As inflation and economic uncertainty continue to loom large, maintaining financial stability becomes increasingly challenging. In this climate, side hustles have emerged as a key tool to help navigate economic turbulence.
Leveraging a side hustle not only opens up additional income streams but also provides a buffer against financial fluctuations. Integral to this strategy is the adoption of tailored payment systems, according to FinTech Magazine.
Strategic financial management is key when it comes to turning a side hustle into a thriving income source. Here are our eight essential tips to help you effectively manage your side hustle’s cash flow:
1. Keep your side hustle business spend separate from your personal costs
Separating business and personal expenses simplifies financial tracking and ensures clear cash flow management. It can also save headaches during tax season, allowing for accurate deductions and tax compliance.
A distinct bank account for your side hustle provides a clear snapshot of the business’s financial health and prevents accidental mingling of personal and business expenses. Check out online banking providers who offer easy, quick, and low-cost options for opening business accounts.
2. Keep your finances secure
Now more than ever, financial security is paramount as cyber threats pose a significant risk to small businesses, including side hustles.
Protect your financial data by implementing robust security measures such as strong, unique passwords and two-factor authentication.
Regularly update your devices’ software and be wary of suspicious emails or messages asking for your financial information. It’s better to be proactive than to deal with the fallout from a financial security breach.
3. Choose a bank provider with open banking and tokenisation
Open banking and tokenisation are two emerging trends in financial technology that can significantly benefit side hustlers.
Open banking allows for the sharing of financial information electronically, securely, and only under conditions that customers agree to, providing a network of financial institutions’ data through API connections.
Tokenisation replaces sensitive data with unique identification symbols, adding an extra layer of security. Choosing a provider with these features allows for safer, more flexible financial management.
4. Make a budget and stick to it
Budgeting is critical for financial success in any business. With clear budgets, you can avoid overspending, set realistic financial goals, and assess your side hustle’s profitability.
Digital banking interfaces allow for real-time monitoring of transactions and balances, making it easier to stick to your budget. Make sure to account for all costs, including overhead, materials, marketing, and unexpected expenses.
5. Invest in helpful tools and software analytics
Consider investing in financial management tools and software analytics, like TRU Insights, to keep tabs on your cash flow. These tools can provide critical insights into revenue trends, cost analysis, and profit margins, helping you make data-driven decisions. Using such a platform, you can identify patterns and trends, uncover bottlenecks, and optimise your operations for financial efficiency.
6. Pay yourself first
One of the main reasons to have a side hustle is to boost personal income, so don’t forget to pay yourself. Set yourself a regular salary from your side hustle earnings.
It will ensure you benefit directly from your hard work and helps gauge the business’s sustainability. The amount can be modest initially and grow as your side hustle expands.
7. Easily manage debt
Debt can quickly become a burden if not effectively managed. Whether you’ve taken a loan to start your side hustle or accrued business expenses on a credit card, having a plan to manage and reduce this debt is vital.
Keep track of repayment dates, understand your interest rates, and prioritise high-interest debt. Make use of financial management apps that remind you when payments are due and help you strategise your debt reduction.
8. Use (business) credit cards
Business credit cards can be a boon to side hustlers. They offer an easy way to separate personal and business expenses, provide a short-term cash flow buffer, and often come with rewards or cashback options.
However, these should be used responsibly. Keep an eye on your spending to avoid unnecessary debt, and aim to pay off the balance in full each month to avoid interest charges.
Grow your side hustle with the right provider
Navigating your side hustle’s financial management may seem daunting, but with the right banking provider and tools, it’s more than achievable. By keeping your finances secure, sticking to a budget, effectively managing debt, and using advancements in banking technology, you can create a robust foundation for your side hustle’s growth.
The right provider should offer more than just banking services. It should provide tools to monitor your business health, secure your finances, and grow your venture.
This is why we are offering business starters a dedicated bank account service that offers them quick access to business finances while securely holding funds belonging to your business operations.
Moreover, we keep things simple with an easy-to-use interface, multiple payment options, two-factor authentication security measures and easy reporting.
Get in touch to simplify your side hustle’s journey and enable fast and modern payments!