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Hi folks and welcome to the Meaningful Money Podcast. This is

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Season 29, Episode 6. Yep,

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welcome back to your very favourite

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personal finance podcast, Meaningful Money with

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me, Pete Mathew, and your favourite

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personal finance podcast co-host, the Barker

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to my Corbett, the Morgan to

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my Wise, Mr. Roger Weeks. Thanks,

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Pete. I find it strange how you gravitate to

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comedians as our comparators though, especially when

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we speak about such serious dry subjects. Although I

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suppose we do have a bit of a laugh

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and bring some humour to our... Yeah, people pick

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that up as well when they send us emails

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and reviews and stuff. Hopefully

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it comes across that we actually like each other. Well,

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to an extent anyway. There

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are limits. Yeah, more serious now. So

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today we're going to be covering helpful basics in

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the area of self-employment and side hustles. We'll

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be talking about what you need to know and

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what you need to do if you're planning on

1:01

going it alone in business or supplementing your income

1:03

in some other way. Yeah, it's another thing that

1:05

came up when we sort of put a call

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out for subjects for this season, really whole idea

1:09

of going self-employed and having some kind

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of income on the side and what that might

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mean for tax and all that sort of stuff.

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So it should be interesting, I think. But I

1:17

did check, I see. The last time

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I dealt with this in any detail was in December 2015, episode 139. That's

1:24

a while ago. Well, this is episode 552. So

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it is a while ago. Certainly

1:30

a long time. Yeah. And as usual,

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after the main body, we'll read a review that's

1:34

been left by a listener and let you know

1:36

what we're going to do next time. We will,

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yeah. Remember, notes and links from today's show are

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at the show notes as always. The only link

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you need to remember, meaningfulmoney.tv slash HB6 for

1:46

helpful basics, episode 6. Meaningfulmoney.tv

1:48

slash HB6. Let's

1:51

crack on. Look at everything you need to

1:53

know first about going self-employed or starting a

1:55

side hustle. What

1:57

do we need to know first, Ronch? What

2:00

is self-employed? I don't know. Do

2:02

you? Yeah, I do. Okay,

2:04

good. Yeah. It's something like being

2:06

a sole trader. So you're self-employed, you're working on your own,

2:10

and as distinct from being in partnership with

2:12

someone else, where there are certain rules and

2:15

regulations specific to partnerships, what you can and

2:17

can't do, and what you're led to arrange,

2:19

and limited companies. So because a lot of

2:21

times, actually, people come to us and say,

2:23

I'm self-employed, I've got my own limited company.

2:26

Well, there are two really distinct things, really.

2:28

So a limited company has lots

2:30

of legal bits attached to it. Yeah, and accounts and

2:32

some bits. Yeah, exactly. So today,

2:35

we're going to be talking about purely sole

2:37

trading. Yeah. So obviously, that

2:39

can be in addition to

2:41

you being employed by somebody else. So you

2:43

could have a full-time job or a part-time

2:45

job and be a

2:47

sole trader, a self-employed person on

2:49

the site. Or of course, it

2:52

could be your only form of income. You can

2:54

have more than one sole

2:56

trade as well, called multiple trades. You can

2:58

have more than one side hustle or more

3:01

than one self-employment. Yeah.

3:04

So you're working on your own. You're not in

3:06

partnership with anybody. You haven't set up a limited

3:08

company. You're just purely trading by yourself. Yeah,

3:11

I've thought about becoming a foot model on

3:16

the site. I could do that, but I'll be

3:18

subject to the week's big toe then. It's

3:21

really legendary, big toe. If PT

3:23

Barnum was still around, he'd have you in his circus for that

3:25

big toe. Okay, so that's... There

3:27

are people to pay for that, apparently. Well,

3:31

I kid you not, Kate will kill me for

3:33

turning this, but she said, honestly, dad, I thought

3:35

about doing it, selling foot pics. Nobody see a

3:37

face, obviously nothing weirder or sexier than that. No,

3:39

you know, it's like, if people want to pay

3:42

me for pictures of my feet, that sounds like

3:44

a market to me. Yeah. I

3:46

don't like, just don't, if you do it, don't ever tell me you've

3:48

done it, right? And register as self-employed. We're going to

3:50

get to that in a minute. So, you

3:53

know, that's what self-employment is. Working

3:55

for yourself, sort of by yourself, essentially, you're

3:57

a sole trader, not in a partnership, not

3:59

in a business. in a limited company. So

4:01

you're an individual still, but doing some

4:03

kind of a business. So

4:06

that's what self-employment is. So a side

4:09

hustle, that's a very modern day term, isn't

4:12

it? It never used to be a thing.

