Weighing the Value of a Second Job: Is It Worth It?
Is a second job worth it? Explore the value and implications of a second income source on our insightful page.
During a recent Uber ride, my driver shared an intriguing story. He had taken up driving to supplement his income and manage the costs of a second mortgage he had acquired. The spike in interest rates had prompted him to seek additional earnings to hold onto his property. His “day job” concluded at 3 pm, and he would transition straight into his driving gig.
His situation is far from unique. Recent data from the Australian Bureau of Statistics highlights a 2.1% increase in the number of workers engaging in multiple jobs since December 2022. This trend translates to a total of 947,300 Australians, comprising 6.6% of the working population, who juggle multiple employments.
The reasons behind taking on a second job vary widely. Some individuals opt for a secondary source of income to manage escalating expenses, while others view it as a gateway to launching new ventures while benefiting from a stable income stemming from their primary occupation.
Assessing the Worth
Delving into the tax landscape, Australia operates under a progressive income tax system. Essentially, the more you earn, the higher your tax liability, and your access to social benefits gradually diminishes.
Thus, evaluating the potential worth of a second job necessitates a comprehensive perspective. It’s crucial to consider the anticipated earnings, associated income generation costs, and the overall impact on your financial situation.
For those venturing into the realm of the gig economy, particularly through platforms like Uber, a significant consideration arises. Many of these roles entail working as independent contractors, implying the responsibility of managing your own tax affairs.
Uber drivers, for instance, are mandated to hold an Australian Business Number (ABN) and be registered for Goods and Services Tax (GST). While this arrangement provides flexibility, it also entails compliance costs.
Furthermore, a fraction (1/11th) of the collected fee must be remitted to the Tax Office every quarter, requiring prudent financial planning to ensure timely tax payments. Balancing this financial equation is paramount, necessitating the segregation of both GST obligations and income tax to guarantee the availability of funds when tax payments come due.
On the bright side, the ability to claim expenses related to the second job can serve as a financial buffer.
If you find yourself contemplating a second job, an essential point to consider is the application of your tax-free threshold. This consideration primarily impacts your highest-paying job concerning Pay As You Go (PAYG) withholding.