On my first day at a restaurant job 10 years ago, a coworker gave me some savings advice that’s helped me pay taxes, save for retirement, and make major purchases

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Alexis Rhiannon Ocean Grill NYE

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It’s still hard for me to believe that there was ever a time I didn’t keep my cash in a high-yield savings account, or HYSA. With every passing year, I was leaving money on the table, missing out on interest payments while my money stagnated in my checking account or the standard savings account offered at my bank. 

But all of that changed when I opened my first HYSA, an Online Savings Account at Ally. It offers a competitive annual percentage yield (APY), refreshing transparency, and has served me so well that I continue to sing its praises a full decade later. It’s particularly ironic considering that when I first opened the account, I assumed it would be a temporary solution for a temporary problem. 

Getting a financial lesson on my first day at a new restaurant job

Here’s the backstory: I had just started a new serving job at a seafood restaurant in New York City, and for my very first training shift, I was paired with a senior server named Todd. In between showing me how to use the point-of-sale system and explaining the side work I’d be expected to complete every shift, Todd had some financial advice to bestow as well.

The restaurant group we worked for kept track of our tips, but didn’t withhold taxes for front-of-house staff, he warned — we were expected to do that ourselves. At the end of each shift, servers would bring their paperwork to the bar to be tipped out from the register, and leave the restaurant with every (pre-tax!) dollar they’d earned that night.

It was tough to avoid spending the money once it was in your pocket, Todd acknowledged, but the trick was to treat that money like gross earnings instead of net income. Or else I could find myself in dire straits come tax season. He told me plainly that I could probably expect to owe between $5,000 and $10,000 every year, and that if I didn’t have that amount on hand (I did not), I should be setting aside 20% of my tips every single night in preparation. 

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To drive the point home, he pointed out another server who was so behind on her taxes from years prior that she literally couldn’t afford to work anywhere else. Periodically, she’d come to work complaining that the federal government had garnished her wages to go toward back taxes. I was officially scared straight.

Setting up my tax-savings system

That very night, I came home and started researching savings accounts. I knew that if I truly wanted to set money aside, I’d need to put it somewhere that I couldn’t see it every day. That meant a new savings account. And since I didn’t relish having to find another ATM within walking distance of work, I knew that online was probably the best option. 

Ally stood out right away for its good reputation, easy balance transfers, and high interest rates. …read more

Source:: Business Insider

      

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