How To Budget Depending on Your Career

Whether you learn the easy way or the hard way, eventually one understands that you must budget your finances to live a more financially free life. According to a recent study conducted by NerdWallet, “Nearly three-quarters of Americans (74%) have a monthly budget.” That’s a decently high number and somewhat surprising due the staggering number of Americans in debt, which is 35%, according to the New York Federal Reserve Data.

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This contradiction can be due to many factors, such as people who are in debt are not the ones budgeting, or drastic unseen financial circumstances that lead to debt–but what can really be the ultimate issue is not choosing the right budget for your career. Many people forget or don’t know the various ways one can budget, and the income you earn and the career you work in means everything when it comes to how you save, spend, and most importantly, budget.

In this list you’ll find tips, strategies, and budgeting methods most suited for specific careers. To read a more in depth explanation on the different ways a person can budget click here.

Here’s the list:

Healthcare Professionals

• Steady Income: Typically, healthcare professionals enjoy a stable income. Allocate a portion of your income to an emergency fund until it covers 6 months of living expenses.

• Continuing Education: Set aside funds for ongoing certification and education to stay current in your field. Investing in certifications or courses in hospitality management or customer service to enhance your skills and opportunities for promotion

• Insurance Needs: Invest in comprehensive health and professional liability insurance.

• Seasonal Fluctuations: Save during peak seasons to cover expenses during off-peak times, especially in locations with significant tourist seasonality.

• Recommended Budget Strategy: The 50/30/20 method. Great for professionals who work long and/or hard hours that have busy work lives. A simple method where you separate your after-tax income into three spending categories — needs (50%), wants (30%) and savings (20%).

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Tech Industry Workers

• Prioritize Savings: This is a big one. Though the tech industry can bring lucrative salaries and benefits it’s also been one of the most vulnerable careers for layoffs for the past ten years. An emergency fund, frugality, and savings is everything for budgeting while working in this career.

• High Earning Potential: Maximize contributions to retirement accounts, especially if your employer offers matching contributions.

• Stock Options: Understand the vesting schedule and tax implications of any stock options or equity compensation.

• Career Development: Budget for tech conferences, courses, and certifications to enhance your skills and network.

• Recommended Budget Strategy: The pay-yourself-first Method. Prioritizes retirement, savings and debt before other expenses, such as clothing, entertainment, utilities, home repairs or gas. This is a great budgeting method for people with a higher than average income, yet keeps spending habits controlled to properly maintain that income.

Freelancers and Creatives

• Self-Employment Taxes: Save at least 30% of your income for taxes and make quarterly estimated tax payments to avoid penalties.

• Health Insurance: Shop around for health insurance options since you won’t have employer-sponsored benefits.

• Diversify Income Streams: Consider teaching, merchandise, or digital content creation as additional income streams and budget for any associated costs.

• Recommended Budget Strategy: The zero-based budgeting method. Due to this type of career typically having an irregular income, this budgeting method is where every dollar is allocated, emphasizing savings during high-earning months to cover leaner periods. It’s the most meticulous approach, so if you’re not an intense budgeter, it’s recommended to become one if being a freelancer or creative is your chosen career path.

Educators

• Summer Budgeting: If your income is school-year based, divide your annual salary by 12 to spread your income evenly throughout the year.

• Professional Development: Allocate funds for educational materials and professional development opportunities not covered by your employer. According to , “on average, educators spend somewhere between $500 and $750 of their own money every year on things students need.” Add this number to your budget so that it never becomes a hit to your savings, but instead expected, or look into programs in your county or city that donate these types of materials or funds.

• Retirement Planning: Explore supplemental retirement savings options beyond your pension, like a Roth IRA or 403(b) plan.

• Recommended Budget Strategy: The 50/30/20 method. Same method as healthcare professionals. In the education industry it’s important to budget for retirement and have an emergency fund, while also keeping things simple.

Entrepreneurs and Small Business Owners

• Business Expenses: Keep personal and business finances separate and budget for reinvestment into your business.

• Emergency Fund: Aim for a larger emergency fund to cover both personal and business expenses during slow periods.

• Retirement Savings: Explore self-employed retirement plans like SEP IRAs or Solo 401(k)s to ensure you’re saving adequately for retirement.

• Recommended Budget Strategy: The Envelope Method. Owning or starting a business is stressful and comes with the task of keeping a very close eye on your funds. Therefore choosing the envelope method as your approach for budgeting may be the best way to track spending and savings the easiest (because it’s the most organized budgeting method), but also the hardest (because it’s the most meticulous and time-consuming budgeting method).

Government Employees

• Stable Income: With relatively stable income, focus on paying down debt and steadily increasing retirement savings.

• Pension Plans: Understand the details of your pension plan and how it fits into your overall retirement strategy.

• Benefits Maximization: Make sure you’re taking full advantage of any government benefits, such as healthcare savings accounts or tuition reimbursement programs.

• Recommended Budget Strategy: The no-budget budget method. Meant typically for above average to high salary earners. This method is about only prioritizing your savings and fixed expenses. You make sure 10% of your income automatically goes directly to your savings and your fixed expenses (utilities, mortgage, etc.) are on autopay. Any money leftover is spent as you please. The most risky budgeting method, but if you’re used to budgeting or a high earner on a fixed income like a government employee can be, this strategy may be for you.

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Real Estate Agents

• Variable Income: Since most, if not all of the income is commission-based, it’s crucial to manage finances by setting aside a portion of each commission to cover slower periods.

• Marketing Expenses: Allocate funds for marketing and advertising, as your visibility directly impacts your earning potential.

• Safety Net: Build a robust emergency fund, as the housing market fluctuates unpredictably all the time, and can be susceptible to long periods of low earnings.

• Continuing Education: Budget for licensing renewals and continuing education courses to remain competitive and compliant in your field.

• Recommended Budget Strategy: The zero-based budgeting method. Same recommended strategy as freelancers and creatives, this method is great for careers with unpredictable high and low earnings throughout the year.

Military Personnel

• Steady Income with Benefits: Take advantage of the steady income and comprehensive benefits, including healthcare and housing allowances.

• Transition Fund: Save for the transition to civilian life, which might include relocation or further education.

• TSP Contributions: Maximize contributions to the Thrift Savings Plan (TSP), especially when deployed, to take advantage of tax-exempt contributions in combat zones.

• Recommended Budget Strategy: Manual budgeting method. The most classic of all budgeting methods and great for beginners or careers such as military personnel to make sure benefits are beings allocated to the right place and frugality is on the mind. To manually budget, use the plethora of budgeting apps that link to your account, or simply write down expenses and goals in a personal budgeting notebook.

Construction Workers

• Seasonal Work: Save aggressively during peak seasons to cover periods of reduced work or layoffs during off-seasons.

• Equipment and Tools: Allocate a portion of your budget for the purchase and maintenance of personal equipment and tools required for your job.

• Health and Safety: Invest in high-quality safety gear and consider health insurance options that cover occupational hazards.

• Taxes: Save for and make quarterly estimated tax payments if you’re classified as an independent contractor, as taxes aren’t withheld from your paychecks.

• Recommended Budget Strategy: The zero-based budgeting method. Same recommended strategy as freelancers and creatives and real estate agents. Best for variable income earners.

Restaurant Industry Workers (Chefs, Servers)

• Tip Income: For servers, accurately track tip income and save a portion to even out income fluctuations. Chefs might look into profit-sharing opportunities in some establishments.

• Skill Development: Budget for culinary classes or certifications that could increase your marketability and potential income.

• Health Insurance: Since many restaurant jobs do not offer health benefits, setting aside money for health insurance is crucial.

• Recommended Budget Strategy: Manual budgeting method. Same strategy as military personal. This can be a great strategy for restaurant industry workers to write down and track daily tips and hourly wages.

Factory Workers

• Overtime Management: Factory jobs often offer overtime; budget this income carefully rather than relying on it for regular expenses, as overtime can fluctuate.

• Union Dues and Benefits: If part of a union, ensure your budget accounts for dues, but also take full advantage of any union-provided benefits, like health insurance or legal assistance.

• Retirement Savings: Look into whether your employer offers a 401(k) or other retirement savings plan, especially if they match contributions, and maximize your savings rate.

• Recommended Budget Strategy: The 50/30/20 method. Same method as healthcare professionals and educators on this list. An easy approach to keep track of the essential payments in your life while saving.

Budgeting Foundations for All Careers

Many career types are not present on this list, but most of this advice is universal to anybody who wants to live a more financially comfortable life. Here’s some extra general advice that you’ve probably heard time-and-time again, but is always a great reminder, and is recommended to any worker in any industry:

• Track Spending: Regularly monitor where your money is going to identify areas for adjustment.

• Set Financial Goals: Whether short-term or long-term, clear goals will guide your budgeting strategy and financial decisions.

• Stay Flexible: Life changes, and so will your budget. Regularly review and adjust your budget to reflect your current needs and career situation.

• Achieve Financial Freedom: Get out of debt, earn income, save, budget.

This article originally appeared on GOBankingRates.com: How To Budget Depending on Your Career