Financial Feminist - Financial Foundations #6: How to Start a Side Hustle

Episode Date: November 16, 2023

In this episode of Financial Foundations, brought to you by State Farm, host Tori Dunlap is talking about side hustles and creating passive income. From what they are, who should start one, and what kind to start — she’s breaking it all down in this episode. So if you’ve ever been curious about using a side hustle to help you reach your financial goals faster — tune in! Get our free debt payoff worksheet: https://herfirst100k.ac-page.com/debt-payoff-freebie Read transcripts, learn more about our guests and sponsors, and get more resources at www.financialfeministpodcast.com Not sure where to start on your financial journey? Take our FREE money personality quiz! https://herfirst100k.com/quiz Learn more about your ad choices. Visit podcastchoices.com/adchoices

Welcome to Financial Foundations, a mini-series of Financial Feminist brought to you by State Farm. During each episode of this limited series, we'll be tackling financial basics like budgeting, investing, debt, and what it really means to be a financial feminist to help you get on track no matter where you're at on your money journey. Through short, actionable episodes and simple homework exercises, I'll help you build a financial plan you'll actually want to stick to. Thanks again to our sponsor, State Farm, for making this series possible. Like a good neighbor, State Farm is there. Hi, Financial Feminists. Welcome back to the show. I'm so excited to see you. That seems to be the intro that I always go with. We never script it, but I'm always excited to see you,

and I will always be here. My name is Tori. I am a money expert. I am a New York Times bestselling author of a book also called Financial Feminist. And this is episode six of our Financial Foundations series brought to you by our friends at State Farm. If you are new to this series, a reminder, please go back and listen to the previous episodes. We are doing these in order for a specific reason. So if you haven't listened to episodes one through five, please go back, listen to those, and then we'll see you back here. If you are already caught up, well, welcome. We're talking today about side hustles and passive income. But before we get into the rest of the episode, let's talk about our homework from our previous episode,

which was to start picturing Nana Yu or Grandparent Yu and journaling about them. I want you to ask yourself now, how did it feel to picture your life in retirement? How did it feel to picture what dream Grandma Yu looked like, what her days were full of, how she spent her time, and how she spent her money? And I want to ask you a follow-up question, she spent her time and how she spent her money. And I want to ask you a follow-up question, which is what choices are you making to get there? How are you opting into your financial life to secure her a better retirement? How are you making strategic financial choices to educate yourself more about money, to talk more about money, to become more comfortable with money so that you can give Nana Yu her dream retirement? One of the biggest things that we have

to think about in order to progress towards those goals, right? In order to progress towards retirement or potentially even retiring early, progressing towards becoming debt-free like we've talked about in the previous episodes, progressing towards saving money is how we earn money. If we want to save more money, pay off our debt faster, retire early, or retire comfortably, we need money to do that, right? It all starts with how we earn money. It all starts with how we make a living and where that money is coming from and how it's coming in. So we have a couple ways stereotypically that folks make money, right? You can work in a nine-to-five job. You can be a W-2 employee at a corporation.

You can also be a freelancer or a gig worker where you're taking on potentially multiple clients or various kinds of work. You can also work for yourself full-time and run a more established business where maybe you have employees and you have something to sell beyond just your services. Or maybe you're doing a combination of a couple or maybe all of those things. We're talking today about how to build a side hustle and thinking about passive income. And before we go into any more detail, I would like to highlight that even the word side hustle is a privilege. For many folks, this is just called a second job. For many people who

can't afford their lifestyle, can't afford their bills, can't afford their rent or their groceries, a side hustle is not a nice to have or a way to accelerate your financial goals. It is a necessity. And it is not called a side hustle. It's called a second job. So there is a lot of privilege already baked into the side hustle. So I just want to acknowledge that. The second thing that's important to talk about before we talk about how to actually

build a side hustle is that we do not recommend nor support contributing to hustle culture. A side hustle is something that can accelerate your financial goals, that can be a way for you to pursue either entrepreneurship someday, or at least a different kind of creative work than maybe you're getting in your nine to five. but it should not be at the expense of your health or at the expense of your relationships or at the expense of your just general well-being. Again, this is why we talk about on Financial Feminist all the time that people shouldn't have to work a second job in order to afford their life. This is where policy change and systemic support needs to come in. We also should not be working ourselves to the point of burnout or exhaustion just to

