Latest / Life. Money. You.® Podcast / S3|E16: Breaking Down 'Tipflation'

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S3|E16: Breaking Down 'Tipflation' · Life. Money. You.® Podcast

• 0:15
  SPEAKER_03: All right, hello everyone, and welcome back to another episode of the Life Money You Podcast.
• 0:20
  SPEAKER_03: We're a financial well-being program provided by BCU, a credit union deeply committed to helping you thrive financially.
• 0:27
  SPEAKER_03: And we're super excited to dive into yet another topic that's super hot, and that's tipping.
• 0:32
  SPEAKER_03: So whether it's tip fatigue or tipflation, aka the title of the episode, there's a lot to unpack here, and we're here to make sense of it all.
• 0:40
  SPEAKER_03: So, as a quick introduction, I'm Danny, program manager and your host.
• 0:44
  SPEAKER_03: And joining me today are my amazing teammates.
• 0:46
  SPEAKER_03: We have Warren, our program product owner, Kim, our coach of the coaches, and Krish, our summer intern.
• 0:52
  SPEAKER_03: And to help guide this conversation, we'll be referencing insights, thank you, Chris, and perspectives from several trusted sources and industry experts.
• 1:01
  SPEAKER_03: And that includes the Pew Research Center, USA Today, CNBC, and Dave Ramsey, a personal finance expert and media personality.
• 1:11
  SPEAKER_03: And a few other names you'll hear: Dr.
• 1:13
  SPEAKER_03: Jamie Peters, assistant dean and assistant professor of finance at Meryville University.
• 1:18
  SPEAKER_03: We have Vincent Barardi, CFP, he's a wealth advisor at Halbert Hare Grove.
• 1:23
  SPEAKER_03: And last but not least, Vanessa Martinez, who is a wealth management professional and co-founder at Empowered Network.
• 1:31
  SPEAKER_03: So, tipping.
• 1:32
  SPEAKER_03: Let's get into it.
• 1:33
  SPEAKER_03: Warren, why don't you kick things off for our listeners?
• 1:36
  SPEAKER_03: What even is a tip?
• 1:38
  SPEAKER_01: That is a loaded question these days, I think.
• 1:42
  SPEAKER_01: Um this represents billions of dollars of our economy.
• 1:46
  SPEAKER_01: Billions.
• 1:47
  SPEAKER_01: That's nuts.
• 1:48
  SPEAKER_01: And that's billions of dollars of income for people too.
• 1:51
  SPEAKER_01: So this this is this is a huge topic that affects every aspect of everyone's lives.
• 1:57
  SPEAKER_01: It can add up to hundreds, hundreds of dollars a year that we don't think of when you're when you're planning for your budget or for anything like that.
• 2:05
  SPEAKER_01: And something that's super interesting is that it's completely voluntary.
• 2:09
  SPEAKER_01: We don't have to do it.
• 2:10
  SPEAKER_03: Yeah.
• 2:11
  SPEAKER_03: Yeah, definitely.
• 2:13
  SPEAKER_03: Um, you know, Pew Research Center found that 72% of US adults say tipping is expected more in places today than five years ago, right?
• 2:21
  SPEAKER_03: So we're taking ourselves back to 2020.
• 2:24
  SPEAKER_03: What's driving this expansion of tipping and like what kind of changed everything?
• 2:30
  SPEAKER_01: Well, I think it started with COVID.
• 2:32
  SPEAKER_01: Like Kim, I don't know, when when did you start noticing more of these tips?
• 2:36
  SPEAKER_02: You know, I know that tipping has always been around, right?
• 2:39
  SPEAKER_02: But I just feel like I was hyper aware to wait, is everybody needing a tip now?
• 2:46
  SPEAKER_02: Did I always need to tip for XYZ service?
• 2:51
  SPEAKER_02: Um, you know, I think about my husband and I were talking about this not too long ago, and he was telling me that he vividly remembers when we were first dating, going to a sonic drive-thru and them asking about a tip.
