How to Save and Budget if You Earn Cash Tips

If most or all of your income comes in the form of cash, it can be more challenging to save and budget that money.


However, it is certainly possible to take full control of your income and save and budget it just as well as anyone else who is earning a non-cash income. There are a few steps involved, but once you have those down you will be on your way to being more knowledgeable and comfortable financially with your income from cash tips.

Why Cash Makes it Harder to Budget and Save

If you work a job such as being a bartender or a server, the majority of your income is likely in the form of cash tips. There are also many other professions that involve bringing home cash when you are paid. It can certainly be more difficult to manage your money if either all or portions of your pay are paid in cash, and this is for a number of different reasons.

First, it can be more challenging to track your income. When you earn cash tips, your income generally fluctuates a lot. You cannot always count on earning the same amount of money each week because so many different factors influence the amount.

Second, budgeting your money is harder because you don’t always make the same amount of money. Therefore, you cannot always count on a certain budget for groceries because some months may be financially tighter than others. Of course, there are ways to still budget and save successfully. To learn more about those tips, read the sections below.

Track Your Income

One of the most important things that you can do as a worker who earns cash tips is to track your income frequently. Make sure to count and write down every amount of money you earn each time you earn it. If you like using computers, you may want to put it into a spreadsheet online. Or, you can always use a notebook or calendar to write down each amount. Then, after you have tracked your income for a few weeks, you can begin to take the average. It is recommended that you take an average for a significant amount of time, such as 10-week increment to see a larger pattern over time. To find the average, you must add up all of the amounts of money you earned for a specific amount of time and then divide by that specific amount of time.

Continue tracking your income and figuring the averages so that you can compare each new average to the last to see if they vary much. Understanding approximately what you make will help you immensely with budgeting and knowing how much money you can set aside for savings.

Smart Budgeting

It can be difficult to set specific budgets if your income varies. This is why it is so important to track your income and determine what the average amount of money you earn is in a specific amount of time. Although that amount can change drastically from one month to another, after a while you may be able to see patterns and have a better understanding of what you can usually expect to earn.

When creating a budget, you should always base your budget on the lowest possible average that you may earn. That way, even if you do earn less money that week or month, you are prepared. You may also consider setting aside a certain amount of money if you earn more than you generally average, so that way you can use money from that month to cover your expenses on the months where you are earning less. Implementing this mindset can help you with your long-term money habits and help you save money in the future.

Transfer to Your Bank Account

Because many bills cannot be paid for in cash, you will likely need to transfer most of your earnings into a bank account. However, how much you transfer into the account is completely up to you, and different methods will work well for different people. If you are okay with using cash to pay for day-to-day expenses, you may consider transferring most of your money into the account but keeping a certain amount on hand to use for expenses that are not bills, such as grocery shopping and entertainment. This method may help you to spend less money daily because you have to physically hand over cash for each transaction instead of simply swiping a credit card. Therefore, consider what works best for you and transfer what you need to into your bank account consistently.


Use Creative Methods to Save

If you can commit to a saving system that works for you, you may find that it is actually not that difficult to put money away into savings consistently. This is especially the case if you plan to put aside a certain type of money or a certain amount of your cash everyday or each time you get paid. Also, utilizing unconventional methods to save your money may make the process more engaging and easier as well.

For example, you may choose to take all of the change you earn and place it in a jar instead of putting it in your bank account or using it for other expenses. Since carrying change is generally a nuisance for most people, it can be very easy to dump it all into a spare jar or canister. Plus, if you decide ahead of time what that money is going to be saved for, you will be even more likely to leave it untouched until you reach your goal.

Alternatively, instead of just saving all of the change you earn, you can commit to set aside certain denominations of bills. If you have a specific goal in mind and have it in your budget to set aside even more money, you could even consider saving every $20 bill for a certain amount of time. Whether you place that money into a savings account or use a jar or piggy bank, you are sure to save a good amount of money very quickly. Or, if you prefer to be more conventional with how you save, you may want to consider saving a set amount of money on a consistent basis, such as automatically putting aside $20 every week. This can help you to know what money you will generally have each week as the amount you save will stay consistent.

No matter which method you use, you should find that as long as you are tracking your income and setting realistic budgets, you can feel much more financially secure and you will have the ability to save a lot of money for whatever is important to you.


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