How to Generate Tax Efficient Income between Jobs
In many ways the urgency of getting some kind of income coming in will determine your behaviour and will surely test your courage and decision making abilities.
You might require money right now and so will accept the first offer you get; on the other hand you might have savings, or the stamina and self confidence to turn down offers while you continue your search. It is hardly likely though, that you will turn down, too many offers.
Regardless of which group you fall in, the good news is that many people before you have been in the exact same situation and have succeeded. I did and so can you.
Your mission, should you choose to accept it, will be to generate enough income to equal or exceed your personal living expenses, until you land your ideal job.
What type of Job am I looking for?
· The industry in which you choose to work may not be as important as the type of job for which you are looking. In other words many skills and jobs can be used across a wide range of industries e.g. secretarial, organizational skills, manual labour, sales, book keeping etc. Working across a variety of industries can be beneficial as it exposes you to different business models.
Your most precious assets, right now, are time and money so you want to use your time and money wisely. Since you are not yet gaining working experience in your chosen field, you will have to rely on your present hard and soft skills to generate money. So at the very start you are going to have to evaluate your hard and soft skills and know how to apply each one. Knowing yourself, your personal traits and social and economic needs is an important foundation without which you have little chance of making enlightened employment decisions.
Now, it is not enough to simply know your broad interests and technical aptitudes. You also should be aware of your social temperament, your ability to handle pressure and stress, your willingness to be open to opportunities and change, what kind of lifestyle do you want and what are your personal values.
You must know what motivates you and what kind of encouragement, feedback, guidance and recognition you need to feel fulfilled. Are you persistent? Of all the principles persistence will be the most crucial factor in your achieving success. And know your ability to build relationships. Now….
Your job or income generator should have the following characteristics
· Income must provide enough cash flow to cover and /or exceed basic living expenses.
· Flexibility. You control when you work. You want a job that will allow you time for interviews, career searches and more lucrative opportunities.
· Cost effectiveness. You want the value, of the income generated, to exceed the physical and emotional cost of your effort, time and money. It should also compensate for the reduced ability to pursue your dream.
· High hourly rate. The higher the rate the less hours you have to work to provide the same income.
· Controllable hours. You should be able to increase or decrease the hours worked as needed.
· Tax efficient. Part time job vs. part time business or self employment. Taxes take a considerable part of all income earned. For this reason how you earn your income is very important since it determines how much money you will have left to spend. Tax efficient income is income which you receive first before taxes, but does not create a large tax burden when you file your annual return. For most jobs taxes are usually deducted at source, so you have to earn more to ensure your take home pay is enough. Some investment income and self-employment are more tax efficient.
· Ideally it should be relevant or related to your chosen field or job or to some financial goal you want to achieve.
· Generate passive or residual income. Many times the job which you initially accept might not be the right one for you. Having an incoming income, independent of your job, can give you more breathing room if you choose to move on.
Potential Income Generators and Sources of income
The following is a partial list of some of the avenues that I used to provide for my family while I sought employment in my field.
v Tax preparation services, Book-keeping and accounting
v Self employment income
v Summer jobs
v Real estate
v Courier, Newspaper delivery,
v Restaurants, Hospitality industry
v Home based business
v Service station attendant
v Research and focus groups
v Job fairs, industry expositions and seminars
v Sewing clothing and clothes repairs
v Hair styling
v Hobbies: Writing, Photography, Art
Summary: Looking for meaningful employment in uncertain times can be challenging and sometimes frustrating, but you can still generate a living income by using your hard and soft skills effectively and persistently. Not only can you generate or exceed your living expenses, you can gain valuable knowledge and experience which will enhance your future value to prospective employers.