4:14

Well, I know, I mean, you said what, if you'd

4:16

have mentioned that phrase 10 years ago, probably people wouldn't

4:18

know. No, no, very

4:21

much so. And it's

4:24

not as defined as self-employment. And when I was

4:26

reading through this today, I was thinking, yeah,

4:28

I know loads of people do this. Because when

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you look at the stats about it, it's like, well, yeah, it

4:32

can't be that many people, but actually, when

4:35

you read what entails. Give us a stats if

4:37

you want. Yeah, so the stats, apparently, approximately 43%

4:39

of UK residents have

4:41

some kind of side hustle. If you've asked me, I'd have

4:43

said like 10% at most. Yeah,

4:46

a tiny thing. It's just under 23 million people. Have

4:50

some kind of side income. Yeah,

4:53

I'm just going to skew towards the youngsters these days. I mean, 63%

4:55

of Gen Z, so 18 to 23 year olds, 65%

4:59

of millennials, so 24 to 42 have side hustles. And

5:04

two thirds. That's

5:06

just crazy. It is, isn't it? I don't think I

5:08

ever actually said what it was. But actually, when we

5:11

know what it is, you go, ah, yeah, I could

5:13

understand that. It's usually something totally different from your main

5:15

job in there. Maybe it's just a way of making

5:17

money on the side, but perhaps you don't think of

5:19

a side hustle as a business. You

5:21

wouldn't think of it as a business. It's like

5:24

selling old or refurbished items, buying

5:27

secondhand and stuff like that. Creating

5:29

content. You could argue meaningful money started as a side

5:31

hustle. It's not really a side hustle. It's not exactly

5:33

a side hustle. You come up with a monster. But

5:35

these days, you can make money, YouTube

5:37

and Instagram and TikTok and all that

5:40

sort of stuff quite easily. Well, if

5:42

Kate was photographing her feet online. She's

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going to kill me for doing that.

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It's not a business. In your head, it's not a business.

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I'm just putting some photographs up. People pay for them or

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whatever. I don't know why people would pay for that sort

5:53

of stuff. So it's all sorts

5:55

of roads we're not judging. No, not at all. Freelancing

5:57

or consulting. So things like web design. graphic

6:00

design, data entry, proofreading, stuff that you do on the

6:02

side. You could be at home in the

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evening reading through a book. I'm

6:07

currently proofreading a book at the moment. Are

6:09

you? Yeah. Who's? Oh, yes. I can't

6:11

believe I asked that. Yes, you are.

6:15

I'm about halfway through it at the minute. Well

6:18

done. I'm not really proofreading. I'm just making

6:20

sure it technically- It makes sense. It's technically

6:23

correct. I

6:26

was gonna say something else then, but I do what? You might not

6:28

sort of think of it as a business, but actually

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looking at the stats, average earnings from

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side hustles in the UK is 207 pounds a week or 900 quid

6:36

a month. That's

6:39

a job, really. Well,

6:42

for a lot of people it would be. And in London, the average is 1,643

6:44

pounds per month. The

6:46

average side hustle income, 1,643 pound

6:48

a month. That's

6:52

tidy. Well, I can just imagine people going to

6:54

car boot sales and buying a shed load of

6:56

children's clothes and then going on Vindador

6:58

or eBay or whatever and suddenly- Probably get them

7:00

all for them. Yeah. Well, that's it. That's the

7:03

side hustle. It's not a business, but I'm just

7:05

doing other side. Yeah. Oh,

7:07

you said about proofreading. So we're halfway through

7:09

a list of sort of popular side hustles

7:11

there. I mean, dog walking or just being

7:13

a handy person. Handy man. What used

7:15

to be called a handyman. Handy person. Gardening,

7:17

pet sitting. I

7:20

mean, in a world where I've seen people,

7:23

particularly in America, they'll go to Walmart or

7:25

Target or something and buy like

7:27

a dozen Lego sets. And then because they're cheap, because

7:29

they're at Walmart or whatever, and then they'll sell them

7:31

for 20% more on eBay. Yeah.

7:35

You know, just sort of, that's just arbitrage. I can get it

7:37

cheap there. I can sell it more expensive over here. So I'll

7:39

buy it cheap and sell it more and make a profit. Drop

7:42

shipping, you know, where you're, you know, you

7:44

don't keep any inventory or anything. You just,

7:47

through e-commerce sites, arrange to

7:49

have things delivered directly to

7:52

customers. Affiliate marketing. Yeah.

