I have waitressed and bartended for almost 13 years now. As food industry workers, most of us share a common dilemma. We make a decent living, but we have no idea how to budget it. The end result is having poor credit and nothing saved. It’s a shame.
A few years ago, I started a new job. For the first month we were training, therefore, I had to rely solely on my checking account to get me through. Luckily I had just received my income tax return and had that to live off of. I took the initiative and paid the following month’s bills ahead of time since I had no idea what our income would be once the place opened. This is one of the best financial decisions I’ve ever made.
I found an article on Pinterest about the envelope budgeting system. I went to the bank, asked for a few envelopes, and went home to fill them out. Each bill got its own envelope. At the top, I wrote how much that bill was per month, then divide by 4 and wrote how much I needed to put in there each week. By adding up the weekly totals on each envelope I now knew exactly how much I needed to make each week to get by. And exactly how much of what I made was extra and could be put towards either savings or frivolous purchases. NOW… I am always a month ahead of where I need to be. Everything I make this month is going towards January’s bills, so I never have an excuse to be late for a payment again.
I have tweaked this system to my own needs over the past couple years, and you can easily do the same. Not everyone has the same bills or gets paid the way I do. I include gas money, miscellaneous expenses, tolls, grocery shopping money, etc in addition to my normal bills. I have extra envelopes that I have to fill before I allow myself to make a frivolous purchase. These include a 52 week challenge envelope (more on that in the next post), a car expenses envelope, and a vacation week envelope. For me, the vacation week replaces what my tip income would have been had I been at work that week. For you, it may just be vacation spending that doesn’t draw from your already budgeted money.
The January before my daughter started kindergarten, I decided that I wanted to be the mom that got her on and off the bus every day and could help with homework and cook dinner every night. This meant dropping down to part time at my job. I made an envelope for savings and budgeted that into my income from January to August. Every week, I needed to put money into that envelope just like it was a bill. In addition, that year I put my income tax return to good use and paid off my car a year early. That was one less bill that I had to account for.
By August, when my peanut started school, I had dropped down to part time, dropped my monthly bills almost in half, and had approximately $8,000 saved just in case my 3 days a week didn’t cut it. That money sat there for about a year without me needing to touch it. Then I chose to use part to take a phlebotomy certification course and the rest I used to pay for our wedding. The envelope system has worked so well for me that I didn’t even end up needing that back up for my bills.
Now, I’m going to be out of work when baby #2 arrives. There is a new envelope for savings so that the money I’m not making for those weeks is already accounted for before I take my leave of absence. This way, I’m still prepared and my bills are still paid so I can focus on my family when I need to.
Please understand, I have no financial background whatsoever. This is just the first system that ever worked for me and finally made me feel like a real adult. If it works for you, yay!!!!! If it doesn’t, I encourage you to try something else that fits your lifestyle or speak to someone who actually knows what they’re talking about.
Good luck! And please let me know what system has worked for you and your family.