Learn how to maximize your side hustle money and productivity.
People pick up a side gig for plenty of reasons: Their full-time job may not cover their expenses due to higher inflation, they want to make faster progress toward their savings or debt repayment goals, or they simply want some extra cash to spend.
Regardless of the reason, once you start earning freelance work income, it’s important to have a plan to track and manage the income and expenses that come along with it. While your full-time job will automatically take taxes out of your paycheck and figure your income for the IRS, you may have to do that yourself with a side gig.
Whether you’re walking dogs, delivering groceries, or designing websites, take the following steps to manage the financial side of your side gig.
1. Choose the Right Side Gig
Driving a rideshare might be the perfect side gig for some folks, but others might not enjoy the time spent in traffic or the worry about the wear and tear on their car. The good news is that in today’s world, there are endless options for side gigs. Look for gig work that fits into the rest of your schedule, that you’re motivated to stick with over time, and that matches your passions. One way to find a great gig is by taking advantage of the free Steady app1, which lists many available jobs and gigs and is updated frequently.
2. Track Your Freelance Income
Knowing how much you’re earning will help you understand the financial viability of your side gig—and make it easier for you to figure out how much you owe in taxes. An easy way to do this is to set up a separate bank account, such as Fifth Third Momentum® Banking. Deposit all your side gig income directly into this account, so you can easily and quickly see how much you’ve earned from this work.
You can have your income deposited directly into your Fifth Third Momentum Checking Account, which enables you to get paid up to two days earlier with Early Pay, or you can deposit income yourself as it comes in. Using online or mobile banking can help you track this income, which tends to be less predictable than what you’d earn at a full-time role.
3. Set Money Aside for Taxes
If you’re earning significant income and face more than $1,000 a year in additional taxes, you’ll need to start paying quarterly estimated taxes on your earnings. Setting aside a portion of your earnings, between 20% and 30% of your side gig income, can help to protect you against being surprised with a giant tax bill later.
4. Keep the Side Gig Separate from Your Full-Time Job
If your side gig is something that you’re doing in addition to a full-time career, make sure to keep the two roles as separate as possible. Doing any work for your side gig while on the clock for your full-time role is unethical and could put your full-time income (and the benefits that come with it) at risk. After all, a side gig is designed to help you achieve your financial goals, not undermine your more lucrative full-time job. Even if you’re hoping to turn your side gig into a full-time startup, being forced to do so before you’re ready could create major financial problems.
We can help you get paid sooner—no matter how you get paid. All you need is a Fifth Third Momentum® Checking Account. Early Pay2 can help with things such as tax refunds, some forms of retirement payments, and child support, too. Need to open a checking account? Find out which Fifth Third checking account is best for you.