There’s a lot to unpack here, but we will attempt to keep it simple. First up: we previously talked about how much you should spend on rent, which most people cite as 30% of monthly income before taxes. So, it stands to reason that if you want to spend more on rent, and thus potentially get a nicer/closer to amenities place, you need to make more money per month. Still with us? Good.
But making more money per month in a W-2 job, unless you work in a handful of industries with robust incentive programs (or you work in sales), is not easy -- companies don’t willy-nilly give lots of in-month promotions. And if you do work in sales, some months are going to be way better than others.
Into this narrative now walks the “side hustle,” which is becoming increasingly common. About 57 million -- yes, 57 million -- U.S. workers have participated at least a bit in the gig economy. If you want to understand the macro picture of what’s happening here, essentially many mid-size to big companies come to be run by cost-cutters, and consultants also drive a similar narrative (often). All this adds together to create a U.S. ecosystem of more 1099s than we’ve ever had (a 1099 is a contractor, and often the tax code associated with “the gig economy”).
There are a lot of pros and cons to the gig economy, and we won’t belabor or enumerate of all them here. You know something is big when The New Yorker and 60 Minutes, two very old-guard ways of getting news, are covering it.
Bigger point being: the gig economy is one way to get some extra money per month, and that can allow you to spend more on rent and maybe get into something you want more, apartment-wise.
“But I already have a full-time job!”
That’s true, but let’s not ignore the fact that a lot of white-collar, W-2 jobs are easier than people make them out to be. They might be busy and full of lots of meetings, calls, and responsibilities … but they are not necessarily hard. Anthropologist David Graeber calls these “bullshit jobs.” If you have this type of job, and many of us do, you can grab a side hustle and be OK. You may need to do it before or after work hours // on the weekends, but it’s possible.
So what are some of the big categories of gig economy work?
Right now, some of the big ones are:
Food delivery (think Favor, DoorDash, etc.)
Driving (Uber, Lyft)
Random tasks for people (TaskRabbit)
Writing/video/design (Upwork, etc.)
Hosting people (AirBNB, etc.)
Think about some of these opportunities in the “net” region. Driving for Uber or Lyft, for example, will put cash in your pocket -- but if you factor in gas, wear and tear, etc. it’s actually a poor economic decision for most. Still, it will supplement your income in the immediate, and that’s often enough to help with a better rent location.
AirBNB usually would require you to have an additional property or place to sleep in order to make money -- it’s a good source of extra income if you travel a lot for work, or can go in with a friend who travels a lot. You need to be very careful about AirBNB though, because if you try it at a complex that doesn't permit it (and most do not), you are very likely to get evicted.
The questions to ponder regarding side hustle development
These would be some of the big ones to start thinking about:
Is there a conflict of interest with your full-time gig? For example, I knew someone once who was writing about learning and development, but his main job courted bigger companies that worked in the L&D / instructional design space. Sometimes those companies would go to him directly, because engaging with one freelance option is cheaper for them than engaging with his main company of employment. This created a series of issues and eventually he was fired from that company. Make sure there is not a conflict of interest between main gig and side hustle, and if there’s any potential overlap, make sure that you make it explicitly clear to your current full-time manager.
Register your business: You can get an Employer Identification Number relatively quickly, which is a good boon for small businesses and the self-employed. Be thankful you don’t currently live in California. The regulatory environment on “gig” / 1099 there is really not bueno.
Establish a brand: This is hard and massively time-consuming, so you will not be able to do it overnight. How to begin, though: Start by thinking about what you offer and where people who need that would be spending time. If you offer instructional design as a side hustle, for example, LinkedIn, Twitter, and Facebook are likely better platforms than Instagram. You could get into niche discussions on Reddit and other boards / industry sites as well. Your brand needs to be unique, i.e. you cannot say the exact same stuff everyone else is saying, and it needs to be a mix of visual and text-based, with some video thrown in, as humans are creatures that respond to multiple learning modalities. You can check out brands you admire, but don’t straight copy them. Take elements of them and infuse those elements with your voice.
Create a proposal and contracting templates: These can be pretty simple, and proposals can start by thinking about your finances (scroll down a bit). Look around at what others are offering. You don’t want to be the lowest in a market because that means you’ll attract mostly people competing on price, and people competing on price tend to -- not always -- be less-than-stellar client engagements to have. Here’s one self-employment contract template, and here’s another.
The numbers: This is a series of steps. You need to work out these numbers --- >
How many hours per week can you devote to side work?
How much money would you like to earn from side work in those hours?
What are your core offerings?
How can you price those offerings to meet the other numbers?
Some simple math
Here’s a relatively simple math breakdown: Let’s say you think you can devote 10 hours/week to a side hustle of consulting or video production. In a given month, you’d ideally like to make an extra $2,000 from your side hustle. That means you will be spending 40 hours/month on the side (10 per week) and need to make $50/hour to reach $2,000 (40 x 50). $50/hour is not a huge rate for many businesses, so this is totally doable! You could probably get it from one client, or break it up across two clients and potentially even clear your $2,000 goal.
If your W-2 is bringing you about $4,000 per month and you add $2,000 on the side, that’s now $6,000, so your rent possibility goes up to $1,800 (30% of $6,000) whereas with the W-2 only, it was $1,200 (30% of $4,000). The difference between a $1,200 rental and a $1,800 rental is vast.
How do you find these side hustle clients, though?
Start with your networks, especially LinkedIn. Explain what you’re doing, what you can offer, and ask if anyone knows of referrals. Message people directly as well. Send emails to old colleagues, confidantes, and bosses you trusted. Work the existing network you have; this can usually land you 1-2 initial conversations (or more!) and those can become clients. Once you get clients, it’s about delivering for them and getting more referrals and recommendations; that’s largely how the self-employed make the hustle work. But as you go through these steps, consider slightly advanced ideas like building an email list around weekly content blasts, using Facebook or Google ads, and more. You want to get a little bit established with people who have a pre-existing knowledge of you before you try that out, though.
Other factors to consider (money)
Get business insurance: Look specifically into errors and omissions coverage.
Understand tax rates: It’s easy to get burned on this. You need to pay a percentage of your 1099 / contractor / freelance money to the IRS, or when you calculate everything, they will be wanting it. (Damn them.) TurboTax has some guides. And honestly, having been a freelancer for most of a few years and getting smoked on owing the IRS money, I would suggest working with a professional.
You might even move from “side” to “main hustle”
There are easy, direct ways to know -- i.e. getting laid off at the main gig. Then there are more subtle ways to know, i.e. you enjoy the side work more, there seems to be more of it, the relationship with side partners is growing and your main income source seems purposeless and flat.
Most people reach a specific point where they inherently know they should switch from Option A to Option B, but it’s obviously a great idea to discuss with friends, significant others, mentors, and more to see if it feels right to someone not experiencing both options daily.
Come at us with your side hustle income and your core income, and let’s find you a spot
That’s how we factor into this whole equation, fam. Start by checking some properties if you want.