Starting a side hustle is a great way to earn extra money, and potentially fund big dreams like a future business. However, handling the financial side of things can be challenging – and if you’re not careful, mistakes can eat into that cash you’re working so hard to earn. 

Let’s take a look at five common money mistakes side hustlers make, and how to avoid them: 

1. Skipping The Basics

Tracking what money comes in and goes out might seem like an annoying hassle, but doing things without any plan or awareness is always going to be a recipe for disaster. Without knowing what is going on with your money, you could end up making a real financial mess. 

The answer is to become a master at the simple basics. 

Using tools like a straightforward tax calculator can save you from any surprises come tax season. Staying on top of your numbers in general also means you will be better at budgeting and making the most of your earnings. 

2. Forgetting About Tax

Speaking of budgeting and taxes, it’s vital that you understand the rules regarding your side hustle. This will differ depending on where you are in the world, what your country’s tax rules are like, how much you’re earning from your side hustle, and other factors (like whether it could be classed as a hobby). 

With so many factors at play, we can’t give you a simple answer to side hustling and taxes. So our recommendation is for you to do your homework, and if it’s too challenging to keep on top of, speak to a professional – it’s better than getting a hefty fine for getting it wrong. 

3. Mixing Together Personal And Business Finances

Using the same bank account for personal and side hustle money might seem like the easiest way to go, but unfortunately, it can cause issues. Not only does it make it much harder to track your profits, but it makes it really easy to spend your profits instead of saving them. 

All told, you can end up struggling to track and manage your finances. 

Thankfully, the answer to this problem is simple: Set up a separate bank account, and consider connecting that account to a tracking app so you can start to understand the financial overview of your side hustle. It is such a small change to make, but one that can give you so many valuable insights. 

4. Spending All That You Earn

As you make more from your side hustle, you might be tempted to get a little carefree with your spending. Side hustlers earn an average of $891 dollars per month, which could be money you waste on things you’ll forget about within a month or money put back into the business. 

To get the best of both worlds, why not put a certain amount into savings, dedicate some to discretionary spending, and reinvest the rest every month? That way, the money is working for you in multiple ways.

5. Earning & Burning Out

Believe it or not, working tirelessly to earn a lot of money could be a financial mistake. If you are working so hard that you never get any downtime, you could burn yourself out. 

Burnout can be debilitating and could lead to you not only losing out on side hustle money, but potentially failing to show up at your main job. It can completely take a person out. 

With this in mind, it’s financially wise to care for yourself enough that you are well-rested, strong, and able to keep up your main job and side hustle without getting unwell. 

Whichever way you hustle, remember to avoid the mistakes above and be clever with your money. With the right attitude, all your extra effort will pay off in the end!

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