Written by Cait Flanders
Monday, January 9th, 2017
If you read a lot of personal finance blogs, you're probably no stranger to the term "side hustle."
A side hustle is the work you do on top of your full-time job, in order to make extra money. And typically, you'll read that the work many people do for their side hustle is whatever they're really passionate about.
I started my own side hustle back in 2011, when I got my first freelance writing job. At the time, I was working in the public sector and desperately wanted to get more writing experience. So I worked all day, then spent my evenings and weekends writing blog posts and newsletters for clients.
Eventually, my side hustle helped me land a full-time managing editor job at a startup. And because I continued writing on the side, I even got to a point where I could quit that job and become a full-time freelancer. It was about the writing — not the money — but it didn't take long for me to see all the potential for what I could do with the extra income.
If you're thinking about starting a side hustle this year, here are some priorities you might want to assign for your extra income:
1. Set some aside for taxes
I know, I didn't start this list off with something fun — but I would be a bad personal finance blogger if I didn't mention this first! When you earn money on the side of a day job, the one thing you need to remember is that you'll have to pay tax on it at tax time. A good rule of thumb is to set aside 30%. And even if that hurts at first, remember that the point of earning extra money is to give you some more freedom. Being hit with a huge tax bill that you can't afford to pay won't really feel like freedom.
2. Pay down your debt
Now, if you're currently trying to pay off any outstanding debts, the money you earn from your side hustle could help you reach your goal that much sooner. The first few thousand dollars I made freelancing all went towards debt repayment, which helped me shave months off the time I thought it would take for me to be debt-free.
3. Save for your next goal
The next best thing side hustle income can help you do is save for and reach your financial goals sooner. It could go towards something small like a vacation, or something more long-term, like saving for a home or retirement. Personally, I used my side hustle income to save up an emergency fund that helped give me the confidence to quit my job and become a full-time freelancer.
4. Reinvest in your business
Aside from your personal finances, another thing you might consider doing with some of the extra money you earn is investing it back into your business. That could mean buying software or hardware that could upgrade your processes, taking a course that could help you level up a skill, or even hiring someone to help you.
5. Don't forget to have some fun!
Finally, when you're working this much — and working towards so many different goals — it's important to avoid burnout. Life is still meant to be lived, and you're allowed to have some fun! You could give yourself an allowance to go on a weekly date, save for something special you want to buy, or book a vacation. How you manage your extra money is personal. But again, remember that the point of a side hustle is to get some freedom, so enjoy it when you can!