Ready to make more money outside of your normal job?  Spoiler alert! A side hustle might be just the thing. On this episode of the Good Cents podcast by Payactiv, Eric and Sydney talk about how to turn a fun hobby into a small-scale money-making business. While yes, being your own boss can mean putting in extra time and effort, Eric’s goal by the end of this episode is to convince you that yes, investing in your side hustles is 100% worth it. 

Looking to take your side hustle to the next level? Read our blog post, “How to Get Your Side Hustle to Pay Your Bills”: https://www.payactiv.com/blog/how-to-get-your-side-hustle-to-pay-your-bills/

Have a financial question for Eric? Email us at GoodCents@Payactiv.com

Listen to the episode now on Apple and Spotify, or continue listening below:

Eric Rosenberg:

Hi everyone. My name’s Eric Rosenberg. I’m a personal finance expert. I’m not a financial advisor. However, and remember that this show is just for entertainment and education purposes. Thank you.

Eric Rosenberg:

Hey everyone. Welcome back to the Payactiv podcast. My name is Eric Rosenberg. I am so happy to have you. And we are back this week with our friend, Sydney. She has some awesome questions she’s coming in with that 20-something fresh look at the financial world. I’ve been around the block a couple times. I’m not grandpa old, but I’m dad old. What we’re going to talk about today is something that’s actually one of my favorite topics in the whole world, because that’s how my career started. I started as a side hustle and that’s what we’re talking about today. So everyone, let’s welcome Sydney into the studio. We’re going to be chatting all about side hustles today with her.

Sydney:

All about side hustles. I’m so excited to talk about this too, because I feel like again, like most of the things we talk about in the show, we are just not taught how to run a side hustle, how to start our own businesses. And this is all something that most people who do it, have to figure out on their own by Googling or talking to friends and family. So we’re here. We’re going to drop some knowledge on you and hopefully by the end of the episode, you’ll feel like you’re ready to start your own side hustle.

Eric Rosenberg:

Yeah. Let’s call this one the 20-minute side hustle MBA. Let’s dive in there. Let’s do it.

Sydney:

Perfect. Let’s do it. Well real quick this as an overview, Eric. Do you want to give us some insight into why you’re so excited to talk about side hustles? What role have side hustles played in your life?

Eric Rosenberg:

Absolutely. Yeah. So side hustles, if you’re not familiar with the term, it’s like a job on the side or an extra income source and what that means to different people can mean different things. And the goal of a side hustle could be different for different people. I know some people who have a side hustle driving for a ride-share service and they want to do that for a couple of years to pay off their student loans or something like that or pay off credit card debt. So that’s a short-term side hustle. When you’re doing a side hustle where you’re working for someone else and it’s not your own business, it’s important to remember, it’s still time for money. So it’s good because it increases your income and who doesn’t want more money, right? We’ve talked about that before. We love more money, but if you start your own business and build your own whole strategy around what you might want to do longer term where you’re not working for someone else, that’s the kind of side hustle that I get most excited about.

Eric Rosenberg:

Because those are the ones that can really change your life. I mean, sure, a short-term side hustle can help you pay off debt and it can change your life. Certainly that’s not a bad thing. But for me personally, I actually started… I’ve always been a side hustler. Let’s back up a little bit. Well, Tarantino. Let’s go back to my youth and see how I got here. I was in Cub Scouts when I was a kid and I sold Cub scout popcorn and coupon books. That was actually probably my first side hustle if you think about it, because of the way Scouts worked then… Girl Scouts, it was a little different with the cookies. With boy Scouts, I got a percentage of the sale in my scout account, which was like a little bank account my troop kept for me, and then I could use that to pay for campouts and ski trips.

Eric Rosenberg:

I grew up in Colorado. So skiing was part of what we wanted to do. And I thought, “How cool is this? I am paying for my ski weekend and my week of Boy Scout camp from selling coupon books.” So I was like 10 years old. So that’s how I started side hustling. And over the years I’ve had a few other things I’ve tried. Some have worked, some have not worked, but the big one is actually what led me here today. When I left my first job after college, I was a bank manager at my first job and I learned so much about banking and all that personal finance stuff you need to know to run your daily money life. And I was the guy approving mortgages, doing all sorts of stuff. So I thought, I’m going to start a little blog about personal finance and that blossomed into writing for other companies about personal finance and starting my own podcast about personal finance and joining another podcast about personal finance.

