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Striking perfect balance between your side hustle and your day job

By Graham Kajilwa | September 25th 2021

A young man showing exercises with an elastic band. [Getty Images]

A few years ago, finding formal employment was the ultimate achievement for many college and university graduates.

But as formal jobs become increasingly fewer and uncertain due to disruptions occasioned by Covid-19 and technological advances, many Kenyan workers and the world over are being pushed to moonlight to make ends meet.

In the wake of the pandemic, workers have woken up to the jarring reality of the precarious nature of their jobs, with millions being laid off and others forced to take pay cuts as companies come to grips with the new operating environment.

Patrose Nduta, an independent financial advisor at Britam, a financial services company, says having a side hustle is just as important as your day job.

“We have seen most of the corporate businesses downsizing to cut costs. These employees probably had liabilities such as bank loans, so what happens when you do not have a plan B?” poses Ms Nduta.

Patricia Kihara, the manager, ordinary life and branches at ICEA Lion and an expert on personal finance, for her part, reckons side hustles can help one pay off that Sacco loan or mortgage without creating a dent in their normal income.

This, she further reckons, can put one in good stead to benefit from reduced interest on such loans that come with early repayments.

But how can one effectively run a side hustle while still in formal employment? And how can one know where to put their money without getting their fingers burnt?

According to Kihara, for starters, it all depends on whether you want active or passive income.

Active income involves running a business that may require you to have a trusted person to manage it. However, passive income requires very little involvement.

The latter can be growing hay or beekeeping if you have land near a forest.

“If it is a long-term thing, someone can plant trees, which will take five years to mature,” says Kihara.

She says side hustles can also be hobbies. This is something you like doing, but you must be willing to put in the work.

They may also involve opportunities you come across in the course of your work, for example, consulting services away from your regular job.

These have to be done either in the evening (after work hours) or on weekends so as not to compromise your main gig.

Kihara says being in formal employment can expose one to contacts and opportunities that they can exploit to build viable side hustles.

“As an accountant, I may identify some small and medium enterprises for whom I can do tax, or if my day job is a tax expert in an organisation, I can be doing a tax health check or bookkeeping for a management company part-time at a fee,” she says.

If you are a good public speaker, you could take up emceeing jobs. Kihara further notes that you could also take advantage of your coworkers’ needs.

For example, if they have a baby shower or wedding, and you know reliable suppliers, you can link them up at a fee, or you could assist someone to import a car if you have done it before.

“This is something you can just do online after work,” says Kihara, noting that some side hustles do not require any capital.

Britam’s Nduta says if your job does not give you the luxury of operating a business, one can invest in a money market fund on a short-term basis, say for two weeks or two years. This is, she says, is where you make your money work for you.

In such a case, the money is invested on your behalf by regulated fund managers.  They could put it in Treasury Bills offered by the Central Bank of Kenya (CBK).

“The interest is normally compounded, which means the rate of return is between eight and 9.5 per cent. The good thing about money market funds is that you can access the funds if you need them,” says Nduta.

This investment, she says, will be like your emergency fund.

A fixed deposit can also work, either with a fund manager or bank, as the interest rate (for most banks) is between five and nine per cent per annum.

“You can also save with a Sacco and later take up a loan for a project,” advises Nduta.

The idea of your money working for you, she further explains, extends to pension products in preparation for retirement.

“There are people who will say, ‘I have some money I can buy land with.’ That is a good investment. You could also put up rentals depending on your capability,” says Nduta.

She says the success of running a business as a side hustle when one is in formal employment also depends on how the reliability of those who run it on your behalf.

“For example, if you have rentals, having the right management team helps you to collect the monthly rent on time,” says Nduta.

So, when is the right time to quit your day job to concentrate on your side hustle?

Nduta says it all depends on how much the business is able to generate compared to your regular income.

She says side hustles are called side hustles because they do not generate as much income as the regular job.

“Some people, depending on their strength, will start farming and once it matches or makes more than their formal job, they resign to concentrate on it,” says Nduta.

But just because your side hustle makes more money does not mean you should quit your day job.

“If your side hustle is growing because of the network that you have as a formal employee, you may not progress well if you cut off your formal employment. These are some of the things you ought to consider,” she says.

“But if, at the point, you find your side hustle is giving you more than your formal job and it is not linked in any way with your job, you can leave,” says Nduta.

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