How to budget when you work for tips
Do you make an income from tips?
Working off tips can have it’s positives and negatives. Being able to budget easily is definitely one of the negatives. We don’t bring home a monthly, bi-weekly or even weekly paycheck that can be broken into the bills we have to pay and then easily see what’s left over. Having a budget when you work off tips takes a little more work, but it can be done. All you need is a little organization and self discipline.
I have relied on tips for at least half of my income, if not all of it, for the past 6 years. Over that time I dug myself out of many financial holes. You can prevent getting behind in the first place if you implement these easy tips!
Make your tips your paycheck!
This is the most important of all! What I mean when I say make your tips your paycheck is this: DO NOT spend what you made that day until “pay day”. Decide how often you want your “paycheck” first of all. I choose to get mine weekly. I’ve found that stretching it to every two weeks makes me more apt to dip into that money before I should. Figure out what works best for you. The important part is that that money adds up until your decided pay pay.
This may be a difficult task to start so here is a good way to ease into it. Figure out a minimum to set aside every day the first couple of weeks. This way you will still have a “paycheck” at the end of the week and some money in your pocket after every shift until you can completely adapt to this approach.
Figure out your average income
This step is important in order to get to the next one, writing your budget. So, while you’re starting to put together your paycheck, start tracking what you make every shift. Sometimes we have an average in our head. But, sometimes that average can be a little off compared to reality. Write down your tips every shift in your planner(I highly recommend a planner, I can’t keep anything organized without one!). After at least two weeks find your average daily income by adding up everything you made and dividing it by the number of shifts you worked.
Write out a budget
When working off tips we don’t tend to budget things out like we should. Sure, we know what bills need to be paid when but other than that we live off how good of a night we had tip-wise. By looking at the average you will make per “paycheck” you will be able to come up with a rough amount you will be able to pay toward bills every pay period. Now you can decide what bills get paid what weeks. You may have weeks where money is going towards larger bills like rent/mortgage and one weeks doesn’t cover it. That’s okay, just treat that money like is has already been paid toward a bill. It is no longer your money to spend on anything else.
Decide where the extra money is going
Sometimes we think after the bills are paid that the rest of the money is ours to spend. As awesome as that sounds, there are other required expenses we all have. Things like groceries and gas should be added into your budget as well. Depending on how tight your money is, you may be able to have more flex in these types of expenses, where bills are what they are and you can’t compromise on those. You can even add in a shopping trip or getting your nails done if these are monthly expenses and things that are important to your budget. None the less, we still have to pay for these things so in the budget they go! Using the envelope budgeting system is the best way(in my opinion) for organizing expenses like these.
Now go budget your tips!!
Sounds easy enough right? I promise the hardest part is getting started. I feel so much more organized when I treat my tips like a paycheck the apply them to my budget. Everything gets paid on time and I have a super clear idea on what kind of money I have left over. I have been doing this for so long I almost can’t remember any other way! If you work for tips and struggle to keep organized give this strategy a try and I promise it will change the way you look at your budget!