Eric Rosenberg:

So literally the career I have today started as a side hustle. I was working in cubicle land doing the… We want to call it 9:00 to 5:00, but it was really more like 8:00 to 6:00 and you’re working long days, but I’d come home after work and I’d pull out my laptop and I’d write an article about something about bank accounts or credit cards or earning travel miles and points or paying off my car loan that I was doing at the time or paying off my student loans that I was doing at the time. And that slowly grew into a viable business. It was a pretty cool thing. When I started in the beginning, it was enough to pay my beer tabs going out with friends on weekends and in my early twenties that was saying something, right?

Eric Rosenberg:

Yeah. It was a part of my budget. I planned that that was an expense that I could have. I already knew my debt payments were taken care of. My rent was taken care of. And this side hustle gave me a little extra that covered my weekend fun. And then it grew to a point that it covered my rent. And then it grew to a point where I was like, “Wow, this could cover my mortgage,” when I bought my first condo and I bought my first home. And it grew to a point that in 2016, I was able to go full time. And I’ve been doing this full time about six and a half years now. And it started as a little side hustle.

Sydney:

[inaudible 00:05:55] Can we just give Eric a little pause because that’s such a cool story. And it’s a side hustle success story really is what it is. Yeah. A lot of people who are maybe trying to figure out what their side hustle is, are trying to figure out how to make money. Stories like this are so important to share, because it is possible. It is possible to be able to pay your bills using your side hustle. And we have a blog post all about this, that I’ll link in the description.

Eric Rosenberg:

And it’s okay to start small. My first blog post that I made a dollar on… The first blog post I wrote, I didn’t make anything. It was a hobby. It was for free. When I started making a $1 here, $5 there, I was thrilled. I never would’ve thought I could’ve paid my rent with it. So you never know what’ll happen with a side hustle. I never expected it to take me where it is today. I just thought it would be a fun hobby that made me a little extra money. I was like, “Hey, my hobby’s making money. That’s kind of cool.” I’d rather make money on a hobby, then spend money on it, right. So that sounds-

Sydney:

[inaudible 00:06:55] About your hobby is, yeah, you like to make money and you like to talk about money. That is the hobby that you have, an interest that you have. And that’s how a lot of side hustles start out. They start out with just an organic interest in something that doesn’t really start with like , “Let’s make money on this.” Usually it’s just a joy thing. Like, “Oh, I like taking pictures of people,” or, “I like to paint,” or fill in the blank. I just like to do this thing on the side with my free time. So the decision then to take that hobby that you enjoy doing and tack on a price tag and provide a service to other people using that hobby, it can be a little bit scary for someone who has never done it before.

Sydney:

So for me, in my experience, I love to paint, but the idea of being paid to paint, which is this special thing that I like to do as a hobby, it’s scary to make that leap and to put a price tag on the work that I do and the hobby that I have. So just, thinking like that-

Eric Rosenberg:

I actually just got a paint set. It’s sitting over out of camera in this office because I thought that could be a fun thing to try out. I’m not going to be the next Picasso, but I could be the next Eric Rosenberg, right?

Sydney:

Yeah. Totally. Yes. So I guess my question for you that I’m kind of teeing up is, in thinking about someone who’s maybe just starting to think about turning their hobby into a side hustle, where do you recommend beginning as just a very elementary starting point for thinking about how to price your time and the work that you do in this hobby?

Eric Rosenberg:

Yeah. That is a great first question. A great starting point. So there was actually a book I read that talks exactly about this. It’s called The $100 Startup by Chris Guillebeau. I know that last name’s a little bit of a mouthful, but he’s a cool guy. I’ve met him a few times. And what he said in that book is, “You really only need three things to have a business. You need a product or service, a way to get it to somebody and someone who is willing to pay for it. That’s really it. Anything else is gravy on top.” Really, all you need to do is have something you can sell with somebody. If you’re doing that, you are in business. So even if it doesn’t feel like a business, maybe you are an incredible baker and you go to a farmer’s market on Sundays and sell muffins.

