Recently a friend of mine picked up a second job as an additional source of income to save more money. The problem is that he already has a high paying job but he simply can not save a dollar. He spends all of his money on going out and making the most useless purchases. We have tried everything to help this guy save money but he just does not listen and instead tries to focus on making more money. His newest strategy is to work a second job that pays almost half of what his current job pays just so he could save money for a car. This is a topic that has been discussed many times on other personal finance sites and I figured it was time I analyzed the debate of whether or not a second job is worth your time and effort.
Times a second job is worth the hassle:
- Saving for a down payment. When you are young and you want to speed up the process on purchasing your first home then you’re going to have to work harder than everyone else. Ya it obviously sucks working two jobs but the moment you step into your OWN place you will not regret anything.
- Building up your emergency fund during a recession. Many young people are nervous about whether their current job is recession proof and as a result are working harder to save more money in case layoffs come. There is nothing wrong with this thinking because the higher your emergency fund is the longer you can go unemployed, which means you won’t have to take the first job offer that comes your way.
- Saving for any other extravagant purchase. You may have a wedding coming up or any other event that requires you have a ton of money saved. In this case you will have to work extra hours to ensure that you don’t come up short financially when the big day comes.
Reasons why a second job may not be worth the hassle:
- If you will earn more money just so that you can spend more money. If you’re the type of person that will earn an extra $400 a week just to spend an extra $400 a week then is all of that additional work worth the trouble?
- To improve your lifestyle. Sure we all want a greater life style and to have cooler gadgets, but is it worth working 16 hours a day?
- If you use it as a form of saving money. It’s very short sighted thinking to work a second job just to save more money. There’s no challenge in that and the real challenge comes from figuring out how to optimize your spending so that your one source of income can provide you with enough money to enjoy your life and save for the future.
Bottom line: the question as to if a second job is worth your effort depends on your situation and what category you fall under. The decision must be made by you and you must answer the question, where will all the additional money go?
I'm a 24 year old dude that studied finance in school and now wants to make it fun. Over the past three years I've been helping readers like YOU make more money and keep more cash in your pocket. I've appeared live on Fox Business News and I've been mentioned in the NY Times.
{ 7 comments… read them below or add one }
Yeah he’s got the wrong idea on why someone should get a second job. He should focus on saving money and let someone who actually needs a job get his part time gig.
Will he listen to anyone? Nope. Will he probably be okay? Yep. But you should keep trying just in case.
I’m not sure if you guys have tax brackets up in Canada, but in the US, a second job sometimes isn’t worth it because of taxes and additional costs. Because a second job is taxed at your highest tax bracket, you could lose as much as 35% of your income from your second job, right off the top. If there are additional costs associated with the second job (clothes, laundry for those clothes, transportation that isn’t reimbursed, day care, etc), you might not even break even, or worse, it might cost you money to get a second job! It’s always important to do the math and see how much, after taxes and expenses, a second job will actually bring in.
No matter what the second job pays, it’s the same as the first job – you make money based on how many hours you put in. Therefore, you’re limited to how many hours a week you can work.
If you’re going to have a second job, you might as well make it your own business, and make it something where you can leverage your time. For example, be a manager of others in your own enterprise, or create a product of your own. Neither of these return fixed dollars per hour worked.
It’s bad enough working to make money for someone else in your regular job. It seems to make sense that your second “job” would be working for yourself.
Clair
I currently tutor as a second job. After this school year I will be done tutoring for the most part. I’m looking into a new part-time business opportunity that I just found out about. None of my friends work second jobs, so why do I?
At first I needed the money to save for a condo down payment. Now, the money is going towards retirement savings that were missed while I was building up the down payment.
A second job doesn’t force you to work 16 hour days. I work an extra 8 hours a week. I have no problem with someone working a couple extra hours a week in order to spend a little more money. You mention missing out on time spent having fun, but I can argue that with a little extra money to spend, you can have even more fun. There are pluses and minuses.
A few key points that are missing. What you make in your second job is extremely important. If you are compensated well enough, a second job is very worthwhile even if you don’t need the money for a specific immediate purpose. Also, the power of compound interest is greatly enhanced by investing early in your working career. Working a second job to be able to invest can lead to financial security at a much earlier age and even greater free time later in life.
What do you all think?
Great discussion topic.
I forgot to mention that a second income is great not only for beefing up your emergency fund, but also for diversifying your income. With the economy the way it is, a second income to fall back on or even increase if you get laid off is very important. Diversifying your investments is crucial, but so is diversifying your income.
I have a question as an outsider of the US and Canada.
Is there an allowance of your income where you don’t get taxed? If so, how much is it?
I ask because in England £6035 is tax-free. Anything you earn above that is taxed at 20% or 40%.
Often when my friends take on a second job it doesn’t affect their tax status which is beneficial but still it is a matter of how better the time can be used.
I think it also depends about the type of work you do. If it’s something that will help you build skills that you can apply to your future career then I think it will always be beneficial.
I personally take on a job to show my ability to manage my time and still achieve. Also my job for my final year of university is going to be as a Transition Mentor (helping first years settle in at my uni). This is helpful to develop people skills, manage time and leadership skills but most importantly is the social aspect. I hope to make some good contacts next year and increase my social network.
Hey Guys – Good topic. I would highly be against getting a 2nd job in college, unless you really need the money to pay your tuition and bills.
Instead, use that extra time to work on your studies and build relationships with professors and counselors. If you’re below a certain GPA threshold i.e. 3.5, do whatever you can to raise the GPA beyond and then take your time doing whatever you want.
Seriously, the “C” you got in economics may ironically hurt your chances to get a certain job and make X amount of money in your lifetime.