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A side hustle budget? What is the point?
Isn’t a side hustle to be just about brining in money?
Side hustles can be a really great thing. But sometimes it is easy to spend more than you actually make on your side hustle without even knowing it! Because most side hustles stem from a hobby that you love and grow into a business, it can be hard to start with a side hustle budget. Most people wouldn’t decide to be a photographer without already having some skills and the camera.
Because of this, there is an awkward transition between a hobby and a business. But if you are bringing in any money or doing any marketing for it… You have a business.
The biggest difference between a business and a hobby is that a hobby costs you money.. and a business makes you money. So which one do you want?
Here are the 6 reasons you need a side hustle budget
1) Prevent you from over investing
If you have a product based side hustle like an Etsy shop or a direct sales business, you know how easy it is to keep reinvesting into your business. You want to keep buying all of the new things without having brought in a single dollar.
It is really easy to get excited about a new business and spend too much upfront or to get wrapped up in the next new project! It can also be extremely overwhelming to invest a ton in your side hustle and then struggle to make your first sale. Starting small is absolutely the best way to create a solid business.
Of course, MOST businesses are going to require a little bit up front to get started. I would question any business that you can start completely for free. But having a side hustle budget can give you a realistic expectation of what to invest and what income is coming in.
Messy action is far better than perfect inaction.
2. Prepare for taxes
Whether it is just a hobby hustle or your full time gig, it is better to be over prepared for taxes and have more left over than to scramble to come up with the money owed!
15%-40% of your income should be set aside for taxes depending on your own situation. Talk to your personal CPA to see what they suggest! This is NOT tax advice by any means, but your business is going to struggle if you are not prepared for tax time next year.
I always tell people that it is better to set aside too much for taxes and not need it than to not set any aside and have to scramble to find it. If you do end up saving too much, after you finish your taxes, take the leftover and upgrade something in your business or even just give yourself a yearly bonus!
3. Save for future expenses
Your photography business is one accident away from being out of business if you don’t have a back up plan for your camera and laptop. Your product business is one crashed laptop away from not being able to operate. Setting a side a chunk of each sale to prepare for these upgrades is a great way of avoiding that stressful emergency. It can also relieve a ton of pressure to come up with all of the money at one time.
It also doesn’t have to be an emergency that you need to be prepared for making upgrades. Maybe you just really want a new toy (laptop, lens, phone, printer) for your business. You work your butt off and your business should be the one paying for these upgrades!
If you are prepared for emergencies, then they are just an inconvenience.
4. Slow Months
If you are a full time entrepreneur, there are going to be slower months. Having a mini business emergency fund is a great way to cover your own expenses when income is lower! This also is available to cover those monthly recurring business expenses.
It could also help you be prepared so you can ACTUALLY take a vacation. Just because you’re an entrepreneur, doesn’t mean that you are required to work 24/7. You decided to be an entrepreneur for your freedom and having a side hustle budget allows you to set clear boundaries.
Having a business emergency fund allows you to save for these dips in income.
5. Including YOUR pay in your side hustle budget
This will always be the most important to me! You start a business/side hustle to make extra money, but the statistics say that MOST entrepreneurs put off paying themselves or severely underpay what they are worth.
Think about it. If you were to hire someone to take over your position in your business.. how much would you pay them? How does that compare to how much you pay yourself?
While most entrepreneurs want to go into business for the big bucks, they often don’t have the money to pay themselves what they are actually worth. This isn’t always an income problem.
Having a side hustle budget allows you to pay yourself more and more often.
6. Keep them from being a sore spot in your relationships.
If you are spending all of your free time working on your side hustle and putting money into it, but your partner never sees a dime on the personal side, it can be hard. Tension and resentment can start building towards your side hustle.
I know what this is like. Your partner constantly sees you working. They constantly see you spending money on your business. But do they see the rewards of your business?
I am not talking about lavish vacations and extravagant purchases. Even the simple, “this date night was paid for by my side hustle” is HUGE for relationship tension. It doesn’t have to be a big thing, but when they see the reward on the other side of your work, it can mean they are more supportive and more willing to cheer on your big goals.
Setting a goal of paying for specific things out of your business income can be huge for the relationships around you.
Which one is YOUR reason for needing a side hustle budget?
Having a super simple money plan or side hustle budget for your business is absolutely the best way to make sure that it works for you instead of you working for it!
Do you feel like you are ready to take the steps to growing your hobby into a business?
I have a whole page of business budget resources to help set you up for success.
OR you can just jump into the Savvy Business Workbook, which is designed to take you step by step through the financial side of your business. For just $11, you can get your business finances rocking!
