it with someone else who already knows the business. For example, an uncle who knows antiques can instruct you on how to spot a real item from a fake.

When a Side Hustle is a Bad Idea

Not every side gig is a great idea. For example, I sold plasma while I was a college student. It was easy money and didn’t require much advance notice. But eventually my iron levels dropped, and I wasn’t eligible anymore. Even though I’d been making $20 a session, my honey pot was now empty.

  • When it’s unsustainable. In college, I often juggled schoolwork along with a demanding gig at the student newspaper. Some weeks I spent 20 to 30 hours at the paper. One semester, I decided to start working as a receptionist on the side. I only had one day off a week, and the receptionist job eventually took its toll. No amount of extra money would have made up for the sleep I lost.

  • When it affects your relationships. There are few things worth sacrificing your relationships for, and more money isn’t one of them. If working a second job leads to problems with your partner, family member, or friend, you may want to reconsider.

  • When it’s not worth your time. Bringing in money just isn’t enough. Unless your side gig is truly a labor of love, you need to weigh your profits against the time it’s taking to make them. It’s a great accomplishment to sell a piece of furniture on Etsy for $100, but not if that coffee table took you 15 hours to refinish. Don’t get discouraged if you’re not making an acceptable rate right away, though—it can take time to grow your business.

  • When it has a limited shelf life. For a while, I sold makeup I no longer used on Reddit. I’d post a description, take high-resolution photos, and describe the condition to interested parties. Once I made a sale, I’d package the item and take it to the post office. I eventually ran out of makeup to sell, thus ending my side hustle. Some side hustles have an expiration date, so have a backup plan if you need to find another way to earn money.

  • When you don’t have a clear reason for doing it. Nick Loper, who runs the Side Hustle Nation blog, recently told me that making extra money isn’t a good enough reason to start a side hustle. You should have a deeper cause that’s driving you. “The secret to motivation is knowing your why,” he said. “And earning extra money probably isn’t strong enough. What will that cash afford you? Why do you want it?”