How Does Tipping Work?
3 min read
Your kids’ first time paying for something on their own, and using their own card, can be a very exciting experience! It can also be the first time they encounter things like tipping and tap-to-pay options.
While exciting, that experience may feel overwhelming if they’re not familiar with those concepts. To make the experience more comfortable, we want to equip you with the right resources to educate your kids on their way to becoming smarter spenders.
Today, we’ll be talking about tipping. When it comes to tipping etiquette, there are a lot of things to consider about which situations we tip in and how much we tip.
How we approach tipping can differ from one family to the next, so talking to your kids early can help them feel more comfortable when they’re paying a bill in which tipping is an option.
Ready to get started?
What tipping means
Think about tipping as a way of saying “thank you!” for a job well done. Tipping might also be referred to as “gratuity,” but it all means the same thing - you’re showing appreciation to someone who provided a service.
Common situations where you might tip include:
- tipping your server when eating out at a restaurant
- tipping a delivery driver for bringing take-out to your house
- tipping someone who has done a service for you, like cleaning your home or cutting your hair
Whatever the situation may be, tipping someone gives them extra money as a sign of appreciation for doing a good job.
How tipping works
Tipping usually happens at the end of a transaction. If you’re dining out at a restaurant, tipping will occur at the end of the meal when you’re signing the bill. If you’re tipping on a service that was provided, like getting your hair cut, tipping will occur after the service has ended and you’re paying the bill.
If you’re using cash to tip, you can just leave cash on the table or hand it to the person you’re tipping. Depending on the merchant, you might even see a tip jar, where people leave cash and change for tips.
In today’s digital age, a lot of tipping happens on screens.
If you’re tipping with a card, you’ll typically write the amount you’re tipping on the receipt, add up the total amount, and then sign before leaving. In today’s digital age, though, a lot of tipping happens on screens. When you check out, you may be presented tip options on a screen along with your total. In this case, you’d simply click whatever option you want (tip or no tip and the specific amount).
How much to tip
The “how much” question is one of those considerations we mentioned earlier that can differ a lot, person to person and family to family.
That said, certain industries have a higher expectation of tipping than others, and workers may be paid less under the assumption they’ll be tipped. At the end of the day, any tip is a nice way to say “thank you,” so make it a discussion around how much may be appropriate in different situations.
What’s important to remember is that the amount you tip is added to the total amount you have to pay.
What’s important to remember is that the amount you tip is added to the total amount you have to pay. This means you need to be sure you have enough money to pay the total price and the tip.
Let’s say you have a $15 balance on your debit card, and you go to pay for a $14 meal. If the tax is included in the price, you have enough to cover this meal. But if you want to tip the restaurant employee $2, your new total is $16, and your card may be declined.
With that in mind, perhaps you buy a less expensive meal, or leave a smaller tip. The decision is yours, but it’s helpful to know that whatever you tip will be added to the total price, so you want to make sure any time you leave a tip you have enough money to cover both the cost of what you’re buying and the tip.
As your kids embark on the exciting journey of making their own purchases and navigating the world of tipping, we want to help empower them with the knowledge and resources needed to become smarter spenders.
Understanding tipping - when it’s expected, how much is appropriate, and how to leave it - helps kids budget more accurately, which can help them save more efficiently and set them up for long term financial success.
This article is for informational purposes only and is not a substitute for individualized professional advice.
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