If you’re putting in $100 to invest in your side-hustle, and it earns you $1,000 this year, that’s a 900 percent rate of return. What the what?! Ask any investment pro or finance major, and they’ll tell you that is an unreal amount to earn on an investment.
That’s why you need a plan for investing some money back into your side-hustle. It’s one of the most powerful ways you can grow your money and generate extra cash to use on anything from funding your hobbies to paying off your student loans.
But I thought investing was supposed to be hard?
There’s a lot of jargon involved in investing, and that can be a huge barrier to entry for people who didn’t major in finance. That’s why for a lot of us, we prefer the head-in-the-sand approach when it comes to investing. While, sure, it’s important to get into the stock market as soon as you feel comfortable (and there are apps that can help you with that), investing in your side-hustle is a great first step.
At its core, investing in the traditional sense is just putting money into companies and industries that will likely grow over time. If you think a little bit of cash could help you scale your side-hustle, well, that’s a valid investment in a business that you think will grow over time.
How to invest in your side-hustle
Luckily, investing in your side-hustle can look like a lot of different things, and you don’t need an online brokerage or an understanding of ETFs to do it.
To invest effectively back into your business, first you need to take stock of where you’re at in your side-hustle. How do you make money? How much money do you make every month?
An effective investment in your side-hustle should help you make more money every month, and it shouldn’t be so expensive that you’re spending more than you’re making every month. (That part seems obvious, but unless your business model is to get venture capital, running your business at a loss is probably a bad idea.)
Next, do some research. How do people with side-hustles like yours grow their income?
This will be entirely dependent on what type of hustle you run, but it’s good to get a sense of what’s popular in your industry. Maybe you’ll buy extra supplies for your Etsy store, or upgrade the software you use to run your online biz — but if you drive for Uber, neither of those are going to have a marked impact on your business, which is why it’s important to pay attention to what counts in your specific industry.
Investing in your skills and knowledge counts, too
Most of us think of investing as tangible, specific things we can buy for our side-hustle.
“I’m going to invest in business cards for my hustle!”
“I’m going to get a new website design for my hustle!”
“I’m going to print up some flyers!”
But a sneaky, and potentially profitable, way to up-level your side-hustle earnings could be to invest in your skills.
If you read a book, or took a course or implemented a strategy yourself and gained new skills because of it, could you offer that knowledge or those skills to a client in exchange for charging a higher price? If the answer is yes, whatever you spent on acquiring that knowledge or skills is an investment.
Plus, nothing against flyers, but I’ve never seen a flyer lead to a more valuable offering for your clients.
How not to blow your budget on “investments”
Back to the money side of things for a hot second: Investing in your side-hustle is a type of spending that can get out-of-hand quickly if you’re not careful.
It’s similar to how we justify our personal purchases as investments in our health, or wellbeing, or simply put them into the “I deserve it” category. Investing in your side-hustle seems like such a good reason to spend money that it can quickly eat up your whole budget if you’re not careful.
Before you start looking for ways to spend your hard-earned side-hustle cash on investing back into your business, make sure to set a budget. One of the most effective ways to do this is to pick a set percentage of your side-hustle earnings, like 10 percent or 20 percent, and set that amount aside to spend on your business.
That limit makes sure you’re not blowing all your money on investing in your business before it grows, and when it does grow, you’ll be able to afford those bigger-ticket things you’ve been eyeing.
The best investments are the ones you understand
If you know your side-hustle and understand how it makes money, you should be able to pick worthwhile places to spend money on growing it to make even more money. That’s the real point of investing in your side-hustle, and you’re uniquely positioned to make those judgment calls because no one understands your hustle quite as well as you do.
So what are you waiting for? Go invest in your biz (within reason).
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