• 3:05
  SPEAKER_02: And I did not leave like a cash tip at that time.
• 3:09
  SPEAKER_02: And he was so shook that I didn't give like cash to the person who came out in the skates when they brought us our food.
• 3:16
  SPEAKER_02: But it was just like not something that I was typically used to.
• 3:21
  SPEAKER_02: You go through McDonald's, you get your bag, you leave, and that's it, right?
• 3:25
  SPEAKER_02: What's the difference between McDonald's and Sonic?
• 3:27
  SPEAKER_02: And he said, the roller skates, the person is coming out in roller skates and giving you your food, you should leave them a couple dollars as a tip.
• 3:35
  SPEAKER_02: And I, you know, when we were talking about that this weekend, he said that he remembers this memory from 15 years ago.
• 3:43
  SPEAKER_02: And then I felt so bad because of course now Sonic has it as an option of you can just like digitally leave a tip for the person who's gonna bring out your food for you.
• 3:53
  SPEAKER_02: And, you know, forgive me, I know that that's taking it left field from when did uh tipping start?
• 4:00
  SPEAKER_02: But I just feel like I have been more hyper aware and hyper-sensitive to it now than ever before.
• 4:07
  SPEAKER_01: Yeah.
• 4:07
  SPEAKER_01: And Chris, you're younger.
• 4:09
  SPEAKER_01: How old are you again?
• 4:10
  SPEAKER_01: Uh 20 years old.
• 4:12
  SPEAKER_01: Do you do you remember a time where every purchase didn't ask you for a tip, or has that kind of just always been part of your life?
• 4:20
  SPEAKER_00: So I know when I was younger, like when I was, of course, I didn't like end up paying for anything when I was like in the early 2016s, 2017, because of course I was with my parents.
• 4:28
  SPEAKER_00: I went out with them.
• 4:29
  SPEAKER_00: So they used to pay for everything.
• 4:31
  SPEAKER_00: But now when I go out, I just see like there's tipping for everything.
• 4:34
  SPEAKER_00: Like if I go to the coffee shop, if I go here, if I go there, I just find that that there's so many places now that I'm like offered a tip back compared to before.
• 4:43
  SPEAKER_00: I remember like when I was younger, we only used to tip at those sit-down restaurants and like if they uh gave us exceptional service, right?
• 4:49
  SPEAKER_00: But now it's like, oh, I'm here at the drive-thru.
• 4:52
  SPEAKER_00: Do you want to tip me?
• 4:52
  SPEAKER_00: I'm here like at the getting coffee, do you want to tip me?
• 4:55
  SPEAKER_00: So it's just to what extent is it like a tip valid at a certain place versus a different place?
• 5:01
  SPEAKER_03: Well, and that's such a good point.
• 5:03
  SPEAKER_03: I mean, now when I go to get a Starbucks coffee through the drive-thru, I'm prompted to tip.
• 5:09
  SPEAKER_03: And that's one of the introductions, right, leading up to 2020 and that really got a rise during COVID is the default tip percentages, those kiosks, right?
• 5:18
  SPEAKER_03: Pre-service tipping, which Kim, I know you mentioned, and then countersurface tipping.
• 5:22
  SPEAKER_03: So there's just all these new introductions that have really um gotten the rise in that normalization of on-screen tipping.
• 5:29
  SPEAKER_03: And so one thing, I one story I had is I remember uh just roughly after COVID, so maybe it was 2021, I was going to use the kiosk to tip.
• 5:38
  SPEAKER_03: And I just always would hit all the way to the right because it usually went 10, 15, 20%, right?
• 5:44
  SPEAKER_03: 20 being the max.
• 5:45
  SPEAKER_03: And so I went and I just hit without looking all the way to the right, figuring it'd be that 20% that I was aiming for.
• 5:51
  SPEAKER_03: And I ended up tipping 30% because they had it 20, 25, 30.