Eric Rosenberg:

That’s a business. That’s real, that’s legit. Maybe you are really good with bikes and you fix all of your friends bikes for free because you’re that awesome friend. But maybe you could start a weekend bike repair business where people… They tell all their friends, “Oh, I got to take my bike over to my friend for a tuneup.” And that is a real business. It doesn’t have to be registered with the government. It doesn’t have to be set up with a lawyer. To be a business all you need is someone to pay you for something. It’s pretty simple. It’s a cool way to approach it. So when you’re starting, think about what is that thing that someone would pay me for? If you are an amazing artist like Sydney, you could start selling your paintings on a place like Etsy, or you could get prints made of them and sell the original for more and then sell prints for less.

Eric Rosenberg:

And I’ve met artists who started and work in side hustles doing just that. I met a really cool guy in Huntsville, Alabama who works near where Space Camp is and he makes all these paintings that look like rockets turning into trees. And that’s his side hustle. He sells them online. I have a friend who lives in Toronto, Canada. I’m actually going to go see him soon. And one of his side hustles is he’s a tour guide. He goes on a few different websites, places like Airbnb and there’s other ones as well that you can create tours and activities. And he does coffee tours and bar tours and downtown tours for people who are new to Toronto and he’s grown up there. He’s lived there for 30-something years so he is an expert in the city. I think that makes him an expert, you live somewhere 30 years.

Eric Rosenberg:

So you might be an expert in something and not even realize it. I mean, maybe you could do bicycle tours. Maybe you’re good at crocheting. You live somewhere cold, you can sell hats and gloves. Who doesn’t love a homemade hat with a fuzzy thing on top? There are so many things you could do. And then that’s not even talking about the computer. With the internet there are a zillion side hustles. I mean, I know zillion’s not a real word, but there are so many, I could not even think about it. You could create websites. You could learn how to code. You could be a writer. You could make podcasts, you could be an editor.

Sydney:

You could freelance.

Eric Rosenberg:

There’s all sorts of freelance opportunities. There’s just so much you can do. And with the internet, the world is so connected you don’t even have to work with people nearby. I have hired people to help me with projects who live on the other side of the world in Asia. There were students and they had a side hustle working on websites and I needed help on a website. So that was a business. They made some money on it and I had a happy experience. It was a good service. Think about what it is that you can do, what you can deliver, what you like, what you’re already good at and what someone might pay for that in the fair market? So I would say, let’s go back to the fuzzy hats example, because… And it’s harder to price art. Art can be, who knows? But fuzzy hats, you go to the department store, you go to the big box retail store. A fuzzy hat’s going to be between, I don’t know, let’s say seven and $20, somewhere in there.

Eric Rosenberg:

So you know that the hat you’re selling is probably going to be somewhere around that range. So you can look at other products or services similar to give you a guideline. And something I like to do, which I’ve seen a lot of success with, start a little bit on the lower end of that to get a little confidence, get your first sale, but don’t do it for free. It’s okay to discount your first sale, but don’t ever do it for free. Don’t give it away.

Sydney:

Even for friends and family?

Eric Rosenberg:

Well friends and family, if you’re doing it any-

Sydney:

Okay. I guess so.

Eric Rosenberg:

I help out my sister with some writing projects for free because she’s my-

Sydney:

Okay. Okay.

Eric Rosenberg:

But-

Sydney:

So that’s a lot-

Eric Rosenberg:

… for real customers, don’t want to work for free and maybe-

Sydney:

Pro bono. Don’t work for experience or exposure.

Eric Rosenberg:

Exactly. Because you can’t pay your bills with exposure. If you need to build a portfolio, do it for yourself. So let’s say you want to be a writer. You can start a blog that is creating experience right there that you can share with someone who might hire you to be a writer. If you’re a graphic artist, graphic designer, build your own website, make your own graphics, do things in your social media channels that you can show off and be proud of. If you’re a video editor, start a YouTube channel or a video creator. Start a TikTok. There’s so many different things you can do to show the world your experience and get practice without getting paid. So then when it’s time to get paid, you can feel confident getting that first paycheck and not have imposter syndrome, which means you don’t really feel like you’re an expert in it, but it’s okay. You are an expert. There’s a reason someone’s willing to pay you.