7:55

I mean, people leaving, you know, setting

7:57

up websites and doing reviews of stuff

7:59

and buy on Amazon and then just all

8:02

the links are affiliate links. So they get a little cart

8:04

every time somebody clicks and buys. It's

8:06

effortless, it's not effortless. It's easier to make

8:09

money than it's ever been. Right

8:11

down to- Making and selling stuff.

8:13

Yeah, cakes. Crafts and baking and stuff

8:15

like that. A neighbor of ours makes gift

8:18

cards and stuff like that. Yeah, my sister does craft

8:21

fairs and does pretty well. She's unbelievably talented,

8:23

right? But she always sells. Of course, of

8:25

course, it runs in the family. Yeah, yeah.

8:29

It's amazing all these sort of side

8:32

hustles, these little ways, we've given it a name of

8:34

side hustle, but it's just the way of making a

8:36

bit of dosh on the side. But

8:38

there are still finance and tax implications.

8:41

Yeah, I'm never thinking

8:43

actually, because I've got

8:45

a wife and two daughters, my wife and three

8:47

daughters and a son, but the wife and two

8:49

daughters I live with technically, they're all vented. So

8:52

three out of the four of our household are all vented.

8:54

Yeah, Joe- That's 75% of the hit rate in my

8:56

house. And mine, Joe joined Vented the other

8:58

day. He sells some stuff.

9:00

So, you know, but that's income,

9:02

right? And- They didn't

9:04

spend up more clothes though. Well, that's true. I'm

9:07

not sure you can offset that against your profits, okay?

9:09

Anyway, it's gonna be below a thousand pounds. It's fine.

9:12

Yeah, that's true. We'll talk about that in a minute

9:14

as well. Yeah, yeah. this

9:16

has tax implications. So let's just explain a little

9:18

bit about how tax works if

9:20

you're self-employed. And this is as opposed to, of

9:22

course, when you're employed. When you're an employee, you

9:24

get your pay at the end of every month

9:26

or every fortnight or whatever, and you get a

9:28

pay slip. So everything is taken care of

9:31

for you. So your national insurance is taken

9:34

off you and paid by your employer. Your,

9:39

just a horrible feeling. No, no, a horrible

9:41

feeling that I hadn't paid. You

9:43

know, when you're talking about paying by your employer, I

9:45

just suddenly went cold and thought, have I paid last

9:47

month's P30? But I have. Sorry,

9:49

listeners, I had a little freak out there for a minute.

9:53

So, you know, your national insurance and your income

9:55

tax taken off you by your employer and paid

9:57

due to revenue for you. You don't have to

9:59

do anything. I

38:01

think having a business is a bit like sort of having

38:04

another person's income going to manage and they

38:06

other than just your own. It's like a

38:08

separate thing. Yeah, because although you can do

38:10

the job, actually running the business is a

38:12

complete separate thing altogether. And you got

38:14

to say to yourself, I've got to look

38:17

after this money because it's not all mine, some of

38:19

it's the tax plans and some

38:21

of it I need to put aside for tomorrow. So

38:23

you think of it as it's not

38:25

your own money to begin with ideally. That's

38:27

very smart. Yeah, absolutely right. So

38:29

yes, you know, it's an extra thing

38:32

to do, but anything worth doing is an

38:34

effort. Remember to keep the

38:36

business separate from you as

38:38

an individual, keep the finances separate. It's,

38:42

you know, I've been self-employed but in a

38:44

kind of pseudo way, but I worked for myself now

38:47

for gosh, 20 years. And

38:51

you know, it's a joy in many ways. It's a

38:53

pressure in many other ways, but you know, it is

38:56

definitely a good thing. Having been both employed

38:58

and self-employed, I've definitely enjoyed being self-employed more,

39:00

but that's not to say that's the case

39:02

for everybody. But you may have come across

39:05

bosses in the past who weren't organized. Make

39:08

yourself the best boss you could ever be. Even

39:10

if you're the only employee, you

39:13

run it the way you would expect someone else to run it.

39:15

Yeah. Don't be slap

39:17

dash with the whole thing. Make sure you're

39:19

set up properly. Make sure you document things.

39:21

Keep your money separate. Yeah. All

39:23

really important. Probably the best book on

39:28

really sort of effective small business is called Emyth

39:32

Revisited. I've read it years ago.

39:35

I've read it probably half a

39:37

dozen times and it's

39:40

sort of central premises that I mean, it's,

39:42

it's almost a parable. There's a, it's a

39:44

sort of fictional conversation between the author and

39:46

a lady who runs a pie

39:48

shop. All right. You know, she

39:51

was making pies out of a kitchen and people say,

39:53

Oh gosh, your pies are amazing. I wouldn't pay for

39:55

these pies. You should totally set up

39:57

a pie shop. And of course she did.