• 5:57
  SPEAKER_03: So I felt a little bit like led differently.
• 5:59
  SPEAKER_03: I was like, wait, what the heck?
• 6:01
  SPEAKER_03: I meant to do 20, and I ended up tipping 30% just because of those default tip percentages.
• 6:06
  SPEAKER_03: Do y'all have any similar stories?
• 6:08
  SPEAKER_01: It's crazy.
• 6:09
  SPEAKER_02: And the other thing I wanted to mention aside from like the default tip percentages and the pre-service tipping, but when you think about Starbucks, they even send you like a push notification after you pick up your drink and it says, like, did you want to leave your tip?
• 6:23
  SPEAKER_02: So it's like after the fact tipping, the same Uber does the same thing.
• 6:27
  SPEAKER_02: So rate your driver, leave a tip, leave a comment or anything like that as well.
• 6:31
  SPEAKER_02: And yeah, um, so these after the fact, like you've already walked out, you didn't miss your mark on hitting the 15 or 20%.
• 6:38
  SPEAKER_02: You can still go back and do it if you want.
• 6:41
  SPEAKER_03: Yeah, you know, you actually made me remind some things.
• 6:43
  SPEAKER_03: So, as Warren said, we have the default tip percentages.
• 6:46
  SPEAKER_03: I told you my story about accidentally pressing 30%.
• 6:49
  SPEAKER_03: We have the pre-service tipping.
• 6:50
  SPEAKER_03: So that's when you order your pad tie and you automatically put the$4 that you'll be giving them when they bring it to your home.
• 6:57
  SPEAKER_03: And then we have counter service.
• 6:59
  SPEAKER_03: So, Chris, can you share your story about that late night you went in to grab?
• 7:03
  SPEAKER_03: I believe it was something.
• 7:04
  SPEAKER_03: Just interrupt me.
• 7:05
  SPEAKER_03: Go ahead and tell the story.
• 7:06
  SPEAKER_03: Yeah.
• 7:06
  SPEAKER_00: So last year I was out late at night with this girl at a fast casual Indian food snack spot because, of course, all of us were hungry.
• 7:14
  SPEAKER_00: And so we were ordering snacks, sweets, desserts, pretty much a lot of things.
• 7:18
  SPEAKER_00: And since it was so late at night and there were still people working behind the counter making our food, I felt a little bad for them.
• 7:23
  SPEAKER_00: So I thought, why not leave a tip?
• 7:24
  SPEAKER_00: So I pulled a couple dollars and I was about to, and as I was about to drop the money into the tip jar, the woman behind the counter quietly stopped me.
• 7:31
  SPEAKER_00: She leaned over and whispered, don't put the money in the tip jar.
• 7:34
  SPEAKER_00: And I was confused.
• 7:35
  SPEAKER_00: I asked her why.
• 7:36
  SPEAKER_00: And she told me that they wouldn't actually get the money at the end of the night.
• 7:40
  SPEAKER_00: She said something along the lines, if I wanted the tip to go to the workers, I should just hand it to her directly.
• 7:45
  SPEAKER_00: And honestly, I was pretty disappointed when I heard that.
• 7:47
  SPEAKER_00: My first instinct was to reach back into the tip jar and grab the money.
• 7:51
  SPEAKER_00: But she immediately told me not to do that either because there was a camera watching.
• 7:54
  SPEAKER_00: And so in the end, I just grabbed a couple more dollars from my wallet and handed them directly to her and the person working with her.
• 7:59
  SPEAKER_00: And that experience really stuck with me because ever since then, whenever I go to certain restaurants or food places, I'll sometimes ask the employees if they actually receive the tips that the customers leave.
• 8:08
  SPEAKER_00: It made me realize that there's probably a lot of places where customers assume their tips are going to workers when that might not always be the case.
• 8:15
  SPEAKER_00: And once you see something like that firsthand, it creates a certain level of distrust.