survive or just to feel like we're fulfilling our goals and our dreams. That is capitalism at work. That is hustle culture at work. And please keep in mind throughout this entire episode, I am not advocating for either hustle culture and burnout and exhaustion, nor am I advocating for this capitalistic approach to working. We want our work to be fulfilling and we want our work to be compensating us fairly. And one of the benefits of the side hustle is that you have more control over how you make money in terms of your effort, your time, as well as the ability to achieve your financial goals faster. So that being said, if you still want to hear about side hustles and you still are interested, as I hope you are, let's talk about it. Let's talk about what a side hustle is versus passive income. The words passive income get tossed around a lot in the finance bro, tech bro community,

and we want to be able to define both because they can sometimes mean the same thing. and we want to be able to define both because they can sometimes mean the same thing. A side hustle is usually a business or some sort of extra income where you provide a good or service in exchange for money. Just some examples. Her first 100k, this business that is now my full-time job and has employees and has a bunch of responsibilities, was a side hustle. You probably know this if you followed along with my story for a while, but I was working a nine to five in marketing and I founded her first hundred K on the side of that nine to five. My motivations with running that side hustle were first, I wanted to expand my experience in marketing and in content creation in order to feel more creative. Two, I was tired of working for straight white men who were abusive and toxic and made me feel

like shit. And I thought that maybe that might be my escape hatch at some point. And three, I always just dreamt of being an entrepreneur. And I thought maybe I could turn this into something someday that could not only support and sustain me, but potentially maybe even make an impact on the world, make an impact on people, maybe even give people jobs someday. If you would have asked me when I was 22, when I founded her first 100K, if all of those things were in my mind, probably not. But as I grew it, and as I worked to understand how I wanted to run my side hustle, those things started appearing. And lastly, four, I just wanted to make some more money.

I wanted to do something that I loved and that really challenged me. And if it made me more money on the side, great. It was one of the biggest reasons I was able to hit my 100K at 25 years old because I was not just saving a portion of my nine to five income. I was also pocketing a huge amount of my side hustle income after my taxes and expenses. So that's one example of a side hustle, right? Is a business that later grows to be a full-time business. Side hustles can also include things like working at your gym in order to either get paid or get a free membership

or free workout classes. Actually, a lot of people don't know this. When I first took her first $100k full time, I didn't know how it was going to go. I didn't know if I was able to support myself. And so I actually, for a couple months before the pandemic hit, worked at my local Bar 3 studio. And that was a great way to make money. And also it was $180 membership. I didn't have to worry that I got it as a free perk. So even when my side hustle became my main hustle, I still had a side hustle for a while. Side hustles can also just be,

maybe you're a graphic designer and you're nine to five and you have a freelance client on the side. It can be Uber driving. It can be catering. I know that's a common one for a lot of folks is picking up catering jobs. Maybe it's being a nanny or a caregiver. There's a lot of different side hustles, right? And again, as I'm highlighting all of these things, I want to, again, remind us that for

many, many people, this is their main hustle. This is their job. And again, there is an amount of privilege to take on a side hustle that is important to discuss. So that's a side hustle. This is their job. And again, there is an amount of privilege to take on a side hustle that is important to discuss. So that's a side hustle. Usually a business or some sort of project you develop where you're providing some sort of good or service in exchange for money. On the flip side, passive income is something that makes you money with little to no effort. This can also be business related, right? If you sell a course that is considered passive income. However, for a lot of things that are passive income, they require a lot of upfront effort. And then ideally, you're selling

them passively later. So again, we sell courses at Her First 100K. Those are technically passive, but the amount of work that it took to create the course, to set up email funnels, to market the course, to continually update the course, right? It's not active effort, right? It's not like I am going out to teach this one-on-one anymore. It is more passive, but there are very few things to me that are like fully passive income. One of the easiest ways to earn passive income, if you're just an average person listening, is a high-yield savings account. High-yield savings accounts give you income for you doing no additional effort except putting some money that you already have in an account.

