When money is tight, it may be tempting to pick up a second job to help make ends meet. But is the extra income worth the time you spend moonlighting? There are a number of issues to consider when deciding whether to take on a second job.
- Tote up all of the expenses of working a second job to see if it's really worth it.
- Don't risk your day job. If the pressure is too much, quit moonlighting.
- Beware of the tax bracket creep.
If you have young children, you need to consider the cost of their care while you're working a second job. If your goal is to bring in an extra $1,000 a month but you have to spend $350 on childcare, you are only adding $650 to your budget every month. In some cases, it may not be worth the time and expense.
Both the time and the cost of getting to and from your second job must be factored in. If you spend an hour commuting each way for a low-paying job, you will have to decide whether the total amount of time, including the commute, is worth the extra income.
And of course, you have to consider the cost of that commute. Work out a budget for extra gas and wear and tear on the vehicle. Or if you take public transportation, add up the costs of tickets, tokens, or passes.
There may be other incidental expenses involved, like clothing appropriate for the second job or supplies that aren't provided by the employer.
There are indirect costs to working a second job. The opportunity cost of working a second job represents what you have to give up to make it work. In other words, what would have been the difference if you had chosen your next best option?
For example, you decide to take a second job for $10 an hour for a total of eight hours per week. The job's starting time is only an hour after you get off work from your main job, so you have to rush home, throw something together for dinner, and rush off to the new job.
Many employers have policies against employee moonlighting, and for good reason.
You no longer have time to make dinner from scratch. You have to purchase frozen meals that you can throw in the microwave. That can significantly increase your grocery budget and become one of the opportunity costs of working the second job.
Tax Bracket Pressure
If the income from your second job pushes you into a higher tax bracket, you may end up taking home considerably less than you think. If your new job pushes your taxable income over $40,125, for example, all of your income over that level will be taxed by the IRS at 22% rather than 12%, if you are filing as a single. (That's according to the IRS tax brackets for the 2020 tax year. For the 2021 tax year, the same situation would occur if your new job pushes your taxable income over $40,525).
Interference with Your Main Job
Many employers have policies against employee moonlighting, and for good reason. Having two jobs can be difficult to juggle and your performance at your main place of work may suffer.
If you are having trouble managing the hours or the effort it takes to have two jobs, consider quitting the second job. It is not worth putting your main source of income at risk.