World Famous 10-Second How to Tip Guide

I keep to a very simple rule when it comes to tipping.

Short 10-second version: 20%, $1-$2 per item, the value of one “service” for personal service providers you visit regularly at the holidays, err on the generous side.

Longer version:

  • If there's a bill or it's a personal service, tip 20% on the bill, before discounts like coupons, happy hours, etc.
  • $1-2 per item, such as a bag, beer, coat
  • At the holidays, tip the cost of one “appointment” for personal service providers you visit regularly, like the barber, hairstylist, nail place, spa, etc.
  • Tip more than you think you should and you'll never go wrong.

Tipping guides always make it too complicated. They give you a million rules about who gets a tip, who doesn't, how much you should tip, 15% or 20%, does tip affect service, …

… it comes to two simple facts about tipping:

  1. Tip well if you want better than average service next time, and,
  2. The difference between a good tip and a bad tip, numerical, is minuscule to you – so tip well.

Tip Well For Better Service

Getting good service is about relationships.

If you build a rapport with the server, over several visits, you'll get above-average service if you're an average tipper. You develop a relationship. If you tip well on top of it, you're more memorable for the next time.

We see this play out daily in a lot of scenarios in which a little extra tip could mean a slightly different level of service.

Have you ever hired movers? Buy them lunch and they will probably be a little more attentive and careful.

Have you ever been to a bar? Tip well on your first order and you'll get a more responsive bartender. If you go to the same place a lot, it pays to build a relationship with the bartenders. You'll get served faster and might get some other perks.

You should tip $2 per drink if you're a good guy, $3 if you're friends with the bartender, $4 if you used to be a bartender... more is better. :)
Courtesy: Thrillist Tipping Guide

Reciprocity is one of Robert Cialdini's six principles of influence and that's the psychological concept you're taking advantage of when you tip. By giving someone a tip, they will seek to return the favor, oftentimes with better service. I'm not sure how strong the tie is but it certainly couldn't hurt.

Tip Well Because … Karma

So we had the pragmatic financial reason for tipping well, here's the other one — tip well because of karma.

The adage of “if you can afford to go out to eat, you can afford to tip well” is true.

Let's say your dinner bill is $50.

How much should you tip? A 15% gratuity is $7.50. 20% is $10. 25% is $12.50.

The difference between a good tip (15%) and a great tip (25%) is $5. FIVE DOLLARS.

Did you know the Federal minimum wage for servers (tipped employees) is $2.13?

When you elevate your tip from average (15%) to good (25%), it's just $5 to you. It's over two hours of work to the server.

Now I'm not saying $5 is nothing, I respect money. But if you're dropping fifty bucks on dinner, you can and should give an extra fiver to the person bringing out your food and working while you're relaxing.

It's just karma.

What if you don't know how much to tip?

There are a lot of times when you aren't sure if you should tip, trust your gut.

Do you want to give that person a tip? If so, go for it. If not, don't.

For example, some coffee shops will have a tip cup by the register. Should you feel obligated to tip? Go with your gut.

For someone who goes daily, they might throw in a few bucks every so often. For someone who might go each month, they won't feel obligated. You will be the one living with your decision so go with what feels most natural and comfortable.

If someone goes above and beyond, reward them. Reinforce their good behavior and work ethic, we need more of those folks in the world and they need to be rewarded.

Trust your gut and remember…

No one has ever gone broke tipping generously. 🙂

(if you want a table and a guide you can whip out to wow people at parties, Wait But Why has a good exhaustive guide to tipping backed by data – it has some other goodies in there too).

How do you tip? What are your guiding principles?

Other Posts You May Enjoy:

How to Send Money on PayPal

To send money you simply search for the email address or phone number of the person you want to pay. Select the recipient, enter the payment amount, and send. If you use the "sending to a friend" feature and use your PayPal balance or linked bank account neither you nor the recipient will pay a fee (if sending in the US). 

What is Credit Card APR?

APR is the interest rate that is charged to the balance of your credit card. Credit cards have different APRs for different types of balances. For example, a balance transfer may have a different APR than purchases.

Jim Wang

About Jim Wang

Jim Wang is a thirty-something father of three who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and a farm in Illinois via AcreTrader.

Reader Interactions

Leave a Comment:

Comments

About the comments on this site:

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

  1. Holly Johnson says

    I tip well because I worked in various service jobs for many years and know how stressful and unrewarding it can be. I always tip 20% in restaurants unless our service is awful. Then I still tip 15%.

    • Jim says

      Ha yeah, it can be awful and you get it from all sides. Kitchen yells at you, manager yells at you, customer yells at you, bartender yells at you, bussers yell at you… True 360 degree feedback haha

  2. Aaron says

    In addition to receiving exceptional service, I believe there are additional situations where elevating a tip is appropriate.

    For example, we often bring our young kids into a restaurant and sometimes they unavoidably leave a larger then normal mess. We try and pick things up the best we can but feel the additional burden on the staff should constitute a larger then normal tip.

    • Jim says

      That’s a fantastic point and it’s something we do too! I figure the more work we create for them, the more they should be compensated for it!

