Saving Tips Is a Bit of a Challenge, but these few steps are a great place to start.
The COVID-19 pandemic is long gone, and government money has stopped. However, restaurants are still busy! This is great for those looking to make some cash and save it. Saving tips is not overly complicated or difficult, but take advantage while the money is there and plentiful.
Why?
Guests have been coming out in force, making up for all the missed birthdays, gatherings and special dinners that went to the wayside during the peak of the COVID-19 pandemic. The pent-up demand is still there.
Many guests will have dinner with a party of 12 for the first in a long time, meaning they will want to spend money. The greater the check, the greater the tip.
Greater tips=$$$$ in your pocket.
Now that the extra money is there, what are you going to do with it?
So, will this money go to the bottom of a tequila bottle or elsewhere?
Sure! Go have some fun with it, not all of it.
With the restaurant industry back in full effect, this is a new beginning, a new opportunity to be better with your tips. Don’t forget that something like a pandemic or recession could be lurking around any corner. Like a good scout, be prepared.
What are Reasons to Start Saving Tips?
- Start a business
- Get a house of your own
- Get a new car
- Fix the car
- Take that long-forgotten trip
- Leave the business for good
- Train for a new career
It is time to take control and not stop until a goal is reached.
Set a savings goal. Set a high one also. Even if its lofty, challenging oneself is a great way to work on mindsdet and get a better outcome.
How to reach a savings goal?
Being disciplined, thats how.
What Does Discipline Have to do With Saving Tips?
Discipline means you pay yourself first. (insert snarky comments like we are some boring ass financial advisor) Its true though, paying yourself first doesn’t mean saving for the future, it might be saving for rent, mortgage or whatever you want.
Save x % of weekly income (10% is a great number)
Practice restraint from buying awesome gadgets on Amazon
Do not visit the bar after work every night, once a week is fine, added bonus, you feel better about life daily instead of feeling hungover or tired.
You do not buy every new video game when it comes out, wait a week and buy used from GameStop (especially if you own its stock)
Plan a vacation from the “vacation fund”
Yes, the anti-budget! It worked for me.
Save off the top and spend the rest, whatever you do, however treat the savings like a stripper…hands off unless you want to deal with a meathead bouncer!
How do I pay myself first when I work on tips and get paid everyday?
Thanks for asking that question Ezekiel!
Do you have a bank account?
Yes?
After you leave work, the first place you go is the nearest ATM and deposit the cash/check (bonus points to your employer if it is a check daily).
If you do not have a bank account, grow up and get one at the closest bank to work with an ATM that takes cash deposits (almost all banks with more than about 5 branches do so now), BECAUSE the bank is your new soulmate.
A bank is the safest place for your money from the greatest criminal on earth…yourself.
After saved tips are deposited into the bank, the savings can be transfered to an online savings account. Ideally this should be at a different bank. Thanks to technology it all can be done automatically or from a smartphone. The money takes 1-3 days to get to its resting place.
A few we like are:
Synchrony Bank
Citizens Bank
SoFi Bank
CIT Bank
Find which rate/features you like and do not get an ATM card. That is evil and tempting.
Don’t be evil…be happy.
But NMS, I don’t make enough to save 10%?
No problem, first figure out your finances. Then start to save tips by using a small number like 1%. Setting aside 1% is less daunting than 10%. 1% of $200 is $2. Try to keep 1% more than last m
Necessities are paramount!
- Rent
- Utilities: don’t get the power shutoff so you can take a weekend off to party
- Car payment
- Insurance
- Credit card payments
- Student loans
- Payday loans
- Title loans
- This stuff needs to be paid first. Pay it and be done, the rest is gravy.
Blogger Paula Pants calls this anti-budgeting. It has less rules and is easier to follow than some of the more complex systems out there; take care of #1 (savings) and necessities first then do what you want with the rest. Simple to follow when trying to save tips…
Isn’t #1 Sanity? This is The Restaurant Business!
Sanity is #1, yes. However, what causes more stress? The assholes on 42 or having to hide the car from being repoed? Its more challenging to deal with table 42 if work is a 42 minute walk or bike ride away, more expensive to ride-share each way (making it hard to save tips) or really inconvenient to take public transportation.
Paying the necessities first takes all the pressure off working and having to worry about making enough to pay the bills before working on the sanity piece. Its easy to forget about paying a bill or push it aside, that is true.
A great place to start this is having a solid idea of the monthly nut. After about 3 months (a quarter, you should have a good idea, provided that quarter is not the busiest of the year for you. We are not going to elaborate on that, but you know it, if you do not, ASK SOMEONE.
This also helps prepare you for saving that $$$. Knowing this you can adjust the savings rate seasonally as well.