I wish more people talked about these high yield savings accounts as forms of income. We also have an upcoming episode with Jenna Kutcher and she has a great story where, you know, she was shooting weddings. She was a wedding photographer and she was going out and, you know, manually, of course, traveling and shooting these weddings. And she got to the point where she was like, this is exhausting. I don't want to keep doing this. This is so much time and effort. And so she started educating other people about how to build a business, how to be photographers, and then it became more and more passive. So a lot of things can be more on the passive income side. However, again, there's typically a lot of upfront effort, except with a high-yield savings account,

which again, this is why we talk about them all the time. We have our links to the one we recommend down below in the description. But the thing to think about with passive income is it's just good to ask yourself, can I create something that can make me money without having to think about it? Maybe that's putting a digital download in an Etsy shop. Maybe that's, again, creating a digital course. Maybe you're a photographer and you license a photo to be able to sell. For me, I put so much work into my book. I put my entire body and mind and health on the line to write a book. And that is now technically passive.

But again, this is why I put the biggest asterisk on passive income. There's a lot of people out there just like, make money while you sleep. And I'm like, yes, that's great. But you do have to build a business or build a product or do something to get to that point. Again, high yield savings accounts for me and investing feel like the only ways you can actually have truly or at least close to passive income as possible. All right. Let's talk about who should start a side hustle. One, if you're looking to make extra money, even temporarily.

Right. You're looking to get out of debt faster. You're looking to be able to save more money to go on a trip. Or again, maybe you need this money in order to survive. Number two, maybe you're looking to side hustle because you want to start a small business, but you don't have the funds right now to quit your full-time job. This is where I wave emphatically. This was me. One of the best decisions I've made, and we've talked about this on the show before, was not asking my business to support me before it was able.

I would have become resentful. I would have become desperate. I would have made probably pretty poor decisions for the business if I asked it to support me and support my bills before it was ready to. And I funded my business. I put funding my business in quotes here, but I funded my business using my nine to five, right? Using the stability of healthcare and a stable paycheck and all of that provided, I use that to grow my side hustle. You guessed it, on the side. And finally, who should start a side hustle? Someone who maybe wants to explore a passion or hobby. Someone who is maybe working a very tedious nine to five job that doesn't feel very creative. And maybe you just want to explore creativity on the side.

And maybe you even want to get paid for it, right? I'm thinking about folks who, you know, have candle businesses and they love that and they love doing that. And they put it on the, you know, they start a side hustle with that because their nine-to-five is not creative. Or I have friends who like knit or crochet or make earrings. And again, they love doing that.

And maybe you can monetize it a bit. I want to just take a quick sidebar here. But the thing about side hustles that I do want to highlight is please keep hobbies. Please make sure that you have things that you do just because you love them. And I'm speaking as someone who doesn't have those things. I'm speaking as someone who is really bad at hobbies and capitalism's been popping off in my life. And I just feel constantly, especially early in my career, anytime I did anything, I needed to make money from it. Anytime I did anything, I needed to make money from it. And I was actually talking to my partner the other day

about one of his hobbies that takes a lot of money but brings him a lot of joy. And he was feeling really guilty that he wasn't making the amount of money he should. And I asked him, I go, does this bring you joy? And he's like, yeah. And I'm like, okay, then the money doesn't really matter. Whether you make money on this thing doesn't really matter if you love it. So I just want to also highlight that if you have a hobby and you really love it, there are pros to monetizing that hobby, right? The money. The money is the biggest pro. You get more money. The con is that it's very, very easy for you to, start resenting that thing, to ask it to do more for you than it can. And it starts to lose its kind of magic because you've monetized it. So I will ask you to ask

yourself, is this something that A, I need to monetize and B, I want to monetize with all of the stuff that comes with that. I wish in many ways that some of my things that I love to do, I had not focused on making money off of them. And now I'm trying to rediscover hobbies and rediscover what it means to do things just because I like them and not because they make me money. So just quick sidebar, something to ask yourself. All right, let's talk about our kinds of side hustles. We were already talking about this. Many offer seasonal opportunities for extra work, right? We are just closing out summer here.

