With scarce benefits and a wage crisis, the poverty and near-poverty rate for restaurant workers is 40%. But that doesn't mean all is lost for dishwashers, servers, counter workers, and bartenders.
In fact, a lot of successful people once worked at restaurants:
Amazon founder Jeff Bezos worked at McDonalds
Dell founder Michael Dell washed dishes in a Chinese restaurant at age 12
Personal finance guru Suze Orman bussed tables and washed dishes to pay her way through college.
No matter where you find yourself on the climb up the restaurant ladder, the good news is: you have a paycheck.
Regardless of the size of that restaurant paycheck, learning financial skills and the ability to make your paycheck go further is truly one of the smartest personal business decisions you can make.
Remember: The above-mentioned Jeff Bezos rose from a minimum wage gig at McDonald’s to becoming the richest man in the world. With a pinch of passion, a dash of determination, and some savvy financial thinking driving your decision-making, your bank account could look like his one day.
Here are a few simple ways to manage your money, and make your paycheck go further.
Whether you’re paid by check or direct deposit, you’ll get a pay stub, either in paper form or electronically. Although this isn’t actually required under federal law, it’s generally considered a best practice.
Your pay stub contains a lot of valuable information that you should understand and review on a regular basis. At a top level, your pay stub is a summary of the difference between your gross pay and net pay.
Gross pay represents the total amount you are paid, including wages, overtime, bonuses, tips, and anything that adds to your income.
Net pay is your take home amount after deductions, like income and payroll taxes, savings plans, your portion of insurance coverage, etc.
Rather than get into a detailed discussion of every paycheck component, let’s focus on the big picture: You need to check the numbers.
Make sure that the following are accurate:
Rate of pay — Watch for any unexpected changes or if you’ve received a raise, and know when it should be reflected in your paycheck.
Withholding rates — When you’re hired, you fill out a form called a W-4. The information in this form determines your withholding rates for things like income tax, Social Security, Medicare, and unemployment. Life changes, like marriage or the birth of a child, can affect these rates. If you’ve had a change, all you need to do is submit a new W-4 (it’s also a good way to ensure that your mailing address is up-to-date).
Rates for benefits and savings plans — If you’re participating in any workplace savings or insurance plans, your rates were likely outlined when you started your role. If you notice that the numbers change, follow up to ensure it’s not a mistake.
Bonus tip — The deductions taken for 401K contributions help lower your taxable income. In other words, you’re not only saving for the future, you’re also saving right now.
Another important thing that employers are required to do is provide you with a W-2 -- Wage and Tax Statement-- at the end of the year. This document summarizes all your earnings and taxable information for the year and is what you use to file your personal income taxes. It must be in the mail or provided electronically by January 31 each year. (If this date falls on a weekend, then the deadline is the next business day.)
3) Make a Budget
The Penny Hoarder offers some simple, straightforward advice on getting started with creating a budget:
Begin with the information you already have — Download your electronic bank statements, or go to your bank and request your statements for the past three months. Then, assign a category or label for everything in order to help you identify spending patterns.
Know when your bills are due — Again, this will help you establish a regular routine or pattern. Believe it or not, if you have one bill that’s way out of sync with the others, you can check with the provider to see if you can change billing cycles.
Be flexible and realistic — Crash diets don’t work, and neither do overly-restrictive budgets. Know who you are and set reasonable limits. Allow for mistakes and give yourself the chance to learn.
4) Plan Ahead
In addition to creating a budget, be sure to:
Determine your average weekly income — This can be a challenge in the restaurant world, where depending on your job, your paycheck can vary from week to week.
A rule of thumb is to track your income for 10 weeks, then add the totals and divide by 10 to get an average.
Plan for upcoming expenses — If you need glasses or you’re planning a vacation, don’t let time get the best of you. Give yourself enough lead time to set a certain amount of cash aside each month.
If the expense is a year out, take the amount and divide by 12 to know how much to save each month.
Prepare for taxes all year long — Set aside 10-15% of what you earn from each shift.
Save your change — Little things do make a difference. Create a change jar, fill it up, and take it to the bank once a month. You’ll be surprised how it all adds up.
Use cash for day-to-day expenses — Why pay interest when you don’t have to? Once you know your day-to-day or incidental expenses, set aside the cash for your daily caffeine binge. (Or, you could add up how much your coffee is costing you each day and start making your own at home.)
Personal financial management is one place where technology can definitely make your life easier. There are a number of smartphone-friendly tools you can use to make your paycheck go further, including:
Acorns — Invest your spare change and watch it grow.
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