The post Why Getting a Second Job Is Important appeared first on Millennial Money.
More and more young people are choosing to get a second job to make ends meet.
In one study, 61% of respondents said the current generation needs a side business for money, while 31% predicted having a side job will be the norm in the future.
So, if you’ve been thinking about getting a part-time job on the side in addition to your full-time job, you’re not alone.
This article explores why getting a second job is important, and how you can pick up extra work to start earning more income.
What to do with a second job
- Pay off credit cards and debt
- Save money in an emergency fund
- Invest
- Buy a house
- Look into alternative investments
One of the most important things you can do for yourself after getting a second job is to tighten your money management skills and set some financial goals.
By getting a second job, you could easily start pulling in hundreds or even thousands of extra dollars per week.
As great as this sounds, it can be overwhelming.
Managing this kind of money requires discipline. If you’re not careful, it could be tempting to go on a spending spree. With discipline, you can maximize your earnings and protect your revenue stream.
With that in mind, here are some ideas for how to allocate your side hustle money when you pick up a part-time gig.
1. Pay off credit cards and debt
If you have thousands of dollars in credit card debt and student loans, you need to get out of the hole as quickly as possible. In some cases, it makes more sense to pay off debt than to invest because you can get a better return.
Start by organizing your debt, and focus on paying off the highest interest debt first.
You may also want to consider consolidating your debt into one loan for an easy monthly payment at a lower interest rate.
2. Save money in an emergency fund
Once your debt is at a reasonable level, start building an emergency fund. Open a high-yield savings account (HYSA) for flexible, high-interest savings and start putting as much money in as your budgeting allows.
Build up enough emergency savings to cover at least six months of savings in the event your main job falls through. If you’re working a lucrative side hustle, this shouldn’t take you long at all if you’re diligent about saving.
This is one of the smartest personal finance decisions you can make. It prevents you from having to rely on debt during an emergency and can help you coast until you get your next full-time job offer.
3. Invest
As you put money into savings, you should also invest through a brokerage account and a tax-friendly retirement account like an individual retirement account (IRA) or Roth IRA.
Take a portion of the extra income you bring in and spread it around into strategic investment accounts like stocks, exchange-traded funds, and bonds.
You don’t need a lot of money to start investing. Anyone can do it.
Just make sure you’re smart about how you handle taxes, especially if you’re working a side job as a 1099 freelancer or independent contractor. You’re going to have to set aside a portion of each invoice to cover income taxes, so you don’t want to tie all your money up in investments.
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4. Buy a house
Once you get a decent chunk of change saved up, you might decide to break the renting cycle and buy a house.
At this point, pick an area where you want to live, find a real estate agent, and go through the process of securing a mortgage loan and buying property.
This experience can be a pain, and it could take months or even years to find a house that’s right for you.
Yet it’s a great financial decision. You’ll essentially be paying yourself instead of a landlord every month by building equity and paying down your mortgage.
If you already own a house, consider buying an investment property so you can start collecting residual monthly income from tenants. Passive income is one of the keys to building long-term wealth.
One option is to combine homeownership and real estate investing into one purchase. Buy a multi-family house you can live in along with tenants. You’ll pay down the mortgage much faster this way.
5. Look into alternative investments
As time goes on, continue diversifying your investments with your side hustle money. For example, you may want to look into a cryptocurrency like bitcoin, commodities, or fine art.
The more diverse your portfolio, the more financially secure you’ll become. So look around and explore different opportunities in addition to traditional deposit and investing accounts.
Why getting a second job is important
While getting a second gig will leave you with less time for leisure, there are several reasons why it might make sense.
1. Protect yourself
Despite all the advancements in worker rights over the last few decades, the fact is that most workers are highly replaceable. Unfortunately, this is going to get worse in the coming years, as employers move forward with automation.
At the same time, remote work is increasing competition, giving employers access to a wider global talent pool.
Getting a second job is a way to protect yourself. By diversifying your income, you can still have a way to bring in money if your main source of income disappears.
2. Get ahead for retirement
Planning for retirement isn’t easy when you’re struggling to pay your bills and put food on the table.
By picking up a second job, you can put more money away for retirement and inch yourself closer to financial freedom.
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3. Live a better life
Money doesn’t buy happiness. However, it provides fertile ground for happiness to grow.
When you have more money in your pocket, everything gets easier. You’ll be able to eat better food, wear nicer clothes, and live in a better house.