And there's a lot of summer side hustles with outdoor activities and with summer camps and with tour groups, right? Tourism goes up in the summer. But there's also a lot of winter seasonal activities, right? A lot of people need extra team members for the holidays. Maybe there's ways you can sell what you make for gifts for the holidays, right? There's things to think about in terms of seasonality. There's also the ability, of course, to work for someone else or contractually, right? We're talking DoorDash, retail positions, lifeguarding,

substitute teaching, babysitting, nannying, pet sitting, right? Rover. This is also where like my bar three side hustle came into play. There's also the ability, again, as a kind of side hustle to start a small business. Selling on Etsy or at a farmer's market, maybe doing graphic design or photography or copywriting or social media marketing, right? And this is where her first $100K eventually turned into, right? It was a small business on the side of my nine to five that later became my full business. A couple of questions to ask yourself to figure out what kind of side hustle might work for you. We have a whole additional sidebar in my earning chapter of my book, Financial Feminist, that helps you figure

out what your side hustle should be and how to make money. So if you explore these questions and you still want more information, cool. We'll see you in chapter six of the book. Okay. First, what do you already love doing? What do you already love doing? And are you good at it? Are you talented enough at it to be able to ask somebody to pay you for it, right? Maybe again, that's creating a good or creating a service, but are you fulfilled by this work? Do you like this work enough to keep doing it? And are you good enough at it to get paid for it?

The second is, do you have time right now? If you don't have time right now, that will be tricky. If you can't make time in your schedule, that will be very difficult for you to manage a side hustle. One of the exercises that I outline in my book is sitting down and looking at your week, looking at your work commitments, how much time you're spending at your full-time job, and what are your personal commitments, your social commitments, your mental and physical health commitments, right? When are you going out to eat with friends or seeing friends? When are you working out? When are you going to therapy? When are you taking care of your children? When

are you commuting back and forth? When are you cleaning your house or cleaning your apartment? If you take stock of your week and you realize there's no time to spend on a side hustle, well, that either means it's not the right time right now or you're going to have to make time. I've also discussed this before. One of the things I was willing to do when I was growing her first 100K was make more time in my schedule for the business because I really wanted it. I really wanted the business to succeed. And I was willing to sacrifice a little bit of my personal time because it didn't feel like a sacrifice. It felt like an investment in future me and the future of the business.

It's also going to determine what kind of side hustle you pick, right? the business. It's also going to determine what kind of side hustle you pick, right? I wanted something that was more flexible, something that I could press on the gas or ease off depending on how I was feeling, depending on how busy my life was, and depending on my schedule. If you have a side hustle where you have to be somewhere, right? You have to clock in or clock out and show up. That's going to be a lot harder to adapt to your schedule, right? Again, if you work at a gym or you have to show up at a particular time to sell your goods at the farmer's market, right? If shit hits the fan in your life Saturday morning and you have to be somewhere, that might not work for you. So again, time will also determine not just how much time you do or don't have, but how flexible you can be with it. Another question

to ask yourself is to take it seasonally. This side hustle doesn't have to be forever. You can reevaluate it at any time, right? Is this something that you want to do just temporarily to see if you like it, to see if this works for you? I would say that most things you can get in, and if you want to get out, you can get out, right? And again, you might want to choose certain side hustles that you have more flexibility with in terms of when the busy season is, when your personal busy season is, and if those two are conflicting. And finally, a question to ask yourself to figure out what kind of side hustle might work for you is the 10% rule by Amy Porterfield,

who was a previous guest on the show, a friend of mine. She always says, if you can teach somebody and you know 10% more than somebody else, great. You can teach somebody that. Again, we talk with Jenna in an upcoming episode about we feel like we have to be like the most expert of all experts to build a business or to do something. And really, you're just teaching the people who are slightly behind you. You're just providing services to people who are slightly behind where you're at, right? I think about social media marketing.

