3 Pitfalls of Working a Side Hustle

Contrary to what a lot of people seem to think, you can't budget and skip-coffees your way out of not having a high enough income. And cutting every single discretionary expense might save you some money, but it could come at the cost of your happiness -- and be unsustainable in the long run. What's the solution? Many people have been able to improve their personal finances by getting a side hustle.

While having another source of income can help you cover your bills, pay off debt, save for a big expense, and have more money for fun things, it isn't without its potential drawbacks. Here are a few pitfalls to be wary of if you're seeking a new side hustle.

1. Suffering from burnout

There are 168 hours in any given week. If we assume that you spend one-third of them sleeping, that still leaves 112 hours. If your main job requires just 40 hours from you every week, that leaves a whopping 72 hours free -- or the equivalent of three full days!

This is obviously a very simplistic example, and it doesn't account for time you might want to spend eating, bathing, hanging out with family/friends, and anything else that isn't work. But the point is that it can be extremely easy to think you can just fill all of your leisure hours with your side hustle and skip taking time off. This is a bad idea, though.

Burnout is a major risk you'll face if you work too much. This is a form of exhaustion that's caused by excessive and prolonged stress, per WebMD. You may find your work stress bleeding over into your non-work life, and be unable to enjoy your leisure activities. You might also develop resentment toward your job, thereby making it harder to work and earn money -- the entire point of getting a side hustle in the first place. You can certainly become burned out with just one job, but the more work you take on, the likelier it becomes.

2. Tax headaches

It's only fair that if you make more money, you'll owe more of it in taxes. But adding extra income to your life in the form of a side hustle can ding you on taxes in two different ways.

First of all, if your side hustle has you working as a freelancer or contractor, your employer or client won't be paying taxes on your behalf. This means your pay will consist of your full earnings, and it'll be up to you to keep track of what you earn and set aside taxes (may I suggest a high-yield savings account for this purpose?). You'll owe them quarterly, in January, April, June, and September. If you forget to make these estimated payments (lean on a good accountant to help you do the math), you'll be on the hook for penalties.

If you spend a lot of time working at your side hustle, the income you earn might even push you into a higher tax bracket. This could leave you owing the IRS money come April, which can be an unpleasant surprise if you're used to getting a tax refund instead.

3. Time management issues

Remember all that free time we discussed above? Well, depending on your lifestyle and various commitments, you might have less free time than you think. Do you have kids, a live-in partner, or an active social life? All of these commitments require your time and attention, and if you take on a side hustle, you'll need to find a way to balance everything.

It's worth taking a look at your actual waking hours, and seeing how you spend your time. If you're running short on hours to get through your massive to-do list, it's certainly more preferable to give up the time you spend scrolling social media (no shame!) in favor of your kid's sports game or a night out with your significant other.

What started out as a way to bring in extra cash can quickly turn into a source of stress, and that isn't good. Keep your eyes open for these potential pitfalls when you begin a side hustle, and remember to pace yourself.