Starting a side hustle can be a great way to earn extra income, but it often requires an initial investment of time and money. Saving up for a side business may seem like a daunting task, but with the right strategies and mindset, it's achievable. In this article, we'll explore different ways to save up for your side business, from budgeting and cutting expenses to maximizing your income and investing your savings.
Our previously recorded webinar with UIC College of Business’ Entrepreneurial Support Program can help you understand more about side hustles and small businesses.
The importance of budgeting for side hustle:
Budgeting is an essential aspect of running any successful business, and a side business is no exception. Creating and following a budget is critical in the planning process for a side business as it enables you to track your finances, establish goals, and make informed decisions on resource allocation. A budget helps you identify your most important expenses, prioritize your spending, and prepare for unexpected costs.
You can have a look at our Budget Hacks webinar recording to discover more tips and tricks on budgeting and building a spending plan.
Reducing existing expenses:
Trimming expenses is an essential aspect of saving up for a side business. By curbing some expenditure, you can allocate more funds towards your business venture. Some techniques for cutting expenses include overcoming spending temptations, tracking expenses, lowering your housing and transportation costs, shopping consciously, terminating unused subscriptions, and lowering energy consumption.
While it requires self-discipline and sacrifice, pruning expenses can significantly boost your financial capacity to achieve your aspirations for your side business. While it requires self-discipline and sacrifice, pruning expenses can significantly boost your financial capacity to achieve your aspirations for your side business.
Starting or growing an emergency fund:
In order to navigate potential setbacks from a side hustle or side business, it's critical to establish an emergency fund. Having emergency savings set aside can help you navigate potential income volatility, or dips in expected income, as well as surprise costs like machinery breaking or increased supply costs due to inflation or supply chain issues.
Prior to investing anything, regardless of the context, it is important to have a solid foundation to manage financial risk which includes both an emergency fund and other appropriate risk management tools, like insurance.
Investing a portion of your savings:
By investing some of your savings, you can eventually generate passive income, build wealth, and secure your financial future. Check our Investing Basics webinar to learn more.
There are many investment options available, including stocks, bonds, and mutual funds. It's crucial to evaluate each Investment’s Risk and Rewards to determine which is the best fit for your investment goals.
Investing your savings can help your money grow over time, to reinvest your earnings and expand your side business. Some benefits of investing include earning compound interest and taking advantage of tax benefits. It's always a good idea to seek out a financial professional when choosing where to invest your savings.
To learn more, check out side hustles and small businesses or enroll in our Badges courses.