Sydney:

Right. Sometimes it just takes building up that confidence a little bit and building a portfolio, working for friends and family maybe to help build the portfolio itself. Yeah, is a really great place to start. And then shopping and looking at what does the market look like for the product or service that I’m offering and pricing a little bit below that just to get your foot in the door.

Eric Rosenberg:

Then the next trick, once you’ve had that first sale, raise your price and keep raising it until someone says, “No.” That is one of the best secrets of freelancing and side hustling. Just keep raising your-

Sydney:

That sounds so scary-

Eric Rosenberg:

… until someone says “no.” And eventually someone will say “no” and that’s okay. And then you say, “Oh, well would you do it for this rate?” It’s okay to negotiate. Negotiating is a hard thing in the world. But when you’re a business owner, including a side hustler, negotiating might be part of it. There’s a lot of hats you have to wear when you’re running a business, even a little side hustle. So you have to go into it with your eyes wide open and feel prepared for all of those opportunities and challenges. And you’ll probably find sometimes you feel a little uncomfortable. You don’t like things, but sometimes you find things that you love and you’ll learn a lot and you might meet great people or who knows what’ll happen.

Eric Rosenberg:

There’s so many opportunities, but that won’t happen unless you get started and try to get that first sale. So those are my main thoughts on how to get started with a side hustle. Hopefully, that’s helpful for you out there. Also remember when you’re getting started, it’s important to pick something people actually want to buy and pay for. There are some hobbies. I know one that comes to mind. I found out there is something called competitive duck herding. It is a real thing. If you start a competitive duck herding business, I don’t know how successful it’s going to be. It’s just a tough market for competitive duck hurdlers right now. But there are many businesses that are booming. So really do think about that as well. Just because you’re into something doesn’t mean everybody’s into something. But if you are into something, chances are there is a community of people into it. So you have to find and tap into that community. But if the community is not there, if the buyer’s not there, it’s okay to test and try different side hustles. The first one might not be the one that sticks.

Sydney:

It’s true. So once you have something that sticks and you feel good about it, what about the admin side of things? How do you start thinking about the financial side of your side hustle?

Eric Rosenberg:

That’s a great question and I’m a finance guy. I love all the accounting stuff and getting into the numbers. I’m a numbers nerd. So, hopefully I don’t out nerd you guys while we’re talking about this, but here are the basics that you really need to know. So one, you don’t have to register your business with the state to be considered a legitimate business. If you are making money doing anything according to the IRS, according to the United States government, you are a business. So when that happens, it’s really important to keep track of all of the money that comes in and out. And the way I think is best to do that is to open up a dedicated bank account. Chances are, it will probably just be an account in your name that works for the business in the beginning.

Eric Rosenberg:

But as you grow, you might decide to register with the state. And if you do that, you can actually do it online yourself. There’s a few forms you can fill out in any state. I’ve done it myself a bunch of times. But if you’re worried about it, you can pay a lawyer or an online service to do it for you. But it is pretty easy. Most people, I think as long as you can read well, you should be able to handle it. So if you register, there are ways you can do that. I won’t go too far into the details, but the most common way to do that for new businesses and side hustles is an LLC or limited liability company and the benefit of that is they’re usually really cheap and easy to get started unless you live in California like me, then they’re very expensive.

Eric Rosenberg:

And when I lived in Colorado, I think it was $50 to start one. So it wasn’t a huge expense to register a business. In California the minimum is $800 a year. So where you live has a big influence on what you might want to do or not want to do. If you live out in California, you might want to delay registering a business because of that big cost. But if you live somewhere where that’s cheap, you might want to just go ahead and do it because when you do, there’s a few benefits. One, if you keep all of the finances separate, when you run an LLC, there are some legal protections you get. So if someone buys your product and gets hurt with it and decides to sue you, if you have an LLC and you’re running it properly, they can’t go after your personal assets. They can only go after your business assets.

