How To Live Off Tips: A Service Industry Budget

This is a guest post written by Elizabeth Price.

Behold, the fun responsibilities that are adulthood. Paying bills, being nice to people you hate, and spending half your life at work are definitely the best parts.

The best parts of adulthood: being able to stay up late and eat and say whatever you want (for the most part). Quit your complaining.

Now back to the responsibilities part.

I have been in the service industry for close to a decade now (give or take a year), and I have had a lot of people ask me how I manage to budget and save money while living off tips.

I will be the first to say that service industry life isn’t for everyone. It can be very hard to get used to essentially getting a zero dollar pay check after your $2.13 an hour goes to taxes and then basically living off the kindness and generosity of those you serve.

The fact of the matter is that waiting tables, bartending and working in other tipped industries can be an extremely convenient and lucrative way of earning a living. Personally, I take home much more than I took home during my time working in an office, working as a nanny, and teaching. And while I won’t get into the exact details of how much I earn a year, I can say that the majority of tipped employees make far above the minimum wage.

So why are so many of us so broke all the time? Where does it all go? And how can we learn how to manage it?

Here I am going to give you a few pieces of advice that have helped me; while I know these may not be the solution for everyone, I can tell you that following this advice has helped changed my life and finances for the better.

Step 1: Deposit All Your Money Into a Bank Account

There are multiple reasons for doing this but I am going to focus on the two most important ones. First, there will come a time when you are going to need to make a huge purchase like buying a house or car and you need to have proof of income through your bank statements. Most bartenders W-2s and check stubs do not accurately reflect the amount of earned tips they are bringing home and they find themselves totally screwed when having to prove income.

The second reason is that if you are using a debit card instead of cash to make most of your purchases you are able to use a program like Mint to track where your money is going.


Mint helps exponentially by sorting out your spending by category, so you can look back on it and the end of the month and shamefully hate yourself for spending $400 bucks on fireball shots and hopefully Uber rides to get you home after.

This will help you immensely when you go to make a budget.

Step 2: Track All Your Tips

Personally I recommend using an app like Tipsee to do this.

Not my tips. I stole this off the internet.

Tipsee is awesome because it not only tells you how much you are making an hour, it also will tell you how much you average over a weekly or monthly time span. It will also make you feel grateful you don’t work at McDonald’s and it will make you wonder where the heck your money has all gone.(That’s why you have Mint.) Another perk to an app like this is that it allows you to make notes each day. For example, if I have an amazing Tuesday because there was a sporting event, I can note that in my phone so that I know not to expect to make that much the next year. I also work at different bars, and I can note the location I was at so I know roughly how much I can expect to make when I pick up the same shift at that location again.

Step 3: List Your Expenses

Once you have tracked your tips for a couple of months you should have a rough idea how much income you will be earning per month. Now you are ready to cut back on expenses so you can start saving and budgeting. Now it is time to make a list of all your bills and other expenses, and yes I mean ALL of your expenses (laser hair removal, questionable doctors office visits) write it all down, This is where depositing all your money and using a program like Mint comes in handy because you can refer to said program to help you.

Step 4: Cut Out The Excess

So you’ve thoroughly embarrassed yourself by listing your expenses and realizing you spend $500 bucks a month purely on beauty services to be less ugly, and it’s time to look at all of it and decide what should stay and what to go.

Obviously, if you’re spending more than you’re earning either by borrowing money from your parents or credit cards, you have a problem. You also have a problem if you aren’t saving anything. Look through your list and see where you can cut back and what you can get rid of all together. If you’re spending a ton a week on eating out, it may be time to start meal prepping. If you’re dropping $50 bucks a night at the bar, it may be time to start buying a bottle of wine to sit at home and drink all by yourself while watching Grey’s Anatomy and crying yourself to sleep (of which I know nothing about).

Also, here you can look at your bills and figure where you’re spending too much. If you live in Texas like I do, do research through places like Freeway Insurance and Power To Choose to see if you’re spending too much on things like your car insurance and utilities. Look at your interest rate on your car and see if you are eligible to refinance. Chances are, you’re spending a lot more than you should be on a lot of different things.

Step 5: Make a Budget

Now that you’re being a little more practical and you have a better idea of how much you are actually earning, it is time to use some self-control for once in your life. You now have the tools to set limits on how much you spend on non-necessities and actually stick with them. A key here is not setting yourself up to fail, because then you will just hate yourself and nobody wants that. Be reasonable and practical. If you love getting your nails done and you can afford to do so, then budget for that. If eating healthy is a huge deal and you need to spend more on that then budget for that too. But also, be smart. You might not need to go spend two hundred dollars at Target every other week when really all you needed is Q-tips.

Step 6: Set Short and Long Term Financial Goals For Yourself

Next we’re going to talk about saving, but before we do that lets take some time to set some short and long term goals for yourself.

Here are my short term goals (less than a year):

  • Buy a bike
  • Pay $200 extra a month on my student loans
  • Buy a new table and living room set
  • Take a writing class in the fall.
  • Get some dental work done
  • Go on trip inside the US

Here are my long term goals:

  • Pay off student loans
  • Get some plastic surgery I’m too embarrassed to discuss
  • Go on a trip outside the US

Like I keep saying, be practical. As long as you are working in the service industry you probably will never be able to afford to buy a yacht and sail around the world with a British butler named Jeeves at your beck and call; but you might be able to go a cruise next summer if you play your cards right. I just got back from one!


Step 7: Find a Way to Save That Works For You.

I cannot stress how important it is to make sure you have at least a 3 month emergency fund in your savings in case something terrible happens. Working in the service industry is a very physical job, and I cannot tell you how many people I know who have been straight up out of luck because they broke their foot or got pregnant and couldn’t work. Many of us have no kind of disability insurance, so if you are choosing to work in this kind of industry it is extremely important to be responsible.

Having said that, that doesn’t mean you can’t save for something fun as well. I have two different ways I save that work for me and many bartenders I know.

I have four set bar shifts a week, and after cutting back on things I didn’t need, those four shifts are more than enough for me to get by and still have extra for entertainment purposes and random tattoos after day drinking. However, I pick up a LOT of shifts, and I try my best and hardest to put everything I earn on those extra days straight into a savings account.

Now, sometimes stupid stuff happens and this just isn’t possible. Recently I had to use the extra money from the last month to fix my car and pay a deposit on my new apartment. You can’t plan for everything, but that is what your savings are for.

At the end of the month I put two thirds of this money into my emergency fund and the other third into a fun fund to put towards my long and short term goals.

Another way I save money is by hoarding change. As a bartender I end up with lots and lots of quarters at the bottom of my tip jar. Instead of cashing them in for big bills every night I save them. This is usually about eight bucks a day at approximately 5 shifts a week, so that is an extra $160 bucks a month that I am saving for a rainy day. I currently don’t have a goal in mind for my quarters, but I can tell you having them has definitely come in handy during emergencies. It’s also funny watching my boyfriend struggling to carry the box of them to the bank.

So there you have it! A very basic guide to getting your money right when you’re living off tips.

Happy Adulting!

About the author: Elizabeth Price is a twenty-something aspiring writer from Houston, Texas. She enjoys traveling as often as possible, working with kids, advocating for mental health, cooking, and reading anything she can get her hands on. She runs the website, a blog for women by women. When she grows up she hopes to be a novelist and open her very own bar, but for now she’s enjoying her life as a bartender and all the stories it brings her.

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