Your income may be critical to supporting your family's daily expenses and saving for the future. Budgeting on fluctuating pay can be difficult. Learning to budget when your income is largely commission or tip-based can help keep your finances on an even keel, whether business is slow or booming.
Some sales positions offer a base salary and a commission or bonus-based incentive plan, and others are 100 percent commission-based. These positions can be lucrative, but it is often difficult to budget because one pay period you may earn little or no money and the next you might receive more than expected.
Working as a server, bartender, hairstylist or similar position where you receive an hourly wage but can increase your earnings with tips also makes it tougher to budget. You may take home less, working slower shifts one week, and take home more the following week after a few busy shifts. It is important to budget carefully when you work on commission or tips.
Understand your expenses. Learn the difference between needs and wants, particularly if you struggle every month to make ends meet. Consider cutting back or eliminating your nonessential spending to build a buffer when tips are slow or sales are down.
Create a base budget. Create a bare bones budget to cover your family's needs, which details the expenses you must pay each month. These might include the following:
- Utilities and phone bills
- Gas (for work and necessary trips) and commuting expenses
- Basic food (no extras)
- Debt repayments (only monthly minimums)
- Family (child care, school costs, alimony or child support)
- Insurance (health, life and auto premiums)
- Miscellaneous (prescription medication, toiletries and work attire)
List the nonessentials. List your nonessential spending items and determine what you spend on them monthly. Items on your list might include the following:
- Entertainment (movies, subscriptions, concerts and dinners out)
- Cable or satellite TV
- Vacations and hobbies
- Excess clothing, nonessential personal care (cosmetics, manicures and extra hair services)
For help with basic budgeting, you can contact your installation's Personal Financial Management Program, or your service branch's Relief Society. These organizations offer financial services and can help you determine the critical and noncritical items in your budget, helping establish a budget that works for you.
- Visit MilitaryINSTALLATIONS, enter your installation and select the 'Personal Financial Management Services' option in the 'Select a program or service' drop-down menu.
- Army and National Guard families can contact the Army Emergency Relief.
- Navy and Marine Corps families can contact the Navy-Marine Corps Relief Society.
- Air Force Families can contact the Air Force Aid Society.
Cut expenses where possible. Learn to limit your nonessential spending until your necessary monthly expenses, savings and retirement accounts are paid. You may be surprised how little you miss some of the items you once thought were necessities.
Build an emergency fund or savings account. A readily accessible account will help if you are out of work or if work is slow. Aim to build and keep your fund to nine months to one year of income. Try to increase your savings contribution when tip levels are high or you get a nice commission check.
Pay off debt. Pay down your credit cards, car loans and mortgage. For answers on how to get started paying off your debt, consider contacting the Personal Financial Management Program on your installation or talking to a credit counselor. For information on choosing a credit counselor, the Federal Trade Commission offers these tips.
Building and following a budget are important steps to creating financial stability, particularly when your employment is commission or tip-based. Making the time to create and implement a budget will pay off now and in the future.
Visit the Financial Planning and Budgeting section of the Employment Readiness lifecycle stage of MySECO for more information on developing a budget and planning your financial future. Savings Fitness is a great resource to get you started. If you have questions or need assistance with planning your finances or developing a budget, call Military OneSource at 800-342-9647 or use the Live Chat feature on MySECO to speak to a career coach.