  3. Mrs. Groovy says

    We always tip service people, the HVAC guy, etc. And for Christmas I give to the 2 FedEx workers that have been coming to my home for my job the last 9 years. My mail lady has tears in her eyes when I hand her an envelope. I find it hard to believe but she says hardly anyone tips her. USPS workers use their own vehicles and get paid hourly here. I feel it’s the right thing to do.

  4. Cat@BudgetBlonde says

    I try to tip well because I know many people in the service industry rely on their tips to pay their bills. I can’t believe how many people think 10% is still a “good” tip – it’s not!

  5. Leo says

    I have worked as a seerve in college and know firsthand that it is hard work. Now, I have a good job, but I don’t go out much because I have other bills to pay such as student loans. When I go out to eat, it’s for a special occasion and believe it’s wrong to continue allowing the customer to be responsible for the salary of a restaurant employee. In Europe servers are paid a salary. Why does US not pay servers a salary as well? Then, if the service is truly exceptional, then I will leave a tip without feeling guilty or worried that the service will be lacking next time because my tip was not more than 15%.

  6. Robin says

    Great time of year for this blog. I completely agree that if you can afford to eat out, you can afford to tip, and SHOULD for all of the reasons you mentioned. 25% or more for great service, 20% for good, and 15% to 18% for adequate. I will not, however, tip for terrible or rude service. I worked in the service industry through high school and college, and I do expect a reasonable effort. I don’t hold it against the server if the food is slow or overcooked because they don’t control those things, but if they drop my plate on the table without a word, or roll their eyes when I ask a simple question, I’m not going to reward that behavior. Thankfully, I can count those incidents on one hand. Most people in the service world work super hard for their pay, and I am the first one at the table to lay a guilt trip on any cheapskate tipper in my group! Lol, I LOOK and call them out. Yep, I’m THAT person. 🙂

    • Jim says

      If the service is terrible because they’re overwhelmed, I will let it slide. If they’re rude, then that’s a totally different situation for sure… luckily that hasn’t happened in my recent memory.

  7. Fehmeen says

    I usually tip depending on the quality of the service and the actual bill. Someone told me that the universal tipping standard is around 2.5% of the actual bill but that is usually pretty insufficient. And when I’m confused, I go with your karma statement and don’t regret over paying the waiter.

    • Jim says

      It depends on the country, 2.5% would not fly in the United States. Someone would try to talk to you afterwards to see if there was something horrible that happened.

  8. Vic @ Dad Is Cheap says

    I’m a little torn on this topic. While I do tip generously, I think the problem is that it’s accepted that servers are often paid minimum wage (or less) while the customer is expected to cover the rest of their wage. I would be perfectly happy paying a little more for my meal if it meant that my server had a decent salary.

    • Jim says

      I feel the same way but that’s the world we live in, I’m not sure why but I suspect some restaurateur back in the day managed to convince their friends in government that servers are getting tipped and should be paid less. It’s not like other tipped providers can get paid less.

  9. Denise says

    I read somewhere that the wealthy started the tipping thing to show off their wealth. While Europe dropped the practice, America never did. I prefer people receive a living wage vs. relying on the kindness of strangers, but until that happens it’s extremely important to tip.

    I don’t eat out much but when I do, I tip generously. I tip my hairstylist, mani/pedi person every visit and trash and recycle crew and Mail deliverers annually.

    • Jim says

      Wow that is interesting – so I googled it and found a story here about it. Short version is that according to Michael Lynn, a professor at Cornell’s School of Hotel Administration, they used to do it in Europe. Wealthy Americans went there, saw it, and took it back to show how worldly and wealthy they were. So fascinating… now it’s an excuse to pay servers less.

  10. Paul says

    I don’t tip at all. But then, I live in a country where people get paid for what they are worth. Not for some crumbs that someone out of your sphere of influence decides that you may, or may not, get.

    How backward is America? People work for what, $2.38 an hour? That in itself is criminal. And from what I recall reading (and I could be a little hazy on the details) but most people in the bottom rung of employees, you know, the waiters, bus boys etc., have not had a pay increase in straight dollar terms since sometime in the 70’s. How criminal is THAT?

    So, you think people should be tipped? I say they should be paid a decent wage in the first place by the (shock, wait for it)… EMPLOYER!

    And, if the tipping system is so great, then why are increasing numbers of restaurants banning tipping and increasingly paying there staff a somewhat livable wage?

    American employers in the food industry where tipping is condoned/allegedly mandated, truly are nothing but criminals.

    Want to see some interesting discussions? I suggest that you go read about tipping on the moneyning.com website.

    http://moneyning.com/money-beliefs/tipping-guide-for-good-and-bad-service-from-an-ex-waitress/

    Yep, she started it and a firestorm started against her. I’m proud to have had a little part in educating at least some Americans on civilised employee/employer relationships. Essentially, do your job well, get paid, get to keep your job. Pretty darned good incentive from my point of view.

    • Jim says

      I agree with you, the system is backwards and unfair. I don’t even understand the arguments in favor of the system, but the folks who are working in tipped industries live in that world.

      (I’m not sure anyone has said the tipping system is great)

As Seen In: