3 Ways to Budget Your Second Income

June 15, 2018 | By Daniel Dewitt


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If you’re like the majority of people who have second jobs, the reason you’re putting in the extra hours on top of your day job is that you need the money. There’s no shame in that: in today’s economy, many of our financial situations have become increasingly tenuous, and it’s a credit to your character and work ethic that you’ve decided to be proactive about increasing your income in whatever way you can.

With that said, one of the most frustrating parts of putting so much effort and time into a second job is how quickly the extra money can be eaten up by expenses, to the point where it just feels like your life revolves around nothing but bills and work. But there is a way out of the rat race. Just as being more organized in other aspects of your finances can help your situation, crafting a budget for your second income will help you reap the greatest reward for your efforts.

Find Your Income

The first step you should take when it comes to budgeting the money from your second job is to calculate your monthly net income from it. How many hours a week are you really working? Do tips factor into the equation? These are all things that can make your second income much less consistent and reliable than you’d think.

The most effective way of determining your true income is to graph the earnings from your second job over time. Find your pay stubs (either hard copies or digital) and add them up, then divide them by the number of pay periods. Doing this will give you a clearer, if not exact, idea of how much you can expect to earn month to month so you don’t have to depend on fast cash from auto title loans or racking up credit card debt.

List Your Goals

A map is no good if you don’t know where you’re ultimately headed, and budgeting works on a similar principle. Why did you first take on this second job? Was it just to meet your month to month expenses, or was it to save for retirement, buy a car or fund your kids’ college?

Whatever your goals are, make sure that your additional income is being directed to reaching them. To make sure this happens, set up a new account devoted solely to saving for your goals, and have your bank automatically deduct from each paycheck a predetermined amount.


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Cut Out What You Don’t Need

There’s a temptation when you work a second job to cut yourself a little slack. So what if you eat out a little more or spend a little more on a hobby? After all, you owe it to yourself for working so hard, right? The problem with thinking like this is that it can form a vicious cycle where we have to work to afford the things we spend money on to relax after working so hard.

Don’t allow yourself to fall into this trap. If you layout a strict budget with clear and attainable goals to work towards, you may have to sacrifice some of those leisure activities you’re engaging in, but in the long-term, you’ll be happier for having stuck to your budget and minimized your lifestyle.