Whether it’s to pursue a passion or to make a little extra money, more Australians than ever now have a side gig.
But while freelancing, moonlighting and pursuing passion projects can be a great way to add value to your life, they can sometimes complicate how you go about managing both your time and finances.
What’s causing the shift
Wage stagnation and underemployment have contributed to the growth of the side gig, but they are not the only factors. For many, the main motivator is that working on something that is separate to your primary job can give a sense of fulfilment that may be lacking in the 9-5.
Technological advances also play a huge role here. It’s easier and cheaper than ever to present and promote your services professionally. Anyone with a computer can create a website to sell their wares. And most people with a fairly new car can participate in the rideshare economy.
Managing your time
While side gigs can no doubt add value to your life, it’s sensible to make sure you’re managing your time accordingly to ensure you’re still getting adequate rest and leisure.
Know your boundaries and keep a diary. It may even be worthwhile looking into some time management apps to help keep things running smoothly.
It’s also important to get in the habit of recording the time taken on all related tasks, even the menial admin ones. This not only helps you to quote accurately, it also gives you an idea of what tasks generate the most income and what don’t. You can then choose to focus your energy either where the money is coming in, or on what gives you the most satisfaction. If your side gig is not generating the desired level of income or is proving burdensome, it might be worth re-evaluating how much time you spend on it.
As your side gig grows, it may require an increasing amount of your time, so much so, that you need to reduce your hours in your primary job. Before taking this step, you want to be certain that you will be adequately remunerated, and if not, that you can accept the lifestyle changes a reduction in income entails.
Managing your finances
How you go about managing the money you earn from and spend on your side gig will depend on the nature of the services you’re offering.
For some, a side gig is merely a way to bolster income and reach their financial goals sooner. For others, it’s a creative outlet. Understanding the purpose it serves will help you decide your tolerance for how much (or how little) you are making for your efforts. Creative pursuits for example might even run at a loss. And if the money you’re making off rideshare is only covering your petrol money, it may be time to reassess.
There are however a few general rules for managing the finances related to your side gig that you should consider:
- Keep a separate bank account for your side project
- Set aside enough money for tax
- Stay on top of your invoicing – apps can help
- Talk to us about eligible deductions
- Consider making additional super contributions
- Separate business and domestic expenses if you run the business from home
It’s all about structure
As your operation grows, it’s worth giving some thought to how you structure your affairs. Most moonlighters operate as sole-traders, but company structures and trusts may also warrant consideration. Before making any decisions about which option will best suit your needs, talk to us as there are a lot of things you need to be mindful of.
Side gigs are a great way to expand your skills, pursue your passions or provide a little extra cash to play around with. But if approached the wrong way they can leave you burnt out or broke. Play it smart and put some boundaries around your time and finances and you should be good to go. Contact our Business Advisors at our office on 1300 363 866 for more tips on managing your side gig.