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time is money

Time Is Money: What Is Your Side Gig Really Worth?

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The sharing economy, advances in mobile technology, and a population of unevenly employed recent graduates eager to pay off student loan debt have combined to create a workforce of “side giggers.”

You know the jobs—heck, you might even be doing one of them. These are gigs like hosting travelers at home for Airbnb, driving people in your car for Lyft or Uber, delivering takeout for Doordash, doing admin contracts through Fiverr or TaskRabbit, dog-walking or bartending.

But how effective is a side gig, financially speaking? In dollar terms, the gigs could help with household expenses—and maybe enough to pay a student loan but not enough to pay a mortgage if you live in an urban center.

Analysis from both Earnest and Bankrate indicate that only a minority of side hustlers earn more than $500 per month from these gigs. According to Earnest, only 15% of side giggers make over $500 per month; Bankrate data indicate that 25% of Millennials draw more than $500 per month from these jobs.

sharing economy

Hustle, Workaholism, or Economic Necessity?

In some ways, our “hustle culture” some Americans subscribe to makes them feel entrepreneurial and vital. Side hustles may mirror the workaholism celebrated in startup circles, despite research indicating that working more than 56 hours a week is counter-productive.

As this New York Times piece asks: If entrepreneurs getting rich from round-the-clock schedules are losing time with loved ones and succumbing to depression and even suicide as a result of a 24/7 workday,  why would rank-and-file workers mimic these hours just for side money?

What’s the real opportunity cost?

Generally speaking, an extra income stream—be it bartending, babysitting, or a sharing-economy side gig—has many merits. Better to do a little side work than carry a lot of debt, right?

There are benefits to many side hustles that can help with future career ambitions too. For instance, if you’re a newbie cook or aspiring food writer, cooking for Josephine might pay you to test recipes or build a following that will read your food blog or buy from your future food truck. If you’re building up a freelance practice, why not do some remote admin tasks for veterans in the field and see how their workday flows?

However, ask yourself if the money you’re making and time you’re spending on your side gig is worth what nerds might call its opportunity cost—or the tradeoff you’re making in choosing one opportunity over another.

When it comes to side hustles, if your goal is to break into a field that pays better than Uber or Lyft, would it be just as beneficial to replace the time you’d normally sit behind the wheel for an app at professional networking functions, a certification course that gives you necessary credentials for your resume, or doing entry-level or project work in your field?

If a side gig helps you get launched (subsidizes important but low-paid work), get ahead (helps you whack debt or save for a goal), or directly feeds your professional ambitions, it may be worth doing. But if you’ve become dependent on your hustle to live beyond your means—to pay for your eBay collection, first-class plane tickets, or a stuffed shoe closet—you may be missing the point: A hustle shouldn’t become a necessity, but a tool to help you meet goals.

Time Is Money: What are you worth?

Financial planners talk about human capital—the fact that what young adults have is a long window of time (four or five decades) to participate in the workforce and earn and save money. There are legitimate reasons many younger adults accept (or may only be able to get) low pay in their early careers—they’re building social connections in their field, learning a trade, and finding formal and informal mentors who can help them build skills and earning power.

But if you’re accepting low pay for a side hustle that takes too much time, you may be missing out on the kind of work that helps you in the big picture.

Consider this question: Would you flip burgers all through undergrad to avoid borrowing a few more thousand dollars in student loans, at the expense of experiences (internships, field study, free time for extra-curricular activities) that might help your professional long con and make you earn more sooner in adulthood? Similarly, would you rather lead a sleep-deprived life driving for Uber or catch some extra Z’s and bring your full wits to your office job—perhaps catching the boss’s attention and snagging a raise that pays more than your side hustle does?

If you’re doing a side hustle, it’s important to take a look at what you’re fetching in terms of an hourly rate—and whether the time and rate make sense against the backdrop of the other ways you make money. When you list a room on Airbnb, for instance, consider these factors: How much time do you spend cleaning/preparing the room? Do you pay a cleaner? Buy breakfast foods? Spend time e-mailing with the guest and answering their questions before check-in? If you spend 5 hours doing these activities for a one-night $75 reservation, you’re getting $15 an hour. If you spend 5 hours doing these activities for a three-night minimum reservation, or $225, you’re getting $45 an hour.

Read more: How We Priced Our Airbnb Rental (and Our Time)

It’s also worth noting how often you have to “touch” the hustle—once a month, daily, hourly?

Lastly, your hustle will likely have tax ramifications. You’ll need to pay taxes on your freelance income, and you may need to learn to track expenses connected to your work in order to deduct them correctly. This, too, takes time.  Bottom line: If you’re going to hustle, make sure the rate you get is worth the time you’re spending on all the details.

“If you’re going to hustle, make sure the rate you get is worth the time you’re spending on all the details.”

Are you a compulsive hustler?

Many people who have grown accustomed to a multi-hustle lifestyle fall into the habit of “compulsive hustling.” Every spare minute is given over to serving a hustle or making a one-time task or side skill into a hustle. Maybe your Airbnb guests sleep in your spare room while you drive the streets for Uber and Lyft, checking your phone between dropoffs for tasks you might do for pay or how your Etsy store is doing selling your crafts you knit when you’re not making meals for customers.

If you help grandma get onto Facebook and start uploading her pie pictures on Instagram, does that mean you should become a social media consultant while also in grad school and work in a career-related part-time job? Probably not! There are, to quote this Harvard Business Review headline, “upsides to downtime,” one of which is higher productivity and better mental health. Just because the company you hustle for wants to send you business 24/7 (they get fees and commissions, remember), doesn’t mean you can’t set parameters on the time you give to a side gig. If you’re using your hustle for goals (paying off a debt, saving), you can budget both time and money.

You may find that at some point you’ll graduate from hustling—and pass the torch to the next generation of people who need to stash side cash.

Conquer your student debt. Refinance now.

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Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.