Setting an Income Goal for Your Side Hustle
Making money isn't the only reason people start a side hustle but it is always something you have to think about at some point or another. Whether you just want to make enough to pay for vacations, to pay off your student loans or you want to make enough money to leave your day job, we all need to think about how much money we would like to make from our hustle and set an income goal.
I say this all of the time but it's worth repeating, your side hustle is a business. Whether you spend an hour a week on it or you bust out 70 hours a week, you should still think about it as a business if you want to succeed (whatever success looks like to you). You set goals for content and activities for your hustle, so why wouldn't you also set goals on how much money you want it to make?
A lot of people feel uncomfortable talking about money, even in their own business. But you are setting yourself up for failure if you choose to never look at the finances of your side hustle and set goals accordingly. Consistently posting more content on your blog is great, but if you're not making any money on it or even losing money, because you didn't take expenses into account, then you're really running your business like a hobby, it's not likely to grow into more than that. That is why, before you do anything else, you need to set income goals! Not sure how much you should aim to be making with your side hustle? Don't worry, I got you girl.
Here are some things to consider when figuring out how much your business should be making...
What is your end goal?
Did you start your business with the intention of keeping it as side hustle? If your goals are to pay off some credit card debt or student loans, or if you want to save up to travel more, your income goal can probably be much lower than if you're looking for your hustle to bring in enough money for you to leave your day job.
Calculate your expenses.
If you're paying off or saving for something specific, calculate how much you need to accomplish that, and when you need to have the money, then work backwards from there. If you have 15k in credit card debt you want to pay off using income from your side hustle and you want to have it paid off in 12 months, you need to make at least the $1,250 per month payment plus the interest rate your credit card will charge you, let's call it 13% monthly interest. That means you need to make around $1,500 per month from your side hustle to reach this goal.But what about if you want your hustle to be able to fully support you so that you can leave your day job? Calculate your monthly recurring expenses including housing, car payment and insurance, groceries, and any other costs that you will have no matter how much you decrease your expenses. Then you should calculate a realistic budget for entertainment. I know we're all hustling and working plenty of hours each week, but everyone needs a little fun! You should budget money to go out to eat, go to the movies, or any other activities you enjoy doing in your down time. And don't forget to include a budget for savings! Leaving your day job and saying goodbye to a steady paycheck is scary so you need to build a safety net just in case your business runs into a slow period after you've gone full-time, it should cover at least a couple of months of your necessities budget.
Don't forget about taxes and operating costs.
Whatever your situation, the number you came up with from the above, you'll still need to make more to account for taxes and operating expenses. You should be tracking how much it costs to run your business every month, if that amount is greatly increasing the amount you need to bring in every month it may be time to see if you can decrease your expenses. Can you keep running your side hustle but lower your costs? If so, try doing that. If not, you'll need to increase your income goal to account for that. And don't forget about the tax man! If you need to make 3k per month to cover your necessities, entertainment, and savings, you'll need to estimate your taxes on that income. If you're in the 25% tax bracket, a quick way to estimate is to increase that 3k budget by 25% - so you need to make around $3,750 per month. You should do this same calculation for the $1,500 per month you want to pay towards your credit card debt as well, so after taxes your side hustle will need to bring in a grand total of about $1,875 in order to reach your goals.
How to reach your income goal.
Does this sound scary and totally impossible to you? That's ok! Break it up into smaller and simpler milestones in order to work up to your goal. Maybe that is to bring in one new client per month until you hit your goal, maybe it's to make 5 more sales in your Etsy shop per month. Breaking your overall goal into smaller parts will keep you from getting discouraged along the way.
As you look back and review those smaller goals, if you see that you're not moving closer to your overall income goal, it is time to re-evaluate. Do you need to charge more for your client services? Maybe your operating costs for your business and too high. Or maybe you need to set up additional streams of income if your side hustle isn't growing as fast as you hoped. Either way, I have found that your income potential is much higher with a business you are running and setting prices for. You will make more income as your business brings in more revenue, whereas your salary at your day job stays static unless you get a raise. It's much more feasible to grow your income using a side hustle than waiting around for a raise or promotion - let that be a motivator for you. Once you achieve your income goal, it's time to celebrate then make another income goal! Maybe that is to double your side hustle income or it may be to grow your hustle income by 10% each month. Whatever your goals, as long as you're breaking them up into simple and achievable milestones, you can succeed.
Do you have an income goal for your hustle? How much does your business need to make in order to create the life you want?