Why a Second Income May Not be Worth It

During these times of economic instability, there are decisions being made in households all over about the pros and cons of being a one or two income family. For many families, especially those with small children, it seems nearly impossible to justify two incomes due to the costs of daycare.

Another factor people fail to consider is the other things that actually cost money being a working individual. While these costs can be controlled to some extent but for some people, they are a necessary evil that can take away from their monthly income.

Here are some of those other things to consider as a working person with budget concerns.

The Commute

For many working adults, the cost of getting to work is unavoidable. Those who use their private vehicles to get back and forth from work are spending hundreds of dollars each year for gas, maintenance costs, insurance, tolls, and other related expenses, regardless of the amount of time it takes to get to work.

Consider the alternatives to driving your own vehicle to work each day such as:

• Carpooling/Drive Share
• Public Transportation – train, bus, subway
• Vehicle Trade In – exchange a gas guzzler for efficient compact for work
• Walk/Bike

The Attire -Your Wardrobe

Depending on your position and the company you work for, clothing can be a huge dent in your budget. If you need to dress in suits and ties everyday, expect to pay a few bucks to maintain a professional wardrobe.

Consider the alternatives to the high cost of clothing, such as:

• Take extra care of the things you already have
• Shop at consignment shops, which usually insist on high quality clothing consignments
• Borrow clothes or accept hand-me-downs from relatives or friends
• Set aside a weekly amount of money into a clothing fund that can be accessed when needed.

The Office Mentality

Many office environments thrive on celebrating birthdays, promotions, and other situations by pooling money to buy gifts, cakes, or going out to eat. It may be seen as anti-social, non-team building behavior if you choose not to cooperate so sometimes you are stuck between a rock and a budget.

Consider the alternatives to the high cost of office socials, such as:

• Offer to bring in a homemade treat from home for the party if you can’t contribute the cash
• Encourage pot luck lunches inside the office to help those who can’t afford to be dining out so often
• Give what you can afford to give and don’t let anyone shame you into more than you have to give

The Incidentals

During your commute to work and throughout the day, it’s the little things that can get to your budget. Stopping at a convenience store to pick up items such as candy, coffee, gum, and drinks can end up costing you a lot of extra cash in a year. Instead, be prepared the night before work with items you purchase from non-convenient stores that cost much less if purchased elsewhere.

Tax Implications

Adding that extra income to your family by having a second income may just put you into the next tax bracket. In doing so, and by filing jointly, a good chunk of that second income will be going to pay the higher tax bill.

The only way to really find out is to get out a tax bracket chart from the 1040 instructions, or visit a tax professional.

Child Care – Daycare Costs are High

Do you have kids that are not quite school age yet? Then you need to consider what it’ll cost to have someone look after them while your at work. With daycare costs going up ever year, this could be a big expense. Even if your kids are in school while you’re at work, chances are they will get home before you, requiring supervision.

Consider the alternatives to the high cost of daycare, such as:

• Have a relative watch the children while you’re at work
• Arrange a deal with your employer to get out of work early to watch your kids after school
• Consider work at home jobs, telecommuting, or working 4-10 hour days instead of 5-8 hour days

What’s Next?

The key to all of is is containing your costs and the primary way to do that is to establish a strong budget and stick to it.  For an easy way to budget, try Mvelopes. It’s a software-based budgeting method that works incredibly well to help you control household costs and maintain your budget.