That side hustle could cost you more than you earn – experts

The pursuit of extra income may be costing workers more than they earn, financial expert now warn.

This comes as the cost of living continues to squeeze household budgets with millions of workers turning to side hustles to make ends meet.

In Kenya for instance, a significant number of the employed population engage in side hustles to cope with economic pressures where according to a survey by research firm–GeoPoll, conducted across all the 47 counties last year, majority of the employed youth make less than Sh30,000 per month.

An estimated 20 per cent earn between Sh30,000 and Sh50,000, about 17 per cent have an income ranging from Sh50,000 to Sh80,000 with only six per cent indicating they earn over Sh150,000.

This has pushed many to have side hustles to supplement their earnings, the firm indicated, amid a growing desire for self-employment as a pathway to economic independence and opportunity.

Around 71 per cent of employed youth and over 60 per cent of salaried individuals are juggling extra income streams like online work, retail, or farming, driven by high living costs and youth unemployment, though earnings are often modest, notes the report.

However, a report by Singapore-based consultancy firm—Ronin Management now notes that while the promise of extra income may sound appealing, side hustling may actually be leaving people worse off where they could be costing them more than they gain.

This is on hidden costs including burnout, reduced main-job performance, inconsistent income and poor time-to-earnings ratio.

“People often jump into side hustles thinking they will solve their financial problems, but they often don't account for the hidden costs, both financial and personal,” Aaron Conway, a financial expert at Ronin Management, says in a report.

While the extra income from a side hustle might look good on paper, Conway warns that the reality is often far less profitable than people expect.

Research shows that 67 per cent of side hustlers say their additional work leads to burnout, which can have serious knock-on effects for their overall financial wellbeing.

The most significant risk is that exhaustion from juggling multiple income streams can damage one’s primary care, according to the report.

“When you are working evenings and weekends on a side hustle, you are not giving yourself time to recharge,” Conway explains. “This leads to decreased productivity, more sick days and a higher chance of making mistakes at your main job, which is the very income source you are trying to supplement.”

For a lot of workers, their primary employment offers benefits like pensions, sick pay, and career progression opportunities that far outweigh the modest earnings from a side hustle.

Jeopardising these through burnout can be a costly mistake, experts at Ronin Management warn.

There are also chances of low return on time investment with one of the biggest misconceptions about side hustles being that they are an efficient use of time, but many people fail to calculate their true hourly rate once they factor in unpaid hours.

Unlike a salaried position, side hustles also rarely provide steady, predictable earnings with the inconsistency making it difficult to budget effectively or plan for the future.

“People often make financial decisions based on their best month of side hustle income not their average,” Conway warns, “They might commit to a higher rent or take on debt, thinking they can afford the repayments, then struggle when the work dries up.”

This feast-or-famine cycle can worsen financial instability rather than improve it.The mental load of managing multiple income streams is another often-overlooked cost with constantly switching between different roles and responsibilities reducing efficiency and increases stress.

“Your brain is not designed to be in ‘work mode’ all the time,” he notes, “When you are always thinking about your next freelance project or side business, you are never truly off duty. This constant mental load affects decision-making, relationships and overall wellbeing, all of which can have financial consequences.”

Despite these warnings, Ronin Management however stresses that side hustles are not inherently bad. They just need to be approached strategically.

Three key factors that determine whether a side hustle is financially viable are skills alignment, clear financial goals and reasonable time boundaries as side hustle takes up more than 10-15 hours per week.

“If your side hustle is eating into sleep, exercise or relationships, it is not sustainable,” he says,  “And when something is not sustainable, it is only a matter of time before it collapses, often taking your financial stability with it.”