Learn how to forecast your financial situation as a restaurant worker to manage money and stay on top of your financial goals.
Hospitality workers are generally good at adjusting to flexible incomes. Still, when your wages fluctuate–planning vacations, building up savings, or preparing for large purchases isn’t easy, let alone getting out of the paycheck-to-paycheck lifestyle.
A flexible income shouldn’t stop you from living your life or keep you from financial peace of mind.
This is why forecasting your future financial situation is invaluable for managing money, planning, and avoiding financial problems.
We spoke with Bree Thomas, CEO and Founder of Balance—a brand new forecasting tool explicitly built for variable income workers so they can better manage money and start taking control of their financial situations.
What is Forecasting?
Forecasting is precisely what you might think—predicting or estimating future events.
While most associate forecasting with predicting the weather, it can also be used for predicting financial circumstances, which is vital for those whose wages or tips vary based on hours or shifts.
When forecasting, you’re looking at your future financial situation by calculating your current money, future money, and potential upcoming expenses. This is critical to budgeting for seasonality, unexpected life events, financial goals, or large purchases to avoid financial problems.
“More than once my livelihood has relied on a changing income, ” Thomas told us. “Every time I found myself in that position, I also found myself obsessed with predicting my future cash situation. I would estimate my money based on shifts I knew I was going to work and shifts I knew I could pick up. In this way, I could spot issues on the horizon and plan for things like taking a vacation.”
Why Should I Forecast?
While it’s typically short-term forecasting, most industry workers already predict their financial situations in some shape or form.
When Thomas worked as a bartender at a busy nightclub, she knew she would consistently make around $300 in tips during her Friday night shifts—unless that Friday fell on the Fourth of July. Then, she’d estimate earning about half of that. By predicting that financial downturn, she could plan accordingly by picking up an extra shift to make up for the loss.
“You’re already forecasting in your head how much you’ll make on your regular shifts, how much you could pick up if you worked extra, and which shifts you’d never give up for fear of losing a better-than-usual payday,” Thomas said. “You do this because it’s how you survive financially.”
So, the question isn’t why you should forecast—it’s already second nature for you.
The issue is, keeping all this information in your head is challenging and prone to error. If you want to manage money better, with the ability to spot bumps in the road (and adapt quickly) —you need to optimize your forecasting process.
How Can I Forecast More Effectively?
Thomas started forecasting the old-fashioned way. She’d print out calendar pages and then fill in her average work schedule with a pencil.
She’d enter her estimated tipped income and upcoming paycheck amounts. Then, she would manually calculate balances against financial obligations, such as rent, bills, and other random expenses that would impact her financially.
From there, she could calculate her average cash flow—and start visualizing new expenses to see if she could make them work.
“When I started forecasting on a calendar, it forced me to look forward. That helped me run ‘what-if’ scenarios, which was key to making better decisions about how much I wanted to work, spend, or save to reach my goals. It helped me break the ‘feast-or-famine’ financial cycle I was in and ultimately gave me more control over my time.”
Of course, forecasting manually has its downsides. You have to write out all your scenarios and then update them as things come up, like an unexpected bill or weather event that impacts work.
Also, if you want to play out new financial situations– like splurging on a new phone or permanently swapping a Wednesday shift for a Thursday shift– you must erase, write in new scenarios and recalculate repeatedly.
Knowing how much of a pain manual calculations can be, Thomas built Balance so that flexible income workers can forecast and manage money efficiently.
“Balance is like a cash flow calculator in your hand, built around a calendar, so you can see how much money you’ll have on any day you care about in the future. When used over time, Balance will help you become a super forecaster to spot trends and make decisions about what’s best for you financially,” Thomas explained.
Balance can connect to your bank account so that you can start forecasting based on your available cash flow. Once you enter income estimates and actuals, you can visualize all of that against upcoming expenses and run scenarios to help you achieve future financial goals.
The tool is in its early stages, but Thomas plans to add more financial capabilities and goal-setting features.
“We’re inviting people to connect with Balance in these early days and work directly with our team in a very concierge sort of way,” Thomas shared. “I will be front and center taking feedback, looking to understand their experiences, and what keeps them up at night about managing their money, so we know where to focus for our next feature rollout.”
If you’re ready to manage money more efficiently, you can learn about forecasting and check out Balance here. It’s free for workers and could be just the tool you need to start making your money work for you. Plus, it’s a much more accessible and less confusing way to start forecasting than doing it the old-fashioned way.