Is a Second Job Worthwhile?
Many people are still feeling the effects of the financial crisis. This has led many to take on second jobs. Indeed, in 2013 the Office for National Statistics estimated that over one million people in Britain have two jobs. How will a second job affect your finances? And is it always worthwhile?
Check Your Current Contract
Before you start looking for a second job or calculating whether it is worth it, you must check what your current contract says about having extra jobs. Some employment contracts might place restrictions on your ability to find a second job. It might be that you aren’t able to work in a specific sector or that you are required to be able to work at certain hours.
Many employers will also believe there is a conflict of interest if you work for a competitor. While most people will look for a second job in the same industry they work in, this can complicate matters.
If there’s nothing in your contract, speak to your line manager for advice.
Changes to Your Tax Situation
If your current employment contract doesn’t restrict your ability to take a second job, you need to think about the financial implications next. A second job might influence your tax situation and you might end up being financially better off without the extra work.
First, you should understand that you only have one non-taxable personal allowance per tax year and the number of jobs you have doesn’t affect this. This often means that your allowance is spent on your first job, which means that once you’ve used the allowance, your income will be taxed at a normal rate.
To avoid any problems with this you need to inform HM Revenue & Customs that you have a new job. This prevents the authorities from applying the tax allowance to both of your jobs and consequently resulting in penalties for you later on. Disclosing the information is easy, as you simply have to ask for the P46 form from your new employer and fill it in.
Another thing to note is that you might have to pay National Insurance contributions from your second job as well. Currently, the threshold stands at £153 per week for each job.
If you choose to work as self-employed in your second job, you need to make sure you calculate your tax code correctly. Luckily, an online second job tax calculator can help you see if having a second job makes financial sense.
If you receive benefits, such as tax credits, you might also lose them. You can check how the increased income would affect your benefits with the benefits calculator at Gov.uk.
Changes to Your Insurance Premiums
In addition, you should also consider whether your second job might affect your insurance premiums. If you are planning to change your life or health insurance, the new premiums might be higher if you work in more than two jobs.
Your second job might also affect your car insurance premiums, especially if you need to use the car in your new job. So, before you consider getting a new job, check with your insurance providers whether you can expect changes to your premiums, and what these will be.
Will your additional income be "cancelled out" by increased outgoings?
Are You Able to Cope?
Financial implications aren’t the only things you need to consider when thinking about getting a second job. You should consider how it will affect your health and mental wellbeing. Having two jobs can be physically demanding and you might find yourself a lot more tired.
Having extra income with a second job might not be worth it, if you are going to end up physically and emotionally worn out. Think how much you need the extra cash, whether you will be financially better off with your new job and how you’ll feel without the extra free time.
If your finances will improve a lot and you are ready to take more work, then a second job can be very rewarding.
Alternatively, you could consider your other options for saving money.