Many Americans work a side hustle to make ends meet: survey
Side hustles generate extra income but also have additional costs like taxes and insurance
Americans are earning an extra $483 per month on average, or almost $6,000 a year, from side hustles, according to a survey by Insuranks. (iStock)
Many Americans have readied themselves with extra income from side hustles to face economic uncertainties brought on by higher inflation and the threat of a looming recession, a survey said.
Insuranks, a small-business insurance marketplace, surveyed more than 1,000 adults and said that 93% have a side hustle or an added job alongside their full-time or part-time position.
Nearly 80% of those surveyed work full time, but both full-time and part-time respondents said they devoted an average of 13 hours per week to their side hustle.
Although it requires more hours and maybe some extra stress, 97% said they would continue working their side hustle in the future, and 93% said that working a side hustle was worth it.
"The pandemic showed all of us that relying on one source of income, whether it's a job or a business, is never a good idea," Tatiana Tsoir, a business & entrepreneur career coach and CPA, said.
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Many Americans work side jobs to make ends meet
Many survey respondents who reported taking on extra work said they did so as a result of economic conditions and rising prices. Nearly half (44%) said they took on a side hustle to make ends meet, while 28% said it was to cover rising costs from inflation. Around half of Americans (51%) also said that they’re considering taking up an additional side hustle because of inflation. And 26% said they work the extra job to pay down debt faster.
When asked what side hustles they had, 95% of respondents said they did online surveys, 18% sold items on sites like eBay, Craigslist and Facebook Marketplace, 13% did freelance work and 9% sold their used clothes. These workers earned an average of $483 per month, or almost $6,000 a year, from the extra work, the survey said.
"Side hustles can be a good way to bring in extra cash, but you may make more money taking a part-time job," Jay Zigmont, Ph.D., CFP and founder of Childfree Wealth, said. "Gig work has become popular, but once you figure in insurance, wear and tear on your car, and other costs, sometimes a part-time job could be a better option."
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Some additional costs are tied to side hustles
Running a side hustle is similar to running a small business and the added independent income means paying additional taxes, taking on appropriate insurance and meeting local requirements, according to Zigmont.
"For example, if you are running a handyman business, you may need a state or local license or permit, in addition to insurance," he said. "Even if you are driving for Uber, you need to update your car insurance to cover commercial use."
Most of the respondents (92%) with side gigs had never checked to see if they needed insurance, the survey said. Of the 5% of workers who had checked, 2% currently had it and spent an average of $70 every month.
Side hustle workers should also pay estimated taxes on the extra income to the IRS and the state if it had a state income tax, Zigmont said.
"That means regular filing and paying of your taxes across the year. If you don't make the estimated payments, you will not only have a large bill at the end of the year, but you may also have to pay interest and penalties," he said.
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