Eric Rosenberg:

So they might be able to take your sewing needles, but not your house or your car. So that’s an important thing as your side hustle grows. Or if you have a side hustle that has any kind of high risk that anyone can get hurt. That’s just something to think about along the way. But again, you don’t have to be a registered business when you start. Next, as I mentioned, you want to track your finances separately from your personal finances. Even if you don’t have a registered business, you’ll want to do that because at the end of the year, you’ll have to file taxes. And with your taxes, basically the important thing to know is you take all the revenue that your business made, that is money people paid you for your product or service. So if someone pays you $100 10 times, you made $1,000 in revenue. Then you look at your expenses, which is money you spent directly on the business.

Eric Rosenberg:

So if you are doing a sewing business, that’d be your sewing needles and yarn. If you’re a painter, it’s be your paints and canvases. If you work on the computer, it could be your keyboard or your laptop. There’s different things that you might be able to deduct. And what that means is you can subtract it from your revenue when you’re calculating your taxes. So just like a business, because you are a business, you only have to pay taxes on your profits. And that’s a really fun thing that just makes a side hustle different from a hobby. With a hobby, all of your expenses are just expenses. You don’t get anything back. When it’s a side hustle, not only can you make money from it, but you can also deduct expenses to lower your taxes. And I’m not going to go too, too deep into that.

Eric Rosenberg:

Maybe we’ll do a tax episode sometime you can use your tax software. I know PayActiv has a partnership with Turbo Tax for a discount if you want to use that. So however you do your taxes, if you have a side hustle, you just want to make sure you have tracked that income and expenses separately from your personal income for those taxes. But unless you’re registered as a business, you don’t have to file a separate tax return or anything like that. So when you’re starting out, again, I’ll just summarize it to keep it easy, you don’t have to register with the government right away, though you may want to later. You should have a separate bank account for your business, whether it’s a personal account or a business account once it’s registered. Or if you run mostly in cash, it could be an envelope or something that you use just to keep it separate from your personal finances.

Eric Rosenberg:

That separation is the key. And as you grow, you might want to start doing a little bit of accounting and bookkeeping, and there’s some free apps you can use when you’re a side hustler. One is called Way of Accounting. You can go on there and it will walk you through what you need to know to get started tracking your income and expenses for your business on there. But if you do that, it actually makes it a lot easier and faster to prepare your taxes when that time of the year comes, because uncle Sam wants his part of your income. That’s the one big downside. You have to pay taxes on it, but you only pay taxes if you make the money. So you don’t pay taxes if you’re not profitable.

Sydney:

And the PayActiv app is free to download, it’s free to sign up for PayActiv and it’s a great place if you’re just getting started to house your first $10,000 that you’re making. After that point, you will have to find another place to put your money, but the PayActiv account is super quick and easy to set up. So highly recommend that if you’re shopping.

Eric Rosenberg:

And if you are thinking about turning a hobby into a business and you need supplies, let’s say you want to start a business taking people fishing in your area. Maybe you are an expert fisherwoman and you are awesome at fly fishing and you want to teach others how to go fly fishing. So you have to buy a few extra fishing poles and another tackle box, a big set of lures, because you want to look professional. It’s not just the ones that you’re used to using yourself. You want to have those really fancy flies like they have on TV.

Sydney:

Really nice ones.

Eric Rosenberg:

All in, I don’t know exactly what fishing stuff costs. I’m not the expert. You are, right? You’re starting the fly fishing business. So when you’re doing that, if that’s your side hustle and this would work with any business, you can add up what it costs to get started and set that as a savings’ goal.

Eric Rosenberg:

So maybe you need $500 to buy the gear to take people out on a fishing expedition. You have everything else you need. So you want to save up $500. A good way to do that, actually, is also the PayActiv app. If you are getting paid using direct deposit to the PayActiv card, you can automatically split off a portion of your income into a savings’ goal. So whether that’s $5 a paycheck or $10 a paycheck or $20 a month, whatever you want to set up, there are flexible rules in there. And that can get you to the point where you can start that side hustle. And before you know it, that $500 you spent, you’ll make that back and more hopefully if you run a good business

Sydney:

And then later you can write it off, right, after you’ve gotten started?

