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Four in 10 Americans have a side hustle, averaging almost $500 extra a month. Find out why making money from your hobby isn’t always as good as it may seem.
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“You could make a fortune if you went into business,” a friend told me recently after I’d made her a birthday cake. I love baking and have made and decorated wedding cakes for several of my closest friends. It isn’t the first time people have floated the idea, but it is something I’d never do.
From dog walking to selling crafts on Etsy or driving an Uber, side hustles are all the rage.
Around 40% of Americans have a side hustle, according to a Herbalife survey conducted by One Poll. Soaring costs of living have been one factor behind the rise in taking on extra jobs. The study showed 48% of the people with side hustles said they are doing it solely to make ends meet.
While the extra money would boost my bank account, the idea of turning my hobby into a side hustle fills me with dread. Here’s why.
1. Hobbies are how I relax
My job involves working a lot with words and computers. In my free time I like to disconnect and use a different part of my brain. For me, that’s crafts such as jewelry making or letting loose in the kitchen. It’s fun. I can play with ideas and be creative. I don’t have to answer to anyone and it doesn’t matter if I make mistakes.
If either of those hobbies were to become a business, they wouldn’t be relaxing any more. For example, let’s say someone paid me to make their wedding cake. According to WeddingWire, on average, couples spend between $300 and $700 on a cake. That’s a lot of money. But making something that plays such an important part in someone’s big day is a huge responsibility and carries a lot of stress. That’s not what I want from my hobby.
Side hustler tips: It’s understandable to try to make money from your hobby on top of a nine-to-five job. If you go that route, don’t discount the stress involved. Burnout will damage your day job and your side job. Build in other ways to de-stress because your emotional well-being is important too.
2. I hate paperwork
Whatever form your side hustle takes, you have to pay taxes on the money you earn. Taxes equal paperwork. It’s probably not something someone who makes a living by writing about personal finance and small businesses should admit, but I am terrible with paperwork. I get so tied up in the urgent matters of the day that the important (yet not immediate) work of recordkeeping often gets pushed to another day.
I also find it hard to chase unpaid invoices. Worse? In the past, I’ve had a nasty habit of undercharging for the work I do. Going back to the wedding cake, I would likely undercharge and overdeliver. Which is great for getting repeat clients, but not great if I want to make money. Sure, these are all things I can address and work on, but it’s also a strong reason to keep my hobbies as hobbies.
Side hustler tips: Make sure you understand what federal and state taxes you’ll need to pay. To be on the safe side, try to set aside about a third of your side hustle earnings so you’ll be ready when tax season comes around.
It is also much easier to manage your paperwork if you have a separate checking account to track your spending. You can also apply for a business credit card, which might let you earn rewards along the way. Both will reduce the hassle involved.
3. It wouldn’t pay me enough
Some side hustlers earn good money. A recent LendingTree survey found that Americans earned an average of $473 a month from their extra jobs. The thing is, baking and crafts would not be that profitable for me.
For example, the materials to make a basic silver pendant that I could maybe sell for $20 might come to around $3. The work could take me five or six hours. More if you factor in the time spent on accounting, marketing, website development and so forth. Optimistically, that would make my time worth less than $3 an hour. I’d have to work an extra 40 hours a week or so to get to that average of $473.
If I were to take on a side hustle, I’d pick something more profitable than my hobbies. Since I already work as a freelancer, a better plan would be to put in some extra hours in my existing work and give my spare time to the things I enjoy. Better still would be to look for things that generate passive income, such as renting out a room or investing in stocks.
Side hustler tips: Make a business plan before you try to monetize your hobby. Think about whether there’s a market for your services, and research reasonable price points. Then map out the costs to see what kind of profit you might make. Don’t discount the time it will take. If you are going to have to work an extra 10 hours a week, make sure you’ll earn the money you need.
Bottom line
There are many good reasons for taking on a side hustle, particularly if you are struggling to make ends meet or want to pay down debt. The idea of making money from something you’re passionate about is certainly appealing. But there are also downsides and profiting from your passion isn’t always as easy as it sounds.
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