Need a Side Hustle? Here’s 1 Trap You’ll Want to Avoid

Side hustles are all the rage these days, and for good reason. An estimated 40% of Americans lack the funds in savings to cover a $400 emergency, while millions struggle to put money away for retirement, pay off their nagging student loans, or meet other financial goals. Working a second job, therefore, is a good way to drum up extra cash and ease some of the financial pressure those with side gigs would otherwise face.

If you're in the market for a side hustle, there are several avenues you might pursue. You can try consulting in your current field, waiting tables, child- or pet-sitting, or monetizing a hobby, like baking or photography. But here's one side gig you should make every effort to avoid: multilevel marketing.

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How multilevel marketing works

Those people you see advertising beauty products, purses, or clothing online? They're often part of the multilevel marketing world. Some companies that allow individuals to sign up and sell their products directly leave things at that. Consultants, as they're generally called, can peddle those products at parties, online, or at local fairs, and as they make sales, they get a portion of the profits.

Other companies, however, require that their consultants build teams of additional consultants to work under them. Then, as those junior consultants, so to speak, make sales, those senior consultants get a piece of their profits.

Now if you happen to be one of those senior consultants, you might make some decent money out of the deal. But if you're lower down on the totem pole, you're going to end up earning a lot less, while someone above you benefits from all of your hard work.

Furthermore, some multilevel marketing companies require their consultants to purchase and stock inventory that can then be sold to customers. And that's downright dangerous, because if you buy that inventory at a so-called discount and then fail to sell it, you're out money and stuck with a basement full of manicure supplies, fitness accessories, or whatever other product you were forced to load up on. In other words, not only might you not make money from multilevel marketing, but you might actually lose money. Talk about counterproductive.

Don't fall into that trap

There's nothing wrong with finding a product you can stand behind and selling it in an effort to boost your income. But don't make the mistake of thinking that doing so will make you rich, and don't sign up to sell a product if the company behind it pressures you to build your own sales team and forces you to stock up on inventory at your own risk. Some companies merely require that you invest in a starter kit to begin selling their products. That starter kit might cost around $200, and it might have enough product samples to enable you to make sales. As such, you might recoup your initial outlay in a couple of months, and then continue making money from that point on. Of course, the lower the cost of that starter kit, the less risk you'll take on.

That said, be careful when signing up to sell any product of any sort, because getting people to buy these things isn't as easy as it sounds. You can host parties, advertise sales to your social media network, and set up booths at town events showing off your wares, but often, you'll be dealing with overpriced items that don't appeal to the masses. And while your friends might agree to buy some of your products to appease you, know that you'll be risking your relationships by putting them in that position.

Making extra money on the side is a positive thing, but don't set yourself up for failure by signing up for nothing more than a glorified pyramid scheme. Instead, find something you enjoy doing with your spare time, or something whose associated profits are far more predictable. It's a better choice than wasting your time and alienating your friends in the process.

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