Eric Rosenberg:

Absolutely. Yeah. And as we said in that $500 is a business expense. So that means if you, let’s say your business makes $600 that year and you had $500 in expenses, you only have to pay taxes as if you made $100 because that’s your business profit and you get to keep those fishing poles. So bonus.

Sydney:

Not too bad, not too bad at all.

Eric Rosenberg:

That’s a good way to help write off your hobby, right?

Sydney:

Absolutely. Yeah. So I guess just my conclusive question is to you, Eric, is this side hustle worth it like worth all that time and energy that it’s going to take to set it up?

Eric Rosenberg:

Well, I think you all are going to know what I’m going to say here. I think a side hustle is totally worth it because that is really, as I said, what led me here is what created my career totally changed my life. And I started writing as a side hustle because it was something I enjoyed. So I was able to take a hobby in something that I liked and turned it into a little bit of money and then a little bit more money and then a full living. And even though I have a full time living and I don’t necessarily need outside funds, I still keep side hustling because I still think it’s fun. And I still want to keep making more money. Actually right next to the desk here, I have a stack of Funko pop toys from the Ghostbusters movie that I’m going to sell on Amazon. It’s-

Sydney:

Another side hustle.

Eric Rosenberg:

It’s one of my side hustles. There’s a toy distributor not too far from me. So I’m able to buy wholesale and mark it up a little bit. And I think sci-fi and nerdy, Ghostbuster things from the eighties are fun. So that’s something I thought, “Hey, I could buy them and sell them. And for a couple weeks, hopefully not too long, they sit in my office and I can look at them and then I ship them off to whoever buys them.

Sydney:

Unless you really, really like them, right. Then they just end up on your shelf at home.

Eric Rosenberg:

There’s one that I … I haven’t done it yet, but I was eyeing this one from the… Have you seen the new Ghostbusters movie? The little state puff guys? They have these little lighter things are cute, but it’s kind of scary. I thought about putting one of those on my shelf, but it’s listed on Amazon. If you know how to find it, you can find it.

Sydney:

That’s super funny. Awesome. Thank you so much, Eric, for your time. We really appreciate it. And now I’m feeling inspired. Honestly, you’ve given me so many steps that I can take today to start moving my little painting side hustle business up to the next level. So I really am appreciative.

Eric Rosenberg:

I’m actually even teaching my little kids right now how to side hustle. I have a two, four and six year old and I built them a lemonade stand. Because you got to start young. You got to start right. So I built them a lemonade stand. They helped me and pick the colors and helped me paint it and cut all the wood. And now summer vacation is actually just starting this week as we’re recording and we got to get out there and start selling some lemonade because I know they want to buy some Pokemon cards and whatever the kids are into these days and they know they can do it if they side hustle and they make their money, because their main job is school right now. But their side hustle can be selling lemonade.

Sydney:

Absolutely. Awesome. Well with that, thanks so much, Eric.

Eric Rosenberg:

Thank you. This was a lot of fun. I always love chatting with you, Sydney. It’s always great to have you on the show and listeners, I hope you enjoyed it as well. If you have any feedback, any comments, you make sure to head, to PayActiv.com. You can click on the blog section and you’ll find all of our past episodes. You can also subscribe on Spotify and we’re working on making sure you can subscribe everywhere else you listen that’s coming down the pipeline. So be sure to follow along if you have not already hit subscribe.

Eric Rosenberg:

Also, if you have not already, as we mentioned, we’re obviously fans of the PayActiv app. It is free. It has a ton of helpful features. It’s a whole financial wellness platform to help you get on track improving your finances and my favorite feature, it’s kind of a secret feature. A lot of people don’t use. It shouldn’t be a secret. I’m telling you right now you can get a free financial counseling session. And normally those cost… Rich people pay $10,000 for one of those. You can get it for free from the PayActiv app. All you have to do is sign up and you can ask them, “How do you put that side hustle money to good use? How do you use it to pay off debt, build an emergency fund or start saving for retirement,” or whatever else is important to you. 

Eric Rosenberg:

So definitely make sure to check out the PayActiv app and subscribe to the podcast and tell a friend so they can listen to it too. And that’s all we’ve got for today. So thank you so much everyone for listening. Thank you, Sydney. And we will talk to you all next time. Have a great rest of your week and keep living that life you’ve earned.