One of the things we tend to NOT think about when starting a side hustle, is how we’re managing our current moola situation. Sure, we might be starting a side hustle because we need more of the green stuff in our bank accounts, but do we really think about how we’re actually managing the money we have?
I’m the first to admit that I’m not totally awesome at doing this myself. In fact, if we’re all being honest here (this is a safe place, right?!), in my early 20’s, I was pretty cavalier with money.
I can remember my first real job, working as a receptionist for an IT company. I couldn’t believe that someone was going to pay me to sit and answer phones and type on the computer, I thought it was easy money…
The first time those employee dollars hit my bank account, my eyes literally fell out of my head. There were more zero’s in my bank account than there had ever been before, and I was giddy with dollar signs… I completely forgot (or was that disregarded…) about having to pay for rent, power, phone, food and internet at my flat.
Instead, I went on one hell of a shopping spree.
My flatmates were none too pleased with me when I couldn’t produce the required moola to cover my half of all those bills, so to dig myself out of the little hole I’d created for myself, what did I do?
You guessed right if you thought “credit card!”
And there started my rocky journey with money. I never seemed to have enough of the stuff and it wasn’t until I hit my early 30’s that things started to click… the stars realigned, the clouds parted and the sun began to shine… I figured out how to master my money without having to live a life of boring existence.
So, where am I going with this?
Basically, if you’re looking to start a side hustle to earn some extra moola, before you get too excited about doing that, sit down and figure out why it is you need the extra moola and how to master the money you’ve already got coming in. Here’s how:
5 Steps to Mastering Your Money
#1: Track your spending
This is pretty obvious, but clearly not so obvious that I wasn’t doing it, which is why I’m bringing it up. You might have heard this a number of times, but then forgotten to implement it.
If you aren’t tracking your spending now, starting a side hustle is just going to make things more difficult. Because you’re gonna have additional expenses, and come tax time, how will you be able to claim back tax on those business expenses if you’re not tracking them?
There are apps that make this really easy for you, so check out the options below and start doing it now! You’ll thank me later 🙂
- Mint Budgeting App. Available on all platforms and probably the easiest to get started with
- PocketGuard. Similar to the Mint app, it connects directly to your bank account so you can easily see where you’re spending those dollars
- You Need a Budget. By far the best out of these three options, it does require you to purchase it, but it is ‘da bomb’ as my friends Carlo & Florence have said plenty of times to me. It comes highly recommended from them!
Ok, now that we’ve got the tracking part down, let’s move onto the next step…
#2: Track your income
Duh, right? I mean, if you’re tracking your spending, you should track what you’re earning too, otherwise it makes no sense (cents) at all if you don’t know what’s coming in…
By tracking what’s coming into your bank account prior to starting your side hustle, you’ll have a much clearer idea of where those side hustle funds can be put to good use.
And where you’ve got a bit of leeway for a little treat here and there… did I mention I’m a spender, lol?!
Just like you track your expenses and what you’re spending and where, you should track your income. The apps mentioned above will do this for you as well.
#3: Have a backup plan (or is that an escape plan…!)
What happens if you lose your job? What contingencies do you have in place to survive?
Hint: your side hustle is a good place to start!
Aside from that though, you should also think about ways that you can cut down your expenses if you had to.
Think about taking public transportation versus driving your car, selling your home and renting instead. These are the things you could do if you HAD no other option.
Write down your backup plan and keep it somewhere safe. If the absolute worse happens, at least you know what you can do to survive.
And don’t forget to cut out all those luxury items… I’m talking about buying coffee from the local Starbucks, buying your lunch instead of making it, going to the movies, heading out for dinner, etc, etc.
You get the gist — have your backup plan in place and pray you never have to use it!
#4: Look at your needs vs. your wants
This is kinda related to the previous step, but if you’re looking at managing your money better, it’s time to get real and be honest about what you actually need vs. what you want.
Let’s be clear: your needs are non-negotiables, they are the things you must pay to just live a basic life.
I’m talking about paying for a roof over your head, clean water, heating, clothing (not designer!), power etc. These are the things that should be set to automatically be paid without you having to do anything about it.
Wants are everything else and are definitely negotiable. They come AFTER your needs have been taken care of. Not like 20-something Lise, skipping out on all her ‘need’ payments to spend her moola on her wants… don’t be like her!
It’s about being honest with yourself and taking into consideration whether you can wait a little longer to get that beautiful yellow coat or that brand new car.
If you can’t afford to cover your basic needs, then you have no business grabbing something you want. Period.
If you’re only just able to cover your basic needs, then starting a side hustle is definitely a good option for you, so that you can have the best of both worlds.
#5: Have an emergency stash
The ultimate adulting you can achieve from a financial perspective, is to have a solid emergency fund that will cover you for when something goes wrong or for those unexpected situations — you know what I mean, the stuff you haven’t planned or allowed for.
You might not be in a position to do this right now, but working towards it is definitely a step in the right direction. And every bit counts. If you can only afford to put away $10 a week, then that’s all you can do — but do it.
Even a small amount is better than nothing. Deposit it into a high interest savings account to make the money work for you.
If you go through all of the steps above and get to this one, you should be easily able to see where your side hustle can make a huge dent in your financial situation. You can allocate some of the funds earned to go into your emergency fund and then use the rest to get yourself set-up financially.
The bottom line is, if you haven't got your money stuff sorted, no amount of side hustling is going to fix anything. You need to identify the weak spots and fix them.
Need more help? Come join me plus 40 other financial speakers at the Master Your Money Summit, kicking off on March 21st, 2016. You can grab your FREE ticket here: https://www.hustleandgroove.com/masteryourmoney