A good portion of my income has been based around gratuity, either percentage of sales or the kindness of strangers, for over ten years. When you’re not sure what you’ll be making this shift, or even your annual income, things can get a little fuzzy. I have six credit cards and decent chunk of student loans. I sat on thousands of dollars in rollover balances for years. I’ve also worked my way up to a near-800 credit score.
We all have our excuses.
“Everyone has debt, it is normal.”
“I’ll figure it out next month.”
I racked up this debt because I had no idea where my money was going or how to manage the money I had coming in.
Love it or hate it, the tipping economy isn’t going anywhere soon, but if this is how you make most of your money, there are easy ways to stay afloat.
I’m going to cover how I set my budget, what works for me, and what doesn’t.
My Budget:
I’m not reinventing the wheel here, folks. Before you start saving for a vacation, buying a house, or even buying that cute pair of earrings at the farmers market, you need to make sure you have the income covering ALL the bases. In simpler terms, these are the things you pay for every month, because that means you’re still alive.
For me, that includes:
HAVE TO PAY:
Rent – $650 (Water included)
Utilities – $100
This includes mobile, internet, electric, cooking & heating gas.
Minimal food to live – $130 or about $30 bucks a week.
Transportation – $100
This includes minimal parking fees (ugh).
Prevention – $450
For me, this is all my monthly insurance costs (health, car, dog), as well as therapy, medications, and basic self-care.
Then I factor in all the things I really should pay every month:
Student Loans -$100
I pay more than my Income-Based-Repayment plan requires, but not too much because I have other fish to fry right now.
General Savings – $30 – 300
This varies, but I am trying towards the high end of that scale.
Secret Savings – $150
This goes into an account that I have a really hard time taking money out of, so I can continue to build my emergency fund.
So, if I never go out, go shopping, or buy anything but the absolute essentials, I should really pull in about $ 2,000 a month.
But being real with myself, I need to socialize (min. $200), shop for things here and there ($100) and have a buffer (eh, maybe $200 more just in case), which puts us close to $2,500.
You should note, that’s not including any other debts. Other miscellaneous subscriptions (such as amazon + netflix + hulu + new york times crossword puzzle + gym + yoga app + everything else) or tantalizing online shopping can work their way into that buffer money or you can choose to omit them. We’re setting a bare-bones budget here.
In “regular world” that would mean I need to make somewhere around $14 an hour or $600 per week just to comfortably get by. But as any server or bartender knows, it isn’t about the pay check or the minimum hourly wage,
it is about what you take home each day. For those non-industry folks: we rarely get a paycheck because our hourly wage covers the taxes on our tips. Please assume we never see our hourly wage and need tips (18-22% in most places) to get paid, unless it is explicitly stated that the staff is paid a living wage!
Let’s do some math!
To put it simply, you take your budget needs and divide that by how many days you’ll be working that month. You need to set a daily minimum income standard.
Let’s say you work 5 days a week. Each month is usually 4.5 weeks, so you have 22.5 working days a month. Let’s round down as you might not have that “1/2 shift”. With our hypothetical budget of $2500, you’ll need to make at least $113 per day worked.
Now some people might say, “I make better money on the weekends” … so much so that they write off those other days that could be going toward the main goal. I used to be really excited when I got big tip days, and that excitement would eliminate the bad days. So much so that when I had “bad days” – maybe $60 or less take-home – I’d just say that it was throw-away money and blow it all on whatever indulgence I wanted. Looking back, that’s like saying you just worked for a whole day for free. I’ve stopped caring if I work a Tuesday or a Saturday, a 5 hour shift or 9 hour shift. If you set this standard you will stop screwing yourself over.
Hopefully, you’re going to make more than whatever you’d set as your minimum on most days. That’s great! Put whatever goes over your standard into a savings account. It will be helpful later, like when you need new tires, or want to go on a nice date!
Some days you’ll make less. That’s okay here and there, but if your monthly average is not meeting your standard you either need to reduce your budget items or find more income.
This kind of budgeting is a lot harder than if you had a regular schedule and could show up to work each day, guaranteed a paycheck and then set your bills accordingly. There are some months where you need to check into your savings, or play with your adjustable budget items. I’m fortunate that i usually don’t have to do that, but it happens sometimes. As long your monthly average meets your standards, you’re on the right track.
I am fortunate now to have a part time job with biweekly pay, perks, and PTO that allows me to standardize my budget a lot better and take on fewer shifts, but for most of my working life, that hasn’t been the case.
How do I track this stuff?
I’ve tried a bunch of different web-based services but none of them rang true as the free and included “Monthly Budget” template on Google Docs.
I love that I can customize the categories and enter purchases not based on the transaction data but on my own categories. For example, when I go to Meijer or Target, I can look at my receipt and get a total of what I spent on home goods, foods, and beauty products, (which should all get their own category) and then enter them separately.
When using automated services, I’d get one charge on grocery and no way to separate unless I hide that transaction and enter each category manually. Perhaps I am only skipping a step or two but I prefer defining my finances my own way that I haven’t found in any other app.
For a long time, I was fed up with web apps and was doing everything by hand in a notebook or whiteboard, but then I’d still have to go back and calculate everything with some sort of digital support. With this spreadsheet, the numbers automatically update. I also like that I can see exactly what I spent and see what categories need adjusting.
I can also determine my income based on my minimum tip standard, separate any bonus money over the minimum, and then also account for my bi-weekly paycheck. Even though my budget is set on the minimum money in, it is good to see how much more I have to go to make sure the month is on track.
I’d love to hear your thoughts, especially from other service industry workers, on what tech and methods work for you!