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. ๐Ÿ™‚

(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?

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About Jim Wang

Jim Wang is a forty-something father of four 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 Empower Personal Dashboard, 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.

>> Read more articles by Jim

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

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8 years ago

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%.

8 years ago

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.

8 years ago

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.

8 years ago

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!

Leo
8 years ago

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… Read more »

Robin
8 years ago

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… Read more »

Fehmeen
8 years ago

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.

8 years ago

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.

8 years ago

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.

Paul
8 years ago

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… Read more »

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