9 Reasons Why You Need a Financial Mentor for Your Side Hustle

A Mentor Who Can Help You Keep Your Side Hustle Finances on Track Is Crucial

9 Reasons Why You Need a Financial Mentor for Your Side Hustle

Building a profitable side hustle could be your passport to financial and business success. Whether you're building a side project with the goal of getting out of debt, making a big upcoming purchase without breaking the bank, or generating extra income for another reason entirely, it's important to keep track of your finances with any business.

Wading through the challenges of a new side hustle can be difficult, especially if you've never started a  business before.

Partnering with someone else who complements your skills could be the key to building a winning venture. Capitalizing on a financial mentor’s wisdom and knowledge will help you build your side hustle on a firm foundation while tapping into your mentor’s expertise and skills.

Here are a few of the ways a financial mentor’s advice and guidance can help grow your side hustle.

1. Their Experience Will Give You a Head Start

Starting a new project to earn extra income shouldn’t be done blindly. Launching a side hustle that can eventually thrive, requires the insight of others who've broken through the business barriers and made it.

The success and business experience your financial mentor has already had, will a carry positive influence into your project. That is why working with a financially successful mentor with a prosperous business, can be a powerful asset. Their accomplishments will be an inspiration to push you towards making your project work, plus you'll be able to leverage their networks and other competitive advantages.

This is especially true if you're setting up your side hustle within a similar industry.

2. They'll Advise on Managing Your Finances

The right financial mentor will advise you on the right steps you need to take to help you unlock new pockets of customers, increase the value of your existing users, manage your debt load, and develop a healthy cash flow strategy.

Further, depending on your financial situation and the type of side hustle you’re establishing, a small loan might be a better source of capital for the new business than using your own savings. This way, should the side hustle fail, you won’t be left in a financial black hole.

Bob Jenson, the CEO of Small Business Loans, believes that, “Money should not be an obstacle at the startup of a new business. The focus should be on revenue, growth and success.”

3. They'll Teach You How to Evaluate Your Budget

Although a new side hustle may require financial outlay, careful analysis of the expenditures is essential. Sometimes, it takes an extra pair of eyes to see where you’re spending unnecessarily.

A well-thought-out business plan, a financial map, will guide you in the right direction. For example, itemized lists of income and expenditures in the cash flow analysis section will show you how much money is going out and coming in each month. This will make it easier to control spending.

4. They'll Help You Choose the Right Banking Model

An income-generating side hustle is categorized as a small business. You need to know where you should bank the extra money coming in. Personal bank accounts are not ideal for stashing business income.

Therefore, you need to choose the right type of bank account for your money.

A financial mentor has the knowledge to help you select the right business bank account suitable for the project you’re setting up. They can guide you to banks who work with your type of business, if you require special services.

5. They'll Guide You Through the Tax Minefield

When a side hustle ceases being a hobby and becomes a profit-making venture, it’s subjected to the  same tax laws as any business. Any income you’ll generate from your new side hustle is taxable.

In addition to thinking about self-employment tax, record keeping, tax returns, income, profit and loss, you also have to think about your business expenses. Instead of worrying about staying on top of your taxes, ask a financial mentor for advice. They'll share their knowledge about small business deductions so you can feel confident about your tax filings.

6. They'll Serve as a Role Model to Lead You Forward

A model financial mentor is someone who shares your vision and goal. They should have a track record of having successfully achieved what you aspire to do. This qualifies them to mentor you effectively. As a result, their tips and strategies will align with your goals as they help you achieve your success.

They will know the pitfalls to avoid and the paths to follow to make your side hustle grow successfully. Plus, working alongside someone who has the same values and outlook—while sharing personal financial information with them—is motivating.

7. They'll Help You Build Your Skills

As well as sharing their knowledge with you, a strong financial mentor can help you develop your own skills—ones they've already built. They can help you hone your problem-solving abilities, increase your capacity to focus well, communicate effectively and understand how to manage money properly.

A great financial mentor should also be able to:

  • Help you brainstorm unique sales and marketing ideas to grow your side hustle
  • Explain technical financial terms and guide you through complex issues
  • Provide valuable, objective feedback to help you make the right decisions
  • Challenge you to step out of your comfort zone and innovative 

8. They'll Give Valuable Business Advice

An experienced financial mentor will give helpful business advice to help you take your side project to the next level. They should be skilled at showing you how to set up a marketing plan, find the right target  customers, and network by connecting with like-minded people in your industry.

And don’t forget to ask them about their failures. It’s worthwhile to learn from your mentor’s blunders as well as their successes.

9. They'll Help You Develop Short-Term and Long-Term Financial Goals

Important lessons from your mentor should include planning short-term and long-term financial goals to keep your finances in order.

You need to have at least basic financial skills to manage cash flow, plan, and live by a budget. Your mentor can help you develop these skills to help you stay in control of your venture’s finances short-term and long-term.

Key Takeaways 

Find a financial mentor you have a good rapport with and who can add value to your side hustle.

They should be non-judgmental, supportive, and willing to develop a healthy working relationship with you. A wise, successful financial mentor is worth their weight in gold.

Their expertise, insight, and financial know-how will help you set up a successful side hustle that's poised to grow into a full-time business.