That said, as you think about getting a second job, it’s also important to think about burnout. You need to make sure to achieve an effective work-life balance so you can stay healthy.
4. Open up new opportunities
There’s nothing more frustrating than working a dead-end job that doesn’t expose you to exciting people or ideas or teach you new skills.
By taking on a side job, you can make new connections and create new opportunities for yourself.
A side hustle can open many doors for you and lead to exciting possibilities—potentially even a new day job altogether.
Top ideas for side hustles
Sounds great, right? By now, you might be wondering how to get started.
It’s easier than ever to start a lucrative side hustle today. If you’re thinking about freelancing, you might want to browse job offers on sites like LinkedIn and Craigslist to see if there’ anything available.
While freelancing has its perks, it’s not always easy to get steady work. With that in mind, here are some ideas to consider as you begin thinking about potential side gigs.
Drive for Lyft or Uber
Chances are you use rideshare services like Lyft and Uber on a regular basis. Why not consider driving for them?
You could earn money in a way that is fun and flexible while using your own vehicle and setting your own work hours. It’s great for people in busy metro areas like Chicago, New York, Los Angeles, Denver, Miami, or Boston.
The great thing about rideshare services is they operate 24/7. So if you wake up at 2 a.m. on a Saturday with a burning desire to make money, you can grab your keys, fire up your engine, and roar off into the night.
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Offer care services
You can get paid to spend time with elderly people, kids, or people with disabilities using platforms like Care.com.
If you truly love spending time with others and helping people, this won’t even feel like work. It’s a way of getting compensated for simply showing up, visiting, running errands, cooking, and cleaning for others. How cool is that?
If you don’t want to work with people, consider offering care for animals. You can make money walking dogs, sheltering animals, or even grooming pets.
Bartend
Bartending is one of the best second jobs out there—especially if you work behind a desk all day. It gets you out of the house and away from the computer. You can make money pouring drinks and hobnobbing with patrons.
Bartending can be hard work, but it can also be a lot of fun. You’ll make all sorts of interesting connections. And as the bartender, you’ll most likely get control over the music you play and what’s on the television.
That said, most of your money is going to come from tips. On a busy night, you can make a small fortune. On a slow night…
If you would rather serve food instead, consider getting a job as a server or bussing tables.
Frequently Asked Questions
Is finding a second job worth it?
Getting a second job is totally worth it. You’ll bring in extra cash, grow your personal network, and improve your overall situation in life. If you’re thinking of getting a second job, you should put a plan into action.
What’s the difference between being an employee and a business owner?
Working as an employee or becoming self-employed both require time and effort. It should be your goal to eventually make your money by owning a business or investing, which requires less of your time for a higher return on your investment.
As you look into second jobs, consider doing something that can propel you forward and eventually make you more money while working less.
For example, don’t just start a side hustle. Launch a business and start hiring people to work for you. Eventually, get to a position where you rake in cash while letting others manage your operations.
Can an employer stop you from getting a second job?
An employer can definitely stop you from getting a second job if what you’re doing constitutes a reasonable conflict of interest.
For example, if you work in marketing and start an advertising agency on the side, go after your own clients, or employ your coworkers, you could open up a massive can of worms including lawsuits and penalties.
If you have a contract in place with your employer, scour it for any details that could potentially inhibit you from doing other types of work on the side.
You should also talk to an attorney to understand your rights in advance. Always better to be safe than sorry.
How does a second job affect my taxes?
Having a second job can impact your taxes in a few different ways.
First and foremost, you’ll be bringing in extra money, which can potentially push you into a higher tax bracket.
At the same time, not all employers are going to take money out of your checks. If you work a job as an independent contractor on a 1099 basis, you’ll need to set aside your own money for taxes. Don’t expect your second employer or clients to do this for you.
The Bottom Line
Getting a second job in addition to your primary job can be a life-changing experience.
In today’s digital age, it’s never been easier to get a second gig. You can moonlight as a bartender, Uber driver, Amazon delivery driver, social media manager, or virtual assistant, to name just a few possibilities.
The type of job you get in your free time for additional income should correlate with your skillset and personality. Explore available options and find something that you won’t mind putting extra hours towards during the week.
Who knows? It might not even feel like work at all.
The post Why Getting a Second Job Is Important appeared first on Millennial Money.
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June 07, 2021 at 11:53PM
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