What’s The *Real* Cost Of A Side-Hustle?

What’s The *Real* Cost Of A Side-Hustle?

Nasty. Woman. When Amanda Brinkman first heard , she was inspired. That night, she started playing around on her computer making a few t-shirt designs featuring the phrase. She posted a mock-up on Instagram for sale, and went to bed.

Thinking she’d wake up to a handful of orders next morning, Brinkman was stunned to discover she had actually sold 10,000 shirts and her inbox was full of thousands of messages. She had no idea how she would fulfill the orders, but with a lot of help from friends and family, she did— and her apparel company and online community, , was born.

“It was a secret at first,” she says. “I needed a hobby because I had no work-life boundaries, so I taught myself some design skills. But then my secret side-hustle became a business overnight.”

While Brinkman’s story might be anything from ordinary, the lessons she took away from the experience could help all of us. About 40 percent of us have taken the plunge into side-hustling, but a earns a person only about $8,000 in profit each year. That comes out to just over $800 a month.

So is it even worth it? And if so, for whom?

A recent study from Northwestern Mutual showed that people of color have the desire to start their own businesses at a higher rate (20 percent more) than the rest of the population. The study also found that non-white participants were more likely to take the preparatory steps in creating their own companies, like having a side-hustle.

But simply starting a business really is just the beginning. Of those who have started a business or side-hustle, 59 percent revealed that the biggest hurdle was having an unstable or unpredictable income—with women worrying about their cash flow more than men (63 percent versus 52 percent). For those who have started a business or side-hustle, an increase in stress (48 percent) and increased working hours (40 percent) were additional drawbacks associated with running a company.

It can also be draining trying to juggle your “real” job with your passion project.

“Sometimes the entrepreneurs I work with feel like they’re putting in a half effort on their regular job or a half effort on their entrepreneurship,” says , a certified financial advisor at Northwestern Mutual. “Realistically, there is a self-employment tax, but there’s also an emotional tax.”

“Realistically, there is a self-employment tax, but there’s also an emotional tax.”

The balance

That emotional tax Williams talks about can include everything from exhaustion to a lack of financial stability.

“When it comes to transitioning the side-hustle into full-time entrepreneurship, I go line by line with my client to calculate the costs,” she says. “These include everything your current employer provides; life insurance, disability insurance, commuter benefits. The everyday employee forgets their overall compensation is likely more than just their salary from last year.”

Once these costs are nailed down, Williams says it’s time to see how much it would cost to go out and find similar services in the marketplace and determine a realistic, average salary per hour you’d need to make based on these costs. This becomes your sort of “exit strategy” so you’ll know if you can build a business without going into a financial hole.

But, she cautions, there are unseen obstacles entrepreneurs deal with as well, such as getting approved for a mortgage.

“Lenders want to see ‘similar income’ every year,” she says. “But that can be challenging for entrepreneurs because they often show a lower income on their tax returns. It can be challenging.”

When considering any loans, remember: there’s interest associated with them. And even if you end up choosing to go with “angel investors” or get help from family and friends for seed funding, make sure your agreements are formal and in writing, she says.

“The flexibility that the side-hustle allows for those with disabilities or for women who want to start families can be life-changing.”

So what are the benefits of the side hustle given all the financial and emotional drawbacks? The opportunity to work on something you’re passionate about, Williams says, not to mention the opportunity to save more for retirement and have more autonomy.

“We’re moving into an era of better mental health, and self-care is huge,” she says. “When you run your own schedule, you get to practice more of that throughout your day.”

Brinkman and others have still found that it’s been worth it to make the leap from full-time job-side-hustler to full-time entrepreneur. The flexibility that the side hustle allows for those with disabilities or for women who want to start families can be life-changing.

Marisa Hamamoto is the founder of LA-based , a dance company that seeks to use movement as a vehicle for inclusion, while eliminating the stigma and inequality associated with disability. She was selected from more than 6,000 global applicants for the and for the Red Bull Amaphiko Academy, kicking off a meteoric year for her.

But the steps to get there were anything but simple. A stroke survivor, Hamamoto now finds strength in putting her full energy into a mission she believes in. She estimates she spent 60 to 70 unpaid hours a week building the nonprofit from the ground up since 2015.

Just this past September, she finally quit her day job. “It was a tough decision,” she says. “But the moment I shut that one door, so many more opened.”

The same was true for Brinkman.

“I thought it would be a one and done thing, so I didn’t establish as a brand at first,” she says. “It took a while, but people kept coming back, asking questions. I realized there was a need for content— and I wanted to support this community of women.”

Scrappy ways to save on side-hustle expenses

Here are four ways to save on the most common side hustle expenses.

Lean on your people for support

Your besties have likely seen you through the worst of times—so why not be there for each other through what will hopefully be a great new adventure? Brinkman says she brought her friends in early to help out with Shrill Society given its sudden success. You’ll undoubtedly strengthen your bond, and you can return the favor once your business is off the ground.

Become a better negotiator

Hamamoto says that in creating and building her side-hustle she “became a better listener and negotiator.” As a business owner, negotiating is a skill you’ll want to hone early—and it doesn’t hurt to develop your skills even if you go back to your nine to five. Don’t be afraid to ask for a trade or a barter situation that costs you zero dollars in cash, especially when you’re first starting out.

Choose supplies that give back

Supplies can account for a significant portion of your budget as a freelancer or business owner, so why not spend some of it on a good cause? LA-based was founded on a simple principle: you buy one item that delights and inspires you to do your best work, and they give one to a classroom in need. For under $10, try their (which can live in your tote or on your desk to keep you on top of your schedule).

Skip the office space

It’s OK to start small and skip the expensive coworking space while you set up your side business, potentially saving you thousands of dollars a month. Remember, even Apple and Google started in garages, so if you’re in the living room or bedroom, you’re already ahead of the game!