Here’s a New Word and a New Term You Need to Know

Overcoming "tipflation" and "guilt tipping" can save you a lot of money.

By Howard Dvorkin, CPA

Tipping has reached a tipping point.

If you suspect you’re being pressured into tipping for more services than you did a few years ago, your feeling is actually a fact.?

?More than 7 in 10 Americans recently told Pew pollsters?“tipping is expected in more places today than it was five years ago.” There’s even a new word for it: tipflation.

?Unlike inflation, tipflation isn’t caused by structural cracks in the economy. It’s caused by peer pressure. Hence, the term guilt tipping. You’re not throwing down a $5 bill because you’re rewarding someone for their effort. Instead, you believe you’re obligated to do so, regardless of the quality of their service.

That’s draining on both your psyche and your wallet.?

?Nearly 3 out of 4 Americans feel like guilt tipping has gotten out of control, according to CNBC. To bring order to the chaos isn’t difficult, but it does require adhering to some basic principles.

?When to tip

?When you receive good service from someone whose pay depends on it, you should tip. That means not just restaurant servers and bartenders but also hairdressers, manicurists, and Uber and Lyft drivers.?

These professions depend on tips. Their base pay is lower because tips are expected. For example, I live in Florida, and the minimum wage is $12 an hour – but only $8.98 for tipped employees.

?When NOT to tip

?Don’t feel guilty about not tipping in these situations:

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• Don’t tip salaried employees or proprietors. That includes everyone from your doctor to your lawyer, from your plumber to your mechanic.

• Don’t tip if it’s already included.?Once reserved for large parties, more restaurants are adding a 20% gratuity automatically these days. Check your bill carefully to make sure you’re not double-tipping.
• Don’t tip for poor service.?This sounds obvious, but it’s also where guilt tipping is strongest. Instead, tell yourself that you’re actually hurting the diligent servers when you reward bad behavior.?
• Don’t tip on takeout.?That’s just silly.

How much to tip

?First of all, don’t listen to a machine. These days, credit card mobile readers ask if you want to tip 20% or even 25%.?

?Tipping can be both a reward and an investment. While 15% is still the industry standard for tipping, many places now expect 20%. I suggest zero to 10% for poor service,15% for adequate service, and 20% for exceptional service.?

?You can exceed that in specific circumstances and not feel like you’re losing money. For example, I have friends who frequent a particular bar, coffee shop, or restaurant. By tipping higher than usual, they get better service the next time they visit. They might get a better table, a better pour on their drink, or even a freebie once in a while.

?If you’re going to tip, 15% is the minimum. The maximum? That’s up to you – as long as guilt doesn’t drive your decision.

?Conclusion

?Take a tip from me: Don’t feel guilty about tipping. It’s your money. You earned it. If that doesn’t convince you, ask yourself this: How often have you gotten a raise for doing substandard work?