If you are one of the many Malaysians who are involved in doing part-time jobs or gigs during this pandemic, what can you actually do with the side income you receive? Here are 5 best ways on how you can manage your side hustle money.
In the past few months, we talked a lot about surviving retrenchment and pay cuts. And there’s no wondering why - the pandemic has impacted businesses and industries all across the globe, and in Malaysia, a total of 12.7 million Malaysians were unemployed as of June 2020 according to The Edge Markets.
So we suggested a few ways for our readers to manoeuvre around this:
- 8 Side Jobs for Malaysians to Earn Extra Money During CMCO
- #NewNormal: What To Do Immediately After Getting Retrenched Post COVID-19
- #DigitalCareers: How To Switch Careers During A Pandemic
- Job Loss Amid CMCO: How To Bounce Back From Retrenchment
If you’ve managed to secure a second income - a side gig or a freelance business maybe - what do you do next? How can you get extra mileage from your side job? What to do with your side hustle money?
1. Keep track of your expenses, both money and time
We know, we know… bookkeeping is boring! Can’t you leave that in the office since your side job only concerns you and no one else?
Sure, you can. But without proper bookkeeping, you’re only going to complicate things for yourself in the future. You could be a delivery rider, an online tutor, an e-commerce seller, a freelance writer - whatever it is under the sun! Bookkeeping will benefit you in more ways than one.
As you spend time, effort, and (ironically enough) money to build your side hustle, you should always keep track of how much you’re investing in this. Not only does this help you gauge if your investment is worth the money you can get in return, but it also helps you have an overview of your current projects, payments, and everything else in between.
There are so many resources available to help you with this:
Or you could always go with the good ol’ Microsoft Excel/Google Spreadsheet, or an old school ledger book! (Err… but we wouldn’t recommend the second when the world is increasingly digital.)
2. Keep your receipts and invoices for tax season
Aha! Another reason for proper bookkeeping.
If you’re earning money on the side, you have to pay your taxes too. We know that it’s tempting to hide this additional income from the government, but doing so can lead you down a dangerous slope.
Did you know that hiding your income and skipping paying your taxes can get you into big trouble? According to the Income Tax Act 1967:
“Any person who makes default in furnishing a return in accordance with subsection 77(1) or 77A(1) in respect of any one year of assessment or in giving a notice in accordance with subsection 77(3) shall, if he does so without reasonable excuse, be guilty of an offence and shall, on conviction, be liable to a fine of not less than two hundred ringgit and not more than twenty thousand ringgit or to imprisonment for a term not exceeding six months or to both.”
In English, it basically means…
… jail time!
Well, it could be. The penalty for this offense is a fine of RM200.00 to RM20,000.00 and/or imprisonment for a term not exceeding 6 months. Be an informed citizen by checking out all the other common tax offenses and their penalties at the Inland Revenue Board’s (LDHN) website here.
One other good reason to file your taxes is that it actually helps your credit score. It shows your income and profitability level, which can help banks favour you when you apply for loans.
So, yes. Get your bookkeeping done if you haven’t already, keep your receipts and invoices safe, and prepare for tax season!
3. Spend your time very wisely
Now, one very important way to manage your side hustle is by being really, really, really wise with your time management. Your full-time job would take up most of your time (unless it doesn’t, in which, lucky you), so it’s critical that you make every minute of your free time worthwhile.
Again, on that bookkeeping note… freelancers and agencies typically use a timesheet to help them track their time. This can help you a lot, because then you’ll be able to gauge and see if you’re spending too much time on this or that, and calculate back to see if a certain project is worth your time.
Time-tracking aside, you should also practice good time management skills when you’re working on your own free time. There’s a saying that you’re still being paid even if you waste time at work. But when it comes to wasting your own free time, you’re the only one at the losing end.
If you have a problem with procrastination, you need to fix this ASAP. The Pomodoro technique is one way to start:
- Using a timer, do your work for 20 minutes or for however long you want to work.
- Focus on one task during that time.
- After your timer beeps, take a 5-10 minute break.
- Rinse and repeat.
Your goal? To complete as many cycles as you can per day.
4. Commit to developing yourself
A lot of people think that they only need to upskill themselves in their day jobs. The truth is, upskilling in your side gigs is even more important, because unlike in an office where you have a team to help support you or carry the project, you’ve only got yourself to depend on. This means, you need to equip yourself with the right skills so that you can retain your clients instead of having them engage with you once and leave.
Being the boss of your own side gig means wearing different hats - you’re not just the executor, you’re also the business development manager, the marketing manager, the finance manager… you get the drift. So as you work on your own hustle, furnish yourself with the entrepreneurial skills you need to keep your business running.
Thankfully, there are plenty of online resources for self development to help you grow:
- YouTube - all the free videos at your fingertips!
But it won’t mean a thing if you don't put them into practice, so step up and make use of these resources and you’ll see how both you and your business can grow.
5. Consider turning your side gig into a full-time job
If your side hustle is profitable and sustainable, why not consider growing it into something bigger than what it currently is? But before you take that leap, here are six signs that you’re ready play in the major league, adapted from a list by Forbes writer Ryan Robinson in this article:
- You’re financially ready - You have some cash buffer in your bank to support you and your family for the coming months or years.
- Your personal work is gaining attention - You’re getting job offers for the side hustles you’ve been doing. You have a market that’s ready for you and your business.
- You’re a motivated self-starter - Because you will have yourself as the boss, manager, and employee, you need to be motivated and driven enough to push through this journey… especially when things get tough.
- You know your business basics - Like we mentioned previously, you will need to wear many hats. You need to know how businesses work so that you can sustain your work.
- You’ve mastered the art of self-promotion - As a real business, you must know how to sell your products/services. Without that, you won’t be able to get new clients, or worse, retain current customers.
- You’re missing out on new projects - It’s hard to take on more work when you’re juggling your day job and existing projects in your side hustle.
If you need a financial boost to grow your business, you can also consider getting a personal loan to kickstart your growth. Just remember that it would be an investment for your business, so be strategic with how you want to manage your cash flow so you make the right choices for your business.