Should you consider a side hustle?

• Why consider a side hustle?
• What are the downsides of having a side hustle?
• Popular side hustles in the UK

You're far from alone if you’re considering jumping onto a side hustle or even starting a small business to generate additional income. According to finder.com, 43% of UK adults have a side hustle in 2024. This number increases to more than 68% for Generation Z. It's a dramatic increase compared to statistics back in 2017, which were less than 10%. And it’s not much different in the USA. More than half of young Americans have a side hustle, a decision driven by inflation costs. 

So, why consider a side hustle?

Why consider a side hustle?

Earn extra income
One of the most obvious reasons to start a side hustle or gig is to earn extra money. While inflation has only recently hit 2%, the Bank of England's interest rates in 2024 have not changed. There is little doubt that so many of us are feeling the squeeze. Recent UK overdraft statistics by MustCompare show that 1 in 5 adults are overdrawn monthly.

An additional income stream can help you meet your financial goals more quickly. Whether you’re saving for a house, financing a car, or just looking to get some money into a savings account, a side hustle can provide the financial boost you need.

But it’s not just adults. Even children are affected by the need for extra income. With parents struggling to make ends meet, there’s less money available to give as pocket money. According to Euronews, more UK children are adopting income-generating schemes, like babysitting and doing extra chores. You may want to consider a bank account for your child so they can learn more about money and saving.

Additionally, many young people start a job when they leave school and have turned 16, although there are some limitations by law. For example, the minimum age for entering an employment contract is 18. By having their own bank accounts, 16-year-olds and over can gain experience dealing with money and savings. Some of the best accounts for 16-year-olds have added perks, including a bank app with budgeting tools and interest paid on savings. 

Develop skills
A side hustle is a great way to gain experience and learn or improve skills. Whether it's digital marketing, writing, or coding, the skills you gain can enhance your career or even open doors to new job opportunities. Plus, running your own small business can teach you invaluable lessons about time management, budgeting, customer service, entrepreneurship and more.

Making a passion or hobby a reality
Turning a passion or hobby into a side hustle can be fulfilling and a dream come true if it works out. If you love baking, crafting, or DIY, why not make money from something you enjoy? It can make work feel less like a chore and more like a rewarding way to spend your time. Many successful businesses started as side projects driven by passion.

Financial security
Having a side hustle can provide a sense of financial security. If you lose your main job or face unexpected expenses, the additional income from your side hustle can help you stay afloat. It diversifies your income sources, making you less reliant on a single paycheck and helps contribute towards your savings.

Flexibility
Most side hustles offer great flexibility and give you time to do things when you want. You can often set your own hours and work at your own pace, fitting it around your main job and other commitments. This can make things easier to manage without burning out, although there is always that risk - more on this next.

What are the downsides of having a side hustle?

While starting a side hustle has many benefits, it’s important to consider the potential downsides. Here are a few:

Work-life balance
A side hustle can impact your work-life balance, especially if you run it from home. It can be hard to separate work time from family and recreational time. Setting boundaries is crucial to prevent your side hustle from taking over your personal life and ensure you can still relax, spend time with family and friends, and care for yourself.

Time management
Balancing a side hustle with a full-time job, family, and personal commitments can be challenging. Tight deadlines, commitments, and administrative tasks can quickly add up. If you charge for services by the hour, you will also need a way to track your time to ensure it is paid.

All this requires excellent time management skills and can sometimes lead to stress or burnout if not managed properly. Make sure you can take on extra work before committing and diving in.

Initial investment
Some side hustles require an initial investment of time or money, both valuable resources you may not have. Whether you're buying equipment, setting up a website, or taking time to complete a course to improve your skills, be prepared for some upfront costs.

Some are tempted to get a small loan or even a personal loan. But there are risks to additional repayment costs, especially if you’re already struggling. Make sure to budget for these and weigh them against your expected earnings.

Legal implications and taxes
Starting a side hustle means dealing with additional legal and tax responsibilities. Some activities may put you at risk, and you may want to consider insurance that covers or protects you if things go wrong. If you plan on selling goods and services to the general public, you also need to be aware of consumer protection and rights.

Another point is tax. You must inform HMRC if you earn more than £1,000 from self-employment in a tax year. You’ll need to file a self-assessment tax return and may need to register for VAT if your earnings exceed a certain threshold, currently £90,000.

It’s essential to keep accurate records and consider consulting a tax professional to ensure everything is as it should be. It may be helpful to look for a small business bank account. Keeping your business costs separate from your personal bank account can make sorting expenses easier, especially when preparing your tax return.

TIP: When comparing bank accounts for business, look for handy tools that may save you time and money. These tools include invoicing, payment alerts, performance and expense tracking.

Popular side hustles in the UK

If you’re convinced that a side hustle is for you, here are some popular ideas to consider:

Freelancing
In 2024, some 7.4 million people are freelancing in the UK (part-time or full-time), according to Archimedia Accounts. Freelancing is a flexible option where you can offer skills such as writing, graphic design, web development, or digital marketing. The tough bit may be getting new clients, but talking to friends and family may help get you started with a few gigs or in contact with a person who may need your services. [3]

Selling handmade goods
If you’re crafty, consider selling handmade goods on platforms like Etsy or at local markets. Whether it’s jewellery, home decor, or personalised gifts, there’s a market for unique, handmade items. Some also sell second-hand items, such as clothing, on sites like Depop and Vinted.

Online tutoring
If you have expertise in a particular subject, online tutoring can be a lucrative side hustle. Websites like Tutorful and MyTutor connect tutors with students in need of help.

Delivery services
With the rise of online shopping, delivery services are in high demand. Companies like Deliveroo, Uber Eats, and Amazon Flex offer flexible delivery driver positions that can fit around your schedule.

Blogging or vlogging
If you’re passionate about a particular topic, consider starting a blog or YouTube channel. While it takes time to build an audience, successful bloggers and vloggers can earn money through advertising, sponsorships, and affiliate marketing.

Pet sitting and dog walking
If you love animals, pet sitting or dog walking can be a fun and rewarding side hustle. Websites like Rover and Pawshake can help you connect with pet owners needing services.

In conclusion

Starting a side hustle can earn extra income, develop new skills, and pursue your passions. While it comes with challenges like managing your time and navigating tax responsibilities, the benefits may outweigh the drawbacks.

Whether you freelance, sell handmade goods, or provide a service, the key is finding something that fits your interests and schedule. While it takes commitment and sacrifice, you might find a new, rewarding way to boost your income, start a new career, or even start a successful business.

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