Is a Side Hustle Worth It?

We’ve all heard the stories of full-time employees quitting their careers because their side gig took off and made them flush with cash. 

A 2022 study by Zapier showed that 40% of Americans have a side hustle. And with living costs going up, the number of people willing to do odds and ends for cash is bound to go up, too. 

While there is money to be made in blogging, YouTube, crafty entrepreneurship, and more, not every side hustle will lead to such dramatic transformations. In fact, some side hustles might put more strain on your finances and mental health than they are worth.  

Erika Taught Me

  • Earning extra money is a great way to pay bills and get ahead on debt, but not all side gigs are created equal.
  • You must understand your true hourly wage to determine if a job is worth your time.
  • Watch out for predatory companies that have costly starter kits, memberships, or unclear payment terms.

. . .

How Much Side Hustles Really Pay

Ridesharing and food/grocery delivery services through Uber and Lyft are two of the most popular choices because you just need a reliable vehicle and a clean driving record to start. 

Lyft states that its drivers earn $23.46 per engaged hour after expenses, including tips and bonuses. The Rideshare Guy, a site that interviews thousands of rideshare drivers each year, says that Uber drivers average $15 to $25 per hour

These figures are for active hours worked. It does not take into account time spent waiting for opportunities, driving back from a drop-off, or when you need to take a break. 

Depending on how busy your night is, this average hourly wage could be less — even less than your state’s minimum wage. 

Of course, there are other side hustles, like blogging, social media, graphic design, writing, and so much more — and the pay rates are as varied as the options. Do a little digging into your chosen side hustle to see what others are earning.

READ MORE: How Much Erika Kullberg Makes on Social Media

Is Your Side Hustle Costing You Too Much?

To understand if your side hustle is costing you too much, you need a better look at your true hourly rate. 

Just because you earn $100 for two hours of work doesn’t necessarily mean you are earning $50 an hour. 

Here are some other costs you must count:

  • Supply costs: Most side hustles will have some supply costs. Whether you are baking desserts, crafting for your Etsy shop, or freelancing for various clients, you have to count the costs of material, equipment, and software. 
  • Equipment depreciation: Consider the depreciating costs of using your car, kitchen, computer, etc., to run your business. 
  • Transportation expenses: Delivery side hustles require the most gas, but even selling items on eBay will require trips to the post office. 
  • Administrative time: Don’t forget to include the hours you spend on your side gig that don't actively earn you money. For freelancers and service-based jobs, this might be communicating back and forth with clients or trying to drum up new business. 
  • Taxes: Expect to pay 15.3% in taxes on your net profit. You might be able to write off some of your expenses, but it is still a good idea to plan to pay 15.3% on top of your earnings. 

Here’s how this might play out if you baked cakes on the side. 

Let’s say you charge $150 for a small birthday cake. If it takes three hours to bake and frost the cake, you might be tempted to think you earned $50 an hour. 

However, you didn’t consider the hidden time and costs:

  • 30-minute intake phone call with the client
  • 30-minute grocery trip
  • 30 minutes posting on social media to get new clients
  • $30 for ingredients
  • $5 for utility costs — i.e., water and electricity to bake the cake and clean up
  • $5 for equipment wear/car wear
  • $5 for packaging supplies to ensure your cake is boxed professionally
  • 30-minute trip to deliver the cake (15 minutes each way)
  • $5 in gas

So, it really took you five hours to complete the cake, and cost you $50. 

Your profit after the costs would be $100, or $84.70 after tax. 

Your true hourly wage is $16.94 an hour. 

Now, consider if you mess up the cake or relied on advertising to gain new clients; then you would be paying to have a side hustle rather than earning money with your gig. 

READ MORE: How To Start a Side Hustle

Side Hustle Red Flags

Even if you are desperate to make extra money on the side, you need to be wary of opportunities that sound too good to be true. 

Side gigs are all the rage, which means scammers and shady employers are trying to get their piece of the action. 

Look out for the following:

High upfront costs

If you need to buy a marketing kit for $200 or enroll in special training, think twice before pursuing that side gig.

Additionally, look out for “opportunities” that require you to be a regular customer, too — ahem, most multi-level marketing businesses. 

Unrealistic earning potential

If an opportunity guarantees excessively high earnings with minimal effort, it's likely too good to be true. 

Legitimate side hustles usually require time, effort, and, many times, skill.

RELATED: How To Tell If an Investment Is Too Good To Be True

Lack of transparency

You should be able to research the company and other employees. 

Also, you should know upfront how much you can expect to make and when you will be paid, assuming you are working for a company rather than yourself. 

A promising job you didn’t apply for

Unless you have an active networking presence, you should be wary of any company that wants to hire you when you never even applied. 

RELATED: Facebook Marketplace Scams to Watch Out For

Job scope creep

Whether you are working for a company or an individual client, be clear about the job expectations from the start and hold firm. 

Don’t allow a client to add on more tasks without additional pay — it doesn’t matter if it will only take you a few extra minutes.

TL;DR: Not All Side Hustles Are Worth It

We love the idea of earning extra income, but not all side gigs pay well or are easy to make sustainable money from. 

Don’t forget that putting in more hours of work in between your full-time job can quickly lead to burnout and other mental health issues — which are definitely not worth an extra $50 to $100 per day. 

For more tips on getting ahead without burning out, check out these episodes of the Erika Taught Me podcast:

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I'm an award-winning lawyer and personal finance expert featured in Inc. Magazine, CNBC, the Today Show, Business Insider and more. My mission is to make personal finance accessible for everyone. As the largest financial influencer in the world, I'm connected to a community of over 20 million followers across TikTok, Instagram, YouTube, Facebook and Twitter. I'm also the host of the podcast Erika Taught Me. You might recognize me from my viral tagline, "I read the fine print so you don't have to!"

I'm a graduate of Georgetown Law, where I founded the Georgetown Law Entrepreneurship Club, and the University of Notre Dame. I discovered my passion for personal finance after realizing I was drowning in over $200,000 of student debt and needed to take action-ultimately paying off my student loans in under 2 years. I then spent years as a corporate lawyer representing Fortune 500 companies, but I quit because I realized I wanted to have an impact; I wanted to help real people and teach them that you can create a financial future for yourself.

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Advertiser Disclosure

Our aim is to help you make financial decisions with confidence through our objective article content and reviews. Erika.com is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as MileValue.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.

Advertiser Disclosure

Our aim is to help you make financial decisions with confidence through our objective article content and reviews. Erika.com is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as MileValue.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.