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When you rely on tips to pay the bills, managing your money can be tricky. It’s hard to know exactly how much cash you’ll be taking home after each shift, which makes planning and budgeting seriously tough.
Not to mention the fact that the service industry took a huge hit during the COVID-19 pandemic. Add in rising costs of living and bad tippers, and it can all feel a bit overwhelming.
But don’t fret — if you rely on tips, here are some things you can do right now.
1. Make Sure You Have a Budget
When you rely on tips, your income can be unpredictable. Your take-home pay might be wildly different from shift to shift, week to week.
This can make planning out your finances tough. But one of the most important things you can do for your finances is to have a budget. The first step is to start tracking your income. Contributing writer and bartender Jeff Morrison suggests tracking your income after every shift for 10 weeks to find your average weekly pay.
“Pick the lower of the averages and base your budget on that figure,” says Morrison. “Just to be safe. I expect you’ll find your income to be more consistent than you’d think, as long as you take the longer view.”
Then pick a budgeting method. We like the 50/20/30 method because it makes things super easy, and it offers a lot of flexibility.
Here’s how it works:
- 50% of your income goes toward essentials.
- 20% goes toward financial goals.
- 30% goes toward personal spending.
Once you get the hang of it, you can tweak the ratios to fit your specific situation. Find what works best for you and your goals.
2. Keep Your Cash in an Account that Earns You 83x What Big Banks Pay
Working for tips typically means you’ve got lots of cash. But it’s not doing you any good in your wallet or under your mattress. You should be keeping it somewhere that pays you plenty of interest on it.
An account with Aspiration lets you earn up to 5.00% APY — 83 times more than big…
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