Money Management

You can make your side gig full time, but you’ll need to be smart about it. Find out how to make a plan to turn part-time work into a full-time income. 

Working a side gig can be a great way to bring in extra income. Side hustles bring in an average monthly income of around $483, which can go a long way toward helping you accomplish financial goals.

In some cases, though, you may decide you prefer your side job to your full-time work and want to turn it into a small business of its own. If that’s the case and you’re hoping to make a full-time living from what used to be a part-time side hustle, there are a few key steps you need to take to make sure you can live off what you earn.

1. Calculate the income you’d need to get by

The first step towards turning a side hustle into a full-time business is to figure out the financials. You’ll need to know just how much you want to earn — at a minimum — to cover your costs.

Say, for example, that right now your side hustle is earning you $2,500 a month but you are spending $4,337, which is the average monthly expenses for single people (according to the Ramsey Solutions blog). Assuming you wanted a little cash cushion, you might need your side hustle to provide you with $4,500 a month. That would mean you’d need to increase your earnings from it by $2,000.

2. Make a plan for scaling up

Once you know how much more income you need to earn from your side hustle, it’s time to make a plan to actually earn extra cash in your business bank account. You can do this in a few ways:

Working more hours: If you’re making $2,500 a month by working at your side hustle for 15 hours a month and you have enough business already to double that, all you’d need to do is put in those extra 15 hours and you’d be able to achieve your goal. Of course, you’d need to make sure you’d have that extra business for the long haul.Finding more clients: If you can make a high enough hourly wage to produce the income you need by doing your side job but you don’t have enough demand for your services to work the number of hours you need, you’ll have to find more people to hire you. Act on ways to do that, like reaching out to existing customers for referrals or advertising your goods or services online by making a great website.Increasing your rates: Say that you’re making $2,500 a month by charging your clients $50 an hour for your services. If you could find enough clients that would pay you $100 an hour for your work, that would also give you the income you need — as long as you were confident that those clients would pay you the high rate consistently.

Whatever your plan is, you’ll want to be sure it works for the long term and is realistic. For example, if you’d need to work 100 hours a week at your side hustle to bring in the income you need, you are not going to be able to keep up with that for long and when you fail, you’ll fall short of the income you need.

3. Start putting in the extra work

Once you’ve made your plan for scaling up, start putting in the extra work immediately. Look for those higher-paying clients, start looking for more clients, or start putting in more hours at the job. Ideally, you’ll want to actually scale up your business and begin producing the income you need to cover costs before giving up your day job.

By taking these steps, you can ideally turn your side hustle into a great job that produces more than enough money to make ends meet. And maybe you can even turn it into a job that helps you get rich.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Want to be a better Costco shopper? Give these four tricks a try to improve your personal finances by making the most of your warehouse club membership. 

Shopping at Costco can be a great way to save money, which you probably already know if you’re a warehouse club member. But while you can simply buy in bulk at the warehouse club to keep more money in your bank account, you can also take your deal-savviness to the next level.

Want to know how? Try these four Costco shopping hacks to get the absolute best bargains available.

1. Look for items with a price tag ending in $0.97 or $0.88

Costco’s price tags can tell you more than just the amount that will go on your credit cards if you buy the item. The tags can also give you a clue as to whether the product is on sale or is going to disappear soon.

See, a tag ending in $0.97 means the item is on sale. The exact amount you’ll end up saving varies by item. You can find out how deep the discount is by asking the manager what the original price was.

Sometimes items are marked down more than once, especially if there are lots of items left and the initial sale isn’t great. But, if an item ends in $0.97 and there aren’t many left or the original price was substantially higher than the current one, you may want to grab it because it could go quickly.

Items marked at $0.88 are also important to pay attention to. This pricing code means there are very few of the products left for sale, so you should snap them up.

2. Act quickly if there’s an asterisk symbol

There’s another important thing to look for on a Costco price tag: an asterisk. If you see one, you should know you may not get to buy the item again. No matter what the other numbers are on the price tag, the asterisk means the item is not going to be restocked anytime soon and may disappear from the shelves for good.

If there’s something you like buying at Costco and you see the asterisk, consider buying a bunch of the item if it’s within your budget so you’ll have it once the warehouse club is no longer selling it.

3. Check out Costco’s coupon book

Costco does not accept manufacturer coupons. It provides its own coupons and discounted offers, though. You should always check out the warehouse club’s coupon book to see what’s on sale at any given time. This can help you identify deals on items you need to purchase anyway.

You can find the coupon book online, and it advertises both in-club savings as well as online savings. For example, the January coupon book is offering between $200 and $1,300 off of certain Samsung appliances, so if your kitchen needs an upgrade, this might be a good time to buy.

