Cash Discipline

I asked my sister, with years of experience in the food industry, what the biggest challenge for people entering the workforce is.  Answer: cash discipline.  Well, not in those exact words, but basically, tracking what you earn.  Why is this important?  If you don't know what you are taking home, you don't know what you have and hence can't; effectively budget, pay taxes accurately or save.

Don't get me wrong - you could *guess* at these things and probably do alright, but would you want to wing it all the time? (sure - makes life more exciting).  Would you want to OVER pay your taxes or fritter away your money in an unstructured fashion and have NO savings?

Being wait-staff means highly variable income, much of it paid in cash.  While it's tempting to put that in your wallet or purse and just live off of it, it is a very shaky way to manage.  The suggested solution is to pick up a Ledger book at Staples or Office Max or Office Depot or whatever you've got. They can run from  $5 on up.  All you need is a simple tabular format where you can write the date and the amount of your take home.  At the end of the month, you know what you made and what you have to work with and you can start budgeting, saving, setting aside for your taxes, etc. 

The trick is to do this at night when you get off your shift and have the money in hand.  Don't put the money in your stash till after you've recorded it.  Trusting it to memory later will certainly lead to error.  Get in the habit of doing this and you'll take a lot of guesswork out of your future and reduce your long term stress.  Sometimes the IRS will ask you to pay quarterly or monthly taxes depending on your income.  Sometimes you don't have to come up with it till the end of the year.  Fact of the matter is, these days, the IRS is going after not just more of the big fish but ALL the fish.  So if you keep accurate records and hold your projected owed taxes back on your cash take home, you'll be prepared to pay that tax bill instead of struggling to come up with it. 

You might be tempted to not report cash.  Consider the liability this presents.  The IRS likes to find out about this stuff WAY down the road and assess penalties.  With interest.  Trust me, I speak from experience (one time!) when I say that this is no joyful bit of news to receive. Pay what's due when it's due as, unfortunately, our overlords demand it and will make us pay pay PAY later if we don't.

Cheers!