Always dreamt of turning your passion into business? 2020 has brought about a realization; to live your dreams now, tomorrow is not certain. If you’re looking to initiate a side hustle; whilst maintaining the security of your current job – You’ve definitely thought this through.

Passions are a great motivation and add to the purpose of life. We’ve always hoped to be like the artists, musicians, girl bosses, Fortune 500 Company CEOs, the people we’ve grown up idolizing. What sets them apart? They went all out to make it happen. With your liabilities and responsibilities, if you cannot go all out, you are still starting with baby steps. And that’s a good thing. 

Before you start out or run a side hustle, here are few steps to budgeting it right. 

1. Go For The Gig

Who doesn’t like some extra money? Especially when you get to turn your hobby into a profession. But before you get on the tracks, understand what all expenses you need to incur. You want to ensure you’re profitable and for that you need to know how much income you must make to avoid losses in the long run. Side hustles are not easy. When you’re starting out, you’re a one-man army. From finding gigs, to closing them, working on them, getting paid to winning more business. It’s a lot of work. You want to maximize your earnings, but not at the cost of stress, financial drain and a burnout. It’s important you plan this from the get go and analyze every little detail before committing your time and money.

2. Financially plan the additional income

You’ve decided to use your skills to maximize earnings. Don’t spend all the money on unnecessary expenses. Reserve some to grow your business and others to grow your wealth. Talk to your financial planner to chart out a workable and growth oriented plan for you to make the most out of your hard earned money.

3. Profits = Income – Expenses 

At all times, stay on top of your cash flow. Consider a revenue earned only when you have received the payment. Review your estimated fixed and variable income and expenses to actual. This should help you gain an understanding of your profitability as well as draft an estimate for the next quarter. Don’t pocket out on more expenses in anticipation of a likely future income. Keep a conservative approach to your spending. Don’t forget to account taxes with every gig. Budget it and with completion of a project, set aside tax money along with your other payables.

4. Transitioning in to a full fledged small business 

Biggest motivation for side hustlers is to scale up their gigs into a full-fledged small business. You’re making more profits than you estimated. Business is cash flow positive. Your services are in demand. You are struggling to shuffle between a full time job and the demands of your growing hustle. Should these be enough to give up on your secured job and take the leap of faith? There’s no sure way to know it on your own. Just because you suspect it’s a critical disease does not mean you are suffering it. You need to consult an expert and have it thoroughly examined before you conclude. Similarly you need to consult your reliable financial planner if quitting now and running a full-fledged business is the right thing to do. Have you accounted for planned and unplanned living and business expenses? Are you earning enough to keep investing for your retirement? Have you proof checked your financial standing for emergencies like pandemic? Don’t let your emotions make the judgment for you. Speak to an advisor before you say ’I do’ to become a full time entrepreneur.