Armed with this knowledge, you can now determine what your savings rate is going to be. It might be 2%, it might be 15%. Whatever this number is, doesn’t matter. The real goal is to increase it every month by 1% until you reach say 25% or so.
At around 25% you reach grandmaster status and save tips like it’s no one’s business. A 25% savings rate is really impressive, good things are in the future.
What do you do at a 25% savings rate working in a restaurant?
Plan what comes next, have your money make money, take off the slowest month of the year to figure it out!
If you make $40,000 in a year and save 25%…that is $10,000.
We are pretty positive you can survive a month on that, possibly more, actually that should give you about 3 months or so of living expenses. If you are making $40,000/yr (many probably make more) that is $3,333/mo before taxes, meaning living expenses should be about $2,000-$2,500/mo. You can live pretty bare bones if needed, but do not decimate your savings unless you have more money coming in while taking a sabbatical from work.
Call it a mini-retirement:
Well-known author/commentator/social weirdo (self-admitted) Tim Ferriss was one of the first to use this term. His main thesis is, why wait until you are retired to enjoy life, when with proper planning/organizing you can enjoy it now. Take 2 months off life to reset and learn about you. This doesn’t mean plan every second of every day, that is a definition of insanity. If you want to spend a month living in Hong Kong, exploring SE Asia, then figure out how to do it. This idea all starts with knowing how to save tips.
Find the flights, places to stay and ways to do it on the cheap (hostels instead of hotels). His website is a wonderful place to get inspired on how to make money go further to do whatever it is you want to do. Check it out, there is some really great content there that can change your mindset.
Invest Saved Tips?
Take that 25% and have it make money for you. Now, that doesn’t mean invest in the stock market. We do not feel the stock market is the best vehicle to create wealth and passive income, it is one to preserve it.
Investments we like:
- Yourself: learn something new, create something
- Real estate: more billionaires and millionaires are created by real estate than any other means on the planet
- New career: maybe you want to pursue a different line of work
- Businesses: after real estate the second creator of billionaires and millionaires is businesses, starting one. Being Bill Gates is way better than being Steven Ballmer (CEO after Gates left Microsoft)
- Hard assets: Comic books, sports cards and weird stuff seen on Pawn Stars and American Picker
- Cryptocurrency: this is controversial, but this is a burgeoning asset due to limited availability (top coins have only a certain amount produced)
- US Patents: yes, stuff created in labs (usually universities) or by inventors is for sale, this is an ultra-niche market (way better than the ultra-lounge)
This is an example of some investments we like, once these produce money, enough to live your ideal life off of, then you can start talking stocks, index funds and assets you cannot control. Good news though, do not go selling all your stocks and other holdings, that is silly, cause taxes are a pain and expensive. Let it all ride and feel free to throw a little of those savings into these accounts, especially if they are retirement accounts, but they should not be your main vehicle unless you are already boss level and save tips reguarly.
Detractors From Investing From Saved Tips:
Now there will be detractors to this saying you should start investing in stocks and index funds right away.
We do not feel stocks and index funds are the best, famous author (and part scammer) Robert Kiosaki of Rich Dad, Poor Dad fame and a few others, preach on using controllable assets as the vehicles to make you money. Unless you are CEO of Walmart, you cannot control the asset. Its about control to make money, then preservation afterward.
So the detractors and FIRE movement advocates that will gripe about what I say, fine be that way, however we think its best to invest in yourself first and create something or make a deal that gets you there. Once there use those vehicles to preserve it.
You detractors out there can argue about the principles and can take your frugality and enjoy it. Gradual steps toward being better about money or more frugal are good. However, we feel its best to create more income rather than spend less. This does not mean live a Rolls Royce life on a Ford Pinto budget. We think It is silly to get the newest iPhone or Android every time one is released and then pay $50 a month for it over 2-3 years. Instead, use the one you have until it starts to go and then buy (cash) one that fits your needs. Save tips for those things and pay upfront, slow season self will thank you. There are a few exceptions
Enough of that for now.
The End of Saving Tips
Everyone can save. Some require more work and discipline than others, but ultimately it is up to you to save it and keep it there. Set a goal and stick with it, the results are profound. You do not have to brag about it or say anything to anyone. Be a bit stoic, but keep doing it, you should save even when you are spending those savings. That $1,000 you take out for a 4-day trip (after hitting a milestone) make sure if you get a paycheck while away; savings are coming off the top.
Speaking of milestones, rewarding yourself is the best way to stay consistent, find yourself being able to increase that savings rate to 12% from 10%, treat yourself. Its not all work and no play, you made this save tips thing a reality. Don’t let detractors and haters rain on your parade, have an end in mind as well, have a purpose for saving, rainy days never come. Life comes and happens.
Go save more money!
Cheers Friends