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Art of the “side hustle” Thumbnail

Art of the “side hustle”

Making a second (or third) job work for you.

WHETHER IT’S CALLED MOONLIGHTING, a “side hustle” or a freelance gig, more Canadians are earning income from multiple job sources. According to Statistics Canada, the number of workers with more than one job has more than doubled in the last 40 years.[1] And the side gig isn’t just for cash-strapped millennials – it’s a similarly rising trend for older workers and retirees. Statistics Canada has also found that 43 per cent of people age 60 to 64 were re-employed after leaving long-term full-time jobs, many of them within a year of leaving.[2]

Some of this transformation has been driven by technology. Although many Canadians have traditional part-time work as bank tellers, bartenders or coffee baristas, a growing number of today’s side gigs wouldn’t have existed a decade ago. Thanks to online platforms like Uber, Airbnb, Etsy, Upwork and others, Canadians are finding customers and gaining the freedom and flexibility to choose both their location and work hours.

But why are so many Canadians turning to side jobs? A rising cost of living, record levels of household debt and longer lifespans are making it harder for many to make ends meet – let alone put savings aside. For millennials trying to get into the housing market, parents saving for retirement and their children’s post-secondary education, or retirees trying to make their savings last longer, a part-time job can make a big difference.

Upside of a side hustle

A part-time job can provide many benefits beyond extra cash. 

Gain financial resilience

No matter how well you plan, there are always unexpected expenses. The extra income earned at a side job can help keep your head above water, financially speaking. A second job can help diversify your income stream, leaving you better prepared to handle any unexpected interruptions in your regular income.

Enhance career development

Enhance and expand your resumé with new skills and experience. A side job can offer new perspectives on your current work – helping you to get that next promotion or move into a new role. It can also expand your network, providing a wider community of people to draw on and learn from. If you aren’t sure about your next career move, testing the waters with a side job can help with your decision-making process.

Pursue personal growth

Perhaps you’d like a chance to explore your entrepreneurial side and start a small business. You may have interests you want to pursue outside of your full-time work, such as a hobby you want to spend more time doing. A side hustle can help you develop that passion without the commitment of leaving your current job.

Keep in mind

Despite the benefits, there can be challenges to having a second job.

Stretching yourself too thin

If you already work a full-time job 40 hours per week and have other significant responsibilities, a part-time job may be hard to fit into your calendar. A second job adds complexity to your schedule, can increase stress levels and may leave you with no downtime. If you over-extend yourself at your part-time job, it may affect your family life, and potentially put your other job(s) at risk.

Financial cautions

Additional income is great, but depending on your tax situation, you may not be getting much further ahead. Extra earnings can potentially bump you into a higher tax bracket. Some side hustles are self-employment arrangements, meaning there are no payroll deductions or T4 slips. You will be responsible for claiming income and submitting the appropriate tax on earnings. Submiting invoices, figuring out the rules for charging GST/HST, and understanding the difference between gross and net earnings are important considerations.

For workers age 60 to 65 collecting Canada Pension Plan or Quebec Pension Plan, you must still make contributions. For CPP recipients 65 and older, contributions are optional, but the individual must opt out.[3] However, contributions to QPP continue to be mandatory. There could also be implications for those receiving Old Age Security (OAS) payments. If you earn a high income from work after you turn 65 years old, there is a chance that you may need to pay back some or all of the OAS pension payments you have received.[4]

Make it worth your while

A side hustle can be a great way to earn additional income, but make sure you’re really getting ahead financially. Speak with an advisor to help you to create a smart financial plan that makes the most of your earnings.

© 2019 Manulife. The persons and situations depicted are fictional and their resemblance to anyone living or dead is purely coincidental. This media is for information purposes only and is not intended to provide specific financial, tax, legal, accounting or other advice and should not be relied upon in that regard. Many of the issues discussed will vary by province. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation. E & O E. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Any amount that is allocated to a segregated fund is invested at the risk of the contractholder and may increase or decrease in value.

[1] https://business.financialpost.com/personal-finance/young-money/rise-of-the-moonlighters-why-more-canadians-are-taking-on-side-jobsand-how-to-make-it-work-for-you

[2] www.cbc.ca/news/business/rrsp/transition-to-retirement-1.3392141

[3] www.canada.ca/en/financial-consumer-agency/services/retirement-planning/working-collecting-pension.html

[4] Ibid.