Budgeting/Career Changes/College

How I’m Surprisingly Better With Money As An Hourly Worker Than I Was On A Salary

By | Wednesday, September 09, 2020

A few months ago, I had a friend say to me, “I assumed you were financially stable because you were salaried,” and I laughed out loud. I wasn’t!

See, my friend works as a waitress, with her income varying from week to week. So much so that she doesn’t even bother having a financial plan, she just wings it (screams internally). While I assumed she made incredible tips every night, she assumed I had a perfect budget plan because of my consistent paychecks. Which is silly because I can confirm from personal experience that salaried people are fully capable of making financial decisions way out of their budget. At most, there’s just slightly more awareness of spending outside of that budget, given that the paydays are spread apart.

Not long after my friend’s comment about me being financially stable, I went through a few life changes. I found a new job that put me back on an hourly payroll, instead of salaried. I also enrolled in grad school, which meant I needed to pick up a second job on the weekends as a waitress to help pay for classes during the school year.

While at first I was bummed to no longer have a salaried income, I’ve actually found hourly pay to better suit my lifestyle.

Salaried incomes have a certain status to them, and come with expectations. Typically, people who are salaried are paid this way because of responsibility. You are expected to reply to emails after work hours because your pay isn’t directly tied to the hours you are clocked in. Salaried incomes also allow for consistent financial planning, especially as it pertains to budget sheets because every paycheck is the same. Even the mindset is different. You think of your income in terms of a large sum for the whole year rather than how many dollars per hour. But even though I felt like I was making much less measuring my time by the hour rather than the year, I have to say, being salaried is not all it’s cracked up to be, either.

While hourly wages are less likely to come with benefits packages and health care options, salaries can trap employees in other ways. My revelation was this: what’s the point in having an extra week of paid vacation when your salaried position doesn’t even pay you enough to actually take one? At my previous employer, I felt stuck not being able to earn overtime as a salaried worker. If I needed extra money to make up for that impulsive shoe purchase I made (you know, the shoes you regret splurging on, but not quite enough to return them), staying late at the office did nothing for my pay. On the other hand, opportunities for overtime can make a big difference for an hourly employee.

While salaried, I also found myself using a full vacation day for doctor’s appointments and errands because there was no “quarter-day-off” option. Depending on the employer, hourly jobs can be much more flexible with personal schedules, because extra time out of work is time the employer isn’t paying you for. Then again, one thing I consistently witness with hourly workers is their need to linger at the time clock, waiting for the extra minute to roll over into their paycheck. It may be as small as one dollar, but to some, an extra five dollars for the week makes the difference.

Before waitressing, I was pretty familiar with the financial differences that come with working hourly vs. salaried jobs, but I hadn’t fully understood what it was like to rely mostly on tips for income. I’m aware waitressing during a pandemic isn’t the best indicator of the restaurant industry pay, but the stress of a tip mindset has certainly changed my perspective on how different ways of getting paid affect how you handle your money.

Waitressing has a reputation for making incredible tips. Yes, sometimes you end the day averaging $30/hour, but sometimes you have a slow morning shift and average $6/hour. Ideally, effective financial planning as a waitress shouldn’t be done after every shift, but rather, is best achieved by averaging your weekly payout.  The nights you walk out of the restaurant feeling like a million bucks are when things can get really dangerous. Having a fat stack of cash in your pocket or bra makes you feel like you can buy anything, right away. The instant gratification is quite the rush.

Nearly every job in my life has paid me bi-weekly. I know how much is to go towards rent, and how much I can (or rather, should) spend. But having that immediate cash flow after a great tip day makes the money feel like a bonus. With time, I started to understand my friend’s comments more and more about financial stability. Not only did waitressing have varying income, but it also made spending money instantaneously much more tempting.

I once read a financial article about ten years ago, and it actually recommended going shopping with only cash. It theorized that watching the money leave your hand will make it harder to spend, rather than swiping your credit card, relentlessly. I wholeheartedly disagree. My credit card gives me an exact total of what I’ve spent, while cash ends up going from a neat stack of twenties, to a jumble of ones, fives, tens and coins. On top of that, once my cash runs out, it’s like I never spent it. I certainly don’t keep a handwritten ledger of my waitress money cash flow, so if it’s not on my credit card statement, I have no record of spending that money.

As I mentioned earlier, I waitressed in addition to another hourly job. I knew going into my second job that my tips were all grad school money. This allowed me some mental comfort as I knew I could expect a certain amount in my paychecks to cover my essential bills, but there’s something about having cash on hand that gives you a false “baller-mentality.” There’s just something about being able to tangibly hold your income. Truthfully, I’d be lying if I said every tip actually went into my college fund.

While the stress of working for tips wouldn’t suit my anxious personality well in the long-term, I do miss the nights of fat stacks from waitressing. However, I also miss being able to leave early on a Friday and getting the same paycheck when I was salaried.

At the end of the day, just because a salary allows for a financial planning advantage doesn’t mean everyone will use it, and just because a tip based job makes it hard to enforce financial discipline, doesn’t mean it’s impossible.

There are going to be pros and cons with any type of income distribution, but I think the most important thing is finding what works best for you. Successful budgeting can be achieved with any income type, it just needs to be handled accordingly.

Juliet is a freelance writer and friendly neighborhood conspiracy theorist, tirelessly working to save the world from the impending Cowpocalypse and Doughpocalypse one blog post at a time. Read more of her writing at JulietTheNomad.com where she works through her festering childhood qualms and pretends to be a food stylist.

Image via Pexels

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