4. Give Kirkland brand products a try

Kirkland is Costco’s house brand and there are around 350 Kirkland products for sale. Costco ensures Kirkland brand products are at least 20% cheaper than name-brand counterparts, and many of these store-brand products are actually made by the same people as the branded items. For example, Kirkland batteries are made by Duracell, and Kirkland tuna is actually Bumble Bee.

Since you can get awesome products equivalent to name brands at a deep discount, you should try them and see what Kirkland has to offer.

By trying out these tips, hopefully you can become a better Costco shopper in 2024 and use your money more wisely at the warehouse club.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Self-employed people and small business owners have a great option for saving for retirement: a SEP IRA. Find out how a SEP IRA can reduce your taxes. 

If you’re self-employed, you might be looking for ways to save more money for retirement while reducing your taxes. Along with other tax-advantaged retirement accounts like traditional IRAs and Roth IRAs, self-employed people have another special option to invest for retirement: a Simplified Employee Pension (SEP) IRA.

With a SEP IRA, self-employed people and small business owners have a flexible, powerful option to sock away extra money for retirement. Depending on your small business income, you can save even more money for retirement with a SEP IRA than employees can save with their 401(k) plans.

Let’s look at how a SEP IRA works, why it might be a good idea for your small business, and how it can help you invest for retirement while saving money on taxes.

Simplified Employee Pension (SEP) IRA: How it works

You can set up a SEP IRA with a brokerage or investment firm, in the same way as opening an IRA. For example, Charles Schwab, Fidelity, and Vanguard all offer SEP IRA accounts. Self-employed individuals, freelancers, and small business owners can set up a SEP IRA for themselves and their employees.

A SEP IRA is a type of traditional IRA, and it works in the same way as a traditional IRA: The money you put in can be tax deductible. But there are complex rules and limits on how much money you can put into a SEP IRA. It depends on the type of business structure you have, how much net business income you have, whether you have employees, and more.

For 2023, employer contributions to a SEP IRA for each employee can be up to $66,000 or 25% of compensation, whichever is less. If your small business has employees, the employer must contribute to the SEP equally for all eligible employees, and the money is immediately 100% vested — your employees own 100% of the employer contributions to their SEP accounts.

If you’re a self-employed individual, it’s a bit more complicated to figure out how much you can contribute to a SEP IRA. The IRS defines a self-employed person’s “compensation” for SEP IRA contributions as your net earnings (gross business income minus business expenses) from self-employment, after deducting half of your self-employment tax and deducting contributions to your SEP IRA.

So don’t assume that as a freelancer or solo entrepreneur, you can just put 25% of your gross business income into a SEP IRA tax free. The exact amount you can put into a SEP IRA and deduct from your taxable income depends on a few factors. Talk to a professional tax advisor and/or your brokerage to make sure you understand the IRS rules for how much money you can put into a tax-deductible SEP IRA.

How to save money on taxes with a SEP IRA

A SEP IRA can be a flexible way for small business owners and self-employed people to save more money for retirement while reducing their taxable income. In fact, you can save even more money for retirement with a SEP IRA than you can with a 401(k) plan: The maximum amount that individuals can contribute to a 401(k) for 2023 is $22,500, while the most you can put into a SEP IRA is $66,000.

Another reason why a SEP IRA can be a great retirement savings tool for business owners is that you are also allowed to contribute additional money to traditional IRAs and Roth IRAs or to your SEP IRA as an individual, outside of your SEP IRA plan’s employer contribution. For example, as described on the IRS website, Nancy, age 45, is the owner and sole employee of a small business. She contributes the maximum employer amount to her SEP IRA for 2023 ($66,000). She can also make additional contributions to her SEP IRA as an individual employee, up to the 2023 contribution limit of $6,500. This $6,500 amount could also be put into a Roth IRA, or split between a Roth IRA and traditional IRA/SEP IRA.

Want to save money on 2023 taxes? It’s not too late! You can deduct contributions to a SEP IRA as long as you make the contributions by the 2024 due date of your tax return for 2023. Talk to a brokerage about opening a SEP IRA for your small business, and see if you can make prior-year contributions for 2023 — even though 2024 is already here.

Bottom line: If you have a successful small business and you meet the IRS guidelines for how to contribute to a SEP IRA, this can be a great way to supercharge your retirement savings while saving money on taxes. Just make sure you understand the exact rules for how much you can contribute to a SEP IRA as an employer or self-employed individual, based on your business income. Talk to an accountant and your brokerage to make sure you’re following the IRS limits, so you can avoid costly mistakes and penalties.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool recommends Charles Schwab and recommends the following options: short December 2023 $52.50 puts on Charles Schwab and short March 2024 $65 puts on Charles Schwab. The Motley Fool has a disclosure policy.

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