The Shift to Side Hustle: What You Need to Know Before Quitting Your Day Job
The labor market is witnessing a significant shift, as highlighted by the FlexJobs and Remote.co Side Hustle & Financial Flexibility Report. A staggering 41% of workers have either left or considered leaving their jobs to pursue their side hustles full-time. However, only a mere 10% have completely taken the plunge, with 31% still weighing their options. The consideration is serious: over half of those surveyed (57%) indicated that their side hustle would need to generate at least 75% of their current salary before committing entirely.
Finding the Right Side Hustle
Before you hand in your resignation, the shared wisdom is to "test drive" your side gig. Dip your toes in and discover not only if you enjoy the work but also if it can provide a stable income. Gig jobs or freelance opportunities can offer invaluable experience—helping you learn new skills while feeling out your passion.
However, it’s crucial to be aware of the often-overlooked potential hidden expenses that accompany entrepreneurship. Transitioning from employee to business owner means confronting new costs that can impact your financial stability.
Essential Expenses to Consider
When working for an employer, your benefits—like health insurance, retirement plans, and paid time off—are typically covered. As a self-employed individual, you’ll need to account for these expenses yourself. Here are some key costs to keep in mind:
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Health Insurance: If you currently have insurance through your employer, factor in how much you’ll need to pay out-of-pocket once you’re self-employed.
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Retirement Contributions: Without an employer matching your contributions, you might need to save more aggressively for your retirement.
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Office Supplies & Services: Depending on your side gig, you may need to invest in software, marketing, or other tools to build your business.
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Home Office Costs: While you may save on commuting, other utility costs may increase, especially if you’re operating a home-based business.
- Unforeseen Expenses: Build an emergency fund; it’s recommended to save at least three months’ worth of living expenses to mitigate financial stress as you transition.
Leona Burton, a side hustle expert and founder of Mums in Business International, underscores the importance of ensuring that your side gig can cover not only your everyday bills but also unexpected costs. “There’s no holiday pay or sick leave when you’re the boss,” she says.
Building a Foundation Before You Leap
The decision to leave your stable job should not be taken lightly. It’s essential to ensure your side hustle is built like a proper business, which includes having systems, a clear customer journey, and a separate business banking account.
If your side venture is still a few steps away from replacing or exceeding your primary income, examine your client base and income reliability. As entrepreneur Golan Haiem advises, don’t confuse momentum with viability; analyze how steady your income stream is. Create plans for memberships or retainer programs to stabilize your income.
Diversifying Your Income Streams
Jumping into the entrepreneurial pool without a safety net is daunting. It’s wise to make sure you have multiple streams of income before leaving your job. This could involve expanding your product offerings or client base, essentially creating a "financial cushion" for yourself.
Announcing your new venture through social circles and social media can also yield unexpected business. Burton emphasizes the importance of surrounding yourself with like-minded individuals to avoid the isolation that often accompanies self-employment. Join local or online groups that resonate with your experiences.
Conclusion
Leaving your job to focus on your side gig can be exhilarating, but it requires thoughtful planning. Arm yourself with knowledge and take the necessary steps to ensure you’re ready for the transition. By doing so, you’ll be poised not just to survive but to thrive in your new entrepreneurial journey.
For more insights on navigating the financial aspects of your side hustle, stay tuned to Extreme Investor Network. We’re here to provide the tools you need to succeed in your financial ventures.