Side hustle: how to improve your finances with a second job

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If you're in need of extra cash, you may consider getting a second job to help you make ends meet or pay for luxuries.

Not only can a second job help you make more money but you may potentially gain extra skills.

You don't want to do that to the detriment of your family life though.

Ask yourself whether you want to do something similar to your existing job or whether you want to try something completely different.

You will need to find something that fits your current work schedule.

Casual jobs in retail, bartending or waitressing can be a good option because chances are you can get shifts that will accommodate your primary job.

Working from home can also be appealing - but there aren't a huge number of opportunities out there - so you may have to create them for yourself by starting a business.

Think about how you can turn any skills or hobbies into a regular income.

If you're a teacher, maybe doing some tutoring can bring in extra funds, or if you're a keen baker you may be able to make cakes.

There are a few tax issues that come with moonlighting.

The main issue is whether you should claim the tax-free threshold from both employers.

Currently, if you're an Australian resident for tax purposes the first $18,200 (the tax-free threshold) of yearly income is not taxed.

If you're certain your total income for the year will be less than $18,200, you can claim the tax-free threshold from each payer, explains the ATO.

If you will be earning more than that, the ATO recommends you claim the tax-free threshold only from the payer who usually pays the highest salary or wage.

If you claim the tax-free threshold from both, then you run the big risk of ending up with a big tax debt.

If you only claim the tax-free threshold from one employer it essentially means you'll pay tax on every dollar you earn from the second employer.

Your employer will use tax tables provided by the ATO to work out how much tax to withhold based on what you earn from them.

It's worth doing the sums yourself too because there is a risk that either too much tax will be withheld (but you will get it back when you lodge a tax return) or not enough is taken out which will result in a tax debt.

If you think either is likely to occur you can lodge a PAYG withholding variation application form so your employers take more or less tax as appropriate.

If your second income is from a side business, make sure you set aside some extra cash to cover the tax you'll need to pay.

And if you register for GST - which you'll have to do if you think it will have a GST turnover of $75,000 or more - you'll also need to fill in quarterly BAS.

One of the extra deductions you may be able to claim is the cost of using your car to travel directly between two separate jobs.

It has to be a direct trip - so you can't go home first or stop at the bank or pick up groceries.

Nor can you claim a deduction if for one of the jobs is at home.

Making it work

  • Check your main employer's policies. Some might just say you can't work for a competitor, while others may say it is a no-no.
  • Do something that interests you. You don't want to hate the thought of going to the second job.
  • Make time for yourself and your family. Try to have at least one day off a week.
  • Think about travelling time and costs - a job close to your first one or your home is best.
  • Think about when you'll stop. Maybe set a financial goal and when you reach it give up the second job.

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Maria Bekiaris is editorial campaigns manager for Canstar and former deputy editor of Money. She holds a Bachelor's degree in business.