You don't have to be the best social media marketer to ever walk this earth, right? You just need to work with businesses who need some of your support from maybe where you were at two years ago. So if you are 10% better at doing something or no 10% more than someone else, you can teach those people who might be 10% behind in order to catch up with you. A couple of financial considerations to talk about. If you are a side hustler who owns a business, I need you to put money away for taxes. Emphatically, I need you to put money away for taxes. Because what happens when you get paid through a corporation and you're a W-2 employee, your tax is already taken out. The money that

hits your bank account, your taxes have already been paid. But if you are a 1099 contractor or you own your own business, you have not paid taxes on that money. So if you charge a client $1,000, you are not getting $1,000, right? You have expenses, but you also have taxes to pay for. So this should factor into how you price yourself and also should be something that you're strategically doing to make sure that you're setting aside money for taxes in a high-yield savings account. If you are 1099, freelance, or a self-employed person, and that can be part-time self-employment, you are in charge of paying your own taxes. Talk to an accountant for more information. For me personally, a general rule of thumb is 30% of the money you receive should get set aside for

taxes. And again, it should live in a high-yield savings account. And finally, I need you to find a supportive community. We like to think we are a great supportive community here at Her First 100K. We have a free Facebook community. We have this group of financial feminists that cheers each other on and supports each other. We have talked again on the show, and we'll talk more about how isolating it can be to run a business or how isolating it can be to try to figure all of this out. So find people you can rely on, find people that you can talk to, find people who can support you and also challenge you to be better. I think one of the best things I did when I was just getting started in the building a business and figuring out all

of this is I found other business owners in Seattle. And they're still some of my best friends. One of them is our COO, Karina. I met Karina through a women entrepreneur in Seattle group. And these have been some of my best friendships. And we have relied on each other and supported each other and advocated for each other. And that has been so incredibly important. So find a supportive community. Find at least one person that you can talk to about both of the emotions of running a business, but also the logistics of running a business or a side hustle. All right, team, let's do some homework before we head out. I need you to write down everything that you're good at that you think you might be able to monetize. Are you a budding

photographer? Do you love painting pet portraits? Ask yourself how it would feel to monetize that and then get realistic about your time commitments. And if you're ready to start, just start. I need you to not wait for perfection. I need you to take action instead. I would have started actually the business that became her first 100K way sooner if I had just gotten started. But I felt like I needed to know everything and I needed to be an expert and my website needed to be perfect.

Stop sabotaging yourself. You don't need the most beautiful logo. You don't need brand colors. You don't need the most perfect website. You just need to start. You will figure all the most perfect website. You just need to start. You will figure all of that out as you go. I promise you. If you look back at her first 100Ks website in 2016, when we first got started, it was a mess. It was terrible, but it was a website and it was up and it was live and it was good enough.

Done is better than perfect. I need you to just get started because you can make an impact on the communities around you by getting started. You can make an impact on your own money by getting started. And you can start building your confidence and your expertise by actually doing the thing. Team, I am so excited for you to either start your side hustle, to diversify your earnings, and just to maybe explore if your current way of earning money can be different or can be diversified. If you enjoyed this episode, please feel free to share it with friends, colleagues, loved ones. And we have another episode in the Financial Foundation series, our final episode coming up about how to spend like

a financial feminist, how to think strategically about how to show up in your communities and use money as a tool for protest to support the organizations and causes and people that we want to see more of in our lives. So thank you for being here. And we'll talk to you soon. A huge thanks to State Farm for supporting our mission here at Her First 100K and making the Financial Foundations series possible. Like a good neighbor, State Farm is there. Neither State Farm nor its agents give tax or legal advice. Thank you for listening to Financial Feminist,

a Her First 100K podcast. Financial Feminist is hosted by me, Tori Dunlap, produced by Kristen Fields, Tori Dunlap, produced by Kristen Fields, associate producer Tamisha Grant, marketing and administration by Karina Patel, Sophia Cohen, Khalil Dumas, Elizabeth McCumber, Beth Bowen, Amanda Lefeu,

Masha Bakhmikieva, Kaylin Sprinkle, Sumaya Molokurio, and Harvey Carlson. Research by Arielle Johnson, audio engineering by Alyssa Medcalf, promotional graphics by Mary Stratton, photography by Sarah Wolf. And theme music by Jonah Cohen Sound. A huge thanks to the entire Her First 100K team and community for supporting the show. For more information about Financial Feminist, Her First 100K, our guests, and episode show notes, visit financialfeministpodcast.com.