In Fact, a Second Job May Not Be the Solution.
Most advice offered to those struggling to make ends meet usually boils down to some variation of “spend less and/or earn more,” which often means getting a second job . And many of us have followed this advice: These days , about 8.5 million people in the United States have more than one job. On the surface, this makes sense: if you make more money, your situation is bound to improve. But it’s not necessarily that simple. A second job doesn’t always help in the way you expect, and may even cause some harm to your financial situation and other aspects of your life. Here’s what you need to consider before assuming a second job will solve your problems.
More money, more bills
The first thing you need to do is calculate how much money you’ll make from your second job and compare it to any additional expenses you’ll incur:
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Travel expenses. Whether it’s more gas in the tank, more wear and tear on your car, or parking fees, commuting to work costs you money—on average, about $2,600 per year (for a single commute). And that doesn’t include the cost of replacing your car because you’ve doubled the mileage. If you use public transportation and car sharing more instead of driving, add on those costs.
And remember, these costs can sometimes quadruple if you have to commute to work, drive home, then commute to a second job and drive home again. Increasing your commute doubles those costs, so calculate how much more you’re spending and subtract it from your salary at the second gig.
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Food and food. The time and energy for the second job has to come from somewhere. If you’ll be eating more fast food or takeout because of your second job, you’ll need to estimate those extra expenses and also subtract them from the amount you take home. Fast food costs on average $2 to $10 more than food prepared at home, so if you eat out three times a day because you work or commute all the time, it adds up.
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Care for children. If you need to pay for babysitting or other child care services because your second job won’t give you as much time at home, those expenses also need to be deducted. Child care costs range from $5,000 to $25,000 per year depending on your location, so it can make a big difference in your supplemental income.
Every dollar you have to spend supporting a second job reduces the effectiveness of improving your financial situation. Make sure you know how much you’re losing on the deal and whether a second job is still worth it.
Tax consequences
A second job can seriously complicate your tax situation:
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Limit rates. If your second job increases your income enough to move you into a new tax bracket, you’ll pay slightly more in taxes. For example, if you make $40,000 a year in your first job, your marginal tax rate would be 12% . If you earn an extra $20,000 from your second job, just over $15,000 of that money will be taxed at a higher rate of 22%. You’ll still pay 12% of the bulk of your income, but your total liability will increase.
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Double deductions. In many cases, your two employers won’t be able to adjust your Social Security withholding, so you’ll have to pay double the amount , at least temporarily. After all, you may get the Social Security tax credit when you file your taxes to help it even out, but in the meantime, you’ll lose that money, presumably right when you need it. And if your income exceeds $200,000, you’ll also have to pay a higher Medicare tax.
Taxes won’t erase your extra earnings, but you need to know how they will be affected so you can judge whether a second job will bring in enough income to make it worth it.
Burnout and health
Finally, there is a “softer” impact that is difficult to quantify: exhaustion. If you’re already working full-time and now adding more work hours (and more commuting hours), you could be putting your mental, physical , and financial health at risk. Research has shown that working longer hours can increase your chances of depression, heart disease and sleep problems. These conditions come with increased health care costs, which can offset the benefits of a second income.
Working more and sleeping less can also worsen your performance in both jobs, potentially leading to negative financial consequences, such as losing your first job or missing out on performance bonuses. There’s no way to predict the likelihood of something like this happening, and you can’t easily calculate the financial impact, but it’s worth thinking about if you’re hoping a second job will be the ideal solution.