by Pennee Struckman

Created on: August 30, 2009

When couples talk about taking in a second income, the primary focus is "income". People are looking for more money to pay the bills, save for a house, or spend on themselves and their kids.

Sometimes, the talk of a second income may come from the desire to use your skills and education, or interact with people. If you feel that you are not living up to your dreams, taking a job can help. But if the job is not cost effective, consider using the

President's Volunteer Organization. There are many organizations that need volunteers.

When adding a second income, couples need to consider how much actual money will be earned. Consider how this will affect the family and personal life. Consider if it will be worth your time and effort.

To explain, if one person is making $41,000 a year, and the other returns to work making $21,000 annually, the amount of actual money the couple could gain would be between $10,760 and less than $5,560. This will depend on the childcare and number of miles driven roundtrip to work.

Based on the 2008 tax tables, if one spouse makes $41,000, the income tax is $5,351. An additional income of $21,000 would increase the couple's taxable income to $8,501. This is a tax increase of $3,150, or 37%.

When you decide on the amount of the second income, calculate the tax effects first.

Use this example when decided the wages to consider:

$21,000 less Federal Tax less State Tax Less FICA (7.65%) = disposable income. This would be $21,000-$3,150-(est. state 7%) $1,470- $1,607=$14,773.

Then subtract any childcare expenses, an estimated amount of gasoline and wear and tear on car; the IRS 2009 mileage rate is $0.55 per mile, new clothes for work, and lunches.

As an example, the childcare at $100 weekly for 12 months is $5,200. Roundtrip mileage per day of 27 miles, based on 50 weeks, 5 days a week, is $3,713. New clothing might be $300, and lunches $500.

Now you have $14,773-$5,200-$3,713-$300-$500 = disposable income of $5,060.

When you figure out how much money you will really be making, you can then make an informed decision.

Add up your bills. Will this extra income make a dent in the amount of money owed?

How much do you want to save for a house, and how quickly do you want to save this?

Do you want to increase your retirement savings? Will this amount meet your goal?

Will this be enough to enable your child to play select ball? Or attend college?

Accepting the offer of $21,000 on the second income may not bring the results you hoped. You may want to look at a higher paying second job. You both may decide to wait until the kids are older and childcare won't be needed. By taking the time to figure out how much real money your household will have, you can decide as a couple how important it is to have a second income.

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