It was 2008, we were suffering the largest financial crisis since the great depression, and finding a job was not easy. So, I had to wait tables while looking. During that time I learned how to twist balloons for a children’s event at our church and found out I was pretty good. So, I started busking and doing kids events twisting balloons. No almost all of my money was tip based. Some weeks I would make a good amount of money and sometimes I wouldn’t. This made budgeting, saving, and paying taxes complicated to do. So, here are some tips for making the most out of side gigs. You do not have a set monthly income which can make it difficult to budget. However using a simple strategy of prioritizing where your income goes, you will find keeping a budget to be much more attainable.
First of all, you have to start with your budget. Consider what are essential bills and non-essential bills. Essential bills would be things like groceries, rent utilities, etc. Non-essentials are any expenses that you may miss, but you can go a couple of weeks without if necessary. Going out to eat, movies, even your monthly Netflix subscription, etc. On non-essential items, you should set yourself a limit on how much you will spend each month.
Then agree with yourself that a certain percentage of money will go into savings every month. Next, estimate what your taxes would be on any income where you are self-employed.. You need to hold back enough to cover all of your taxes your income and savings. This should be the first amount of money immediately set aside so you will not find yourself facing a tax bill you can’t cover or an underfunded retirement. On yourself employment income, account for the fact that you have to pay your full social security and Medicare tax.
After setting aside taxes and savings, you only pay for essentials until they have been covered for the month. Now, that you have covered taxes, savings, and essentials, you can know that when you spend your money on non-essentials, you will not be put in a difficult financial situation. Also, buy giving yourself a personal cap on non-essentials, allows you to add more into your savings. Keep that non-essential goal uncomfortably small until you have saved up at least 6 months of income for emergencies. Once this is accomplished, you can know if you have a month that starts slowly, or if you wind up with a few months falling short, you can still maintain a stable quality of life.
Navigating the financial challenges of side gigs can be daunting, especially when income is unpredictable. However, by implementing a strategic approach to budgeting and prioritizing your finances, you can gain control over your money and build a more secure future. Remember, starting with a clear budget that distinguishes between essential and non-essential expenses is key. By setting aside savings and estimating taxes upfront, you create a buffer that protects you from financial surprises.
As you progress, challenge yourself to keep non-essential spending in check until you achieve a comfortable emergency fund. This disciplined approach not only fosters a sense of security but also empowers you to enjoy your side gig with less financial stress. In times of uncertainty, these strategies can help you maintain a stable quality of life and turn your side hustle into a sustainable source of income. Embrace the journey, stay focused on your financial goals, and watch as your efforts lead to greater peace of mind and financial resilience.