Many successful side hustlers like me focus on making enough money to replace their dead-end job (or making a growing income) and have money habits to guide them to a worry-free financial lifestyle.
Side hustling might be something you’re thinking about and wanting to do.
But, I’ve got good news and bad news.
First, the good news: according to the SBA’s Office of Advocacy,
“The survival rate for new businesses in their first year has improved recently. About half of all establishments survive five years or longer. About one-third of establishments survive 10 years or longer.”
Now for the bad news: Not everyone can be successful side hustlers. If you’re like most people, you’ll spend all the money after months, sometimes years of earning it and end up with almost nothing.
How is that possible?
Frankly, because nobody teaches us money management, most of us cannot plan for long-term goals like retirement and short-term goals like a weekend getaway.
What I learned was through trial and error—the school of hard knocks.
If you fall into this category, I have more good news. I’ve laid out for you the top 5 money habits that successful side hustlers have.
Successful side hustlers take control of their spending
Take a good, hard look at your expenses. If there’s more money going out than coming in, it’s time to reduce your spending.
Start with discretionary expenses; perhaps eat out once a week instead of twice. Next, look at your committed expenses. Can you take the bus or train instead of a taxi? Can you downgrade your mobile phone plan? Be more energy and water-efficient? That can help lower your utility bills.
Once you have determined how much you can cut each month, call your payroll department and arrange for that amount to be directly transferred into a savings account. Split those savings between high-interest credit card payments (if needed) and an emergency fund.
Use my Time to Hustle planner to track your spending and help you stick to your plan.
Successful side hustlers pay themselves first
My number one rule when it comes to money in business is to make sure you pay yourself. You must pay yourself for your time. You don’t have to give yourself a full salary at first if your business can’t quite afford you, but you need to take something for yourself.
And, never ignore free retirement savings money. Contribute at least enough to your 401k or 403b retirement plan to maximize the match from your employer.
Sign up for any tax-free accounts offered by your employer, such as a health savings account for health care expenses or a flexible spending account for dependent care expenses.
Successful side hustlers classify their expenses
List all your spending under these 3 categories: fixed expenses, committed expenses, and discretionary expenses.
Fixed expenses include housing, insurance, taxes, and car payments—things that don’t change from month to month. Divide the sum by 12 to get the monthly cost.
Under committed expenses, list utilities, food, transportation, mobile phone charges, payments on credit card balances, school fees, and your kids’ allowances—these are things you’re committed to.
Everything else falls under discretionary expenses: clothing, entertainment, schoolbooks, children’s extracurricular activities, and medical bills.
As for vacations and gifts, add up how much you spend in a year, divide by 12, and you’ll have an idea of how much it costs per month. And don’t forget to include a small amount each month to put aside for a rainy day or unexpected expenses.
Successful side hustlers put themselves on the path to being debt-free
Ask your creditors if they would be willing to lower your interest rates. You’ll be surprised by how many are willing to do this.
Start with the highest interest rate balances; see if you can refinance your debt with a balance transfer or lower interest loan.
If you can’t make the minimum payments on your debts, try to negotiate an affordable payment plan with your creditors or schedule an appointment with a nonprofit credit counselor.
If you can pay more than the minimum, put your extra payment on the highest interest or smallest balance debt and repeat until you’ve paid off all debt with interest rates above 4 to 6 percent.
Successful side hustlers protect themselves and business from future storms
Many new entrepreneurs miss a lot of details when building their business. I want you to understand how important things like business licenses, insurance, contracts, and hard conversations are to the success of your business.
As your business grows, you’ll start to work with other people who have skill sets or time that you do not have.
That’s awesome that you can hire them to lessen some of your load.
But when you start hiring help, you need to also think about contracts. Always have an agreement that lays out what you will pay and what they will do. Every detail should be in there, so you both know what to expect in this business transaction.
You won’t want to, but because you’ve read this, you will get that contract signed. When you know better, you do better, right?
Always have a contract. Always.
You can hire a lawyer to put one together. You can use online services like The Contract Shop that takes out all the guesswork about what you need to do to prepare your business for long-term growth.
I don’t care where the contract comes from. But before you exchange a penny or a minute with anyone who is going to work for you, you get that contract signed. You’ll be amazed at what some of the people you trust will do to grab a stack of your cash if it’s easier than working.
By following these money habits, you can begin to enjoy a banquet of prosperity and live a financially healthy lifestyle. Remember, this is a journey, not a destination. Money is neither good nor bad; it’s simply a tool to help you reach your goals.
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