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waiter serving guests

There are ups and downs to working in the service industry. Cranky customers and wry bosses can really bring you down, but any gloom tends to lift, dollar by dollar, as you count your tips at the end of the night.

Putting up with the hustle of the night all feels worth it though as you finish the last sip of your shift drink and skip out the door with a cool couple of hundred dollars in cash in your pocket. It really offsets that waitress or waiter salary you get.

But cash is a tricky thing. Without proper financial planning and insight, that chunk of cash can be spent before you know it, with days (if not weeks) left in the month and bills to show for it.

The good news is that it’s really not that hard to put together a game plan in place and stick to it, especially if you start at the beginning of a tip-filled restaurant job and make solid habits from the beginning.

Whether you’re new to the industry and looking for money management tips, or you’re a veteran who’s looking to polish her tip saving skills, here are a few tricks that will help you manage your cash tips.

busy restaurant staff

Understand the Law

Navigating the US legal system is confusing to say the least. You don’t have to understand all of it (or even most of it) in order to have a grasp on which restaurant labor laws and regulations apply to you as a tip earner. Workplace Fairness does a really great job of summing up what you need to know—start here and dive deeper in other places if you have to.

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Track Your Money

There’s no way you can manage your money if you don’t know how much of it you have. Even though it fluctuates from shift to shift, if you keep track of what you actually earn (post tip-outs) over a couple of months, an average will start to appear. Of course it won’t be exactly the same every month, but this way you’ll at least have a pretty clear idea. Just jot it down at the end of every shift—even a note page in your phone will do just fine.

Set Up a Budget

While budgets are approximately zero fun, having one is key to allocating and spending your cash appropriately. Make sure to account for all of your expenses including loans and other debt that you have to pay for every month. Additionally, this Forbes article advocates for creating a “flex” category, one that includes everything from shopping to dining out. That way you’ve got room to have a little fun every month, but it’s also clear what can go when times get tough (think slow seasons).

waiter serving

Plan Ahead for Taxes

Taxes are never fun and never easy, especially in the service industry. It’s tempting to skip on claiming your cash tips, it can be a red flag to Uncle Sam if you don’t claim enough to cover your basic expenses. Besides reporting, planning is also central to a living on cash tips. Because the cash you pocket every night isn’t taxed as you receive it like regular paychecks are, there’s a good chance you’ll end up owing the government at the end of the year. Setting aside 10-15% of what you make as you go is a good rule of thumb that most servers and bartenders follow.

Separate and Save

There are a couple of different strategies you can take to sifting through your money in order to deposit some and spend some. A long-time bartender explains to the PennyHoarder that after a shift, he deposits all of his big bills—everything $20 and over. That way he generally has enough small bills to left over to pay living expenses as he goes. Besides adding to your regular savings over time, having a separate “cushion” savings is a good idea for anyone with fluctuating employment. Try to have one to three months of living expenses covered in your cushion—that way you don’t have to panic if something like an unexpected reduction in shifts happens. Instead you’ve got a cushion to draw from and priceless time to figure out what to do next.

Now that you’ve got the money management tips you need, you’re on the road to a healthy, sustainable financial future in the restaurant business.

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Cinnamon is a Minneapolis-based freelance writer and journalist who paid a large part of her way through college and graduate school by serving. Her work has been published with outlets like National Geographic, the Washington Post, Pacific Standard, and more. You can read more about her at www.cinnamon-janzer.com.
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