• 8:19
  SPEAKER_00: It makes you think twice about tipping, not because you don't want to support the employees, but because you start wondering whether the money is actually ending up to them where or ending up where you intended it to go to.
• 8:29
  SPEAKER_01: I I can't agree more.
• 8:30
  SPEAKER_01: I worked in restaurants and we always had to tip out to the wait staff, to the to the to the kitchen, to the bar, to to whatever.
• 8:37
  SPEAKER_01: And something else that you had just said, Danny, that just really struck to me.
• 8:40
  SPEAKER_01: You said you're you're paying for a service like your food delivery, you're you're you're tipping before you actually get the food.
• 8:47
  SPEAKER_01: And so I might be giving a 30% tip, but then maybe my driver dropped my my food on the floor, or maybe they forgot my my drink at the restaurant, or maybe they maybe they just took their time and and it's it's cold.
• 9:00
  SPEAKER_01: It's cold by the time.
• 9:01
  SPEAKER_01: Or yeah, maybe, maybe, yeah.
• 9:02
  SPEAKER_01: So all these things I didn't I never put two and two together that I I don't even get to see what the service is like before I'm tipping.
• 9:09
  SPEAKER_01: And I'll add on to that, I know that uh I read that DoorDash was doing some kind of a test.
• 9:15
  SPEAKER_01: And if you don't tip, they'll give you a warning message that says, hey, your food is going to be delivered slower than than we originally promised because you're not tipping, which I think is fair, but it's it's just it's funny.
• 9:27
  SPEAKER_03: Wow.
• 9:28
  SPEAKER_03: 77% of adults say service quality is the biggest factor in tipping decisions.
• 9:33
  SPEAKER_03: What do you guys think about that?
• 9:35
  SPEAKER_03: Do you think it is service quality?
• 9:37
  SPEAKER_02: Absolutely.
• 9:38
  SPEAKER_02: I would have gladly hit the 30% button, Danny, if my service was top tier, you know, my my glass was never empty, my food came out quickly, I always had napkins on the table, whatever.
• 9:50
  SPEAKER_02: Like I am so much more prone to giving extra when the service stands out.
• 9:57
  SPEAKER_01: But I will say that from working in restaurants for years, you can be just just average nice, and you and you'll still get above 20% tips, at least in my experience.
• 10:10
  SPEAKER_01: And I would also say that, like doing a little bit of research, good service only accounts for about 4% of variation in tips when you're looking at restaurants.
• 10:19
  SPEAKER_01: Now that's just one study, but it that it's just to kind of show that you can be really nice, but it's probably not going to help your tips that much at the end of the night.
• 10:27
  SPEAKER_01: And even if you're really nice, you can walk away making very little if you have one table, you know, tip you way under what is uh socially standard.
• 10:37
  SPEAKER_03: Yeah.
• 10:37
  SPEAKER_03: So there's a problem here.
• 10:39
  SPEAKER_03: Uh, Dr.
• 10:40
  SPEAKER_03: Jamie Peters notes tipped workers earn lower hourly wages based on the assumptions tips will bridge the gap.
• 10:47
  SPEAKER_03: But we're talking right now that it's based on the situation.
• 10:50
  SPEAKER_03: It's not an expectation.
• 10:51
  SPEAKER_03: Our situation determines whether or not we're going to tip X amount of money.
• 10:56
  SPEAKER_03: So what do you think is wrong with the compensation model?
• 10:59
  SPEAKER_03: Do you think there is something wrong?
• 11:00
  SPEAKER_03: Where's the gap?
• 11:02
  SPEAKER_01: Uh well, I mean, it it's not it's not fair.
• 11:04
  SPEAKER_01: When you're a server, what if you get slammed?
• 11:07
  SPEAKER_01: You get eight tables at once, your service quality is going to suffer.
• 11:11
  SPEAKER_01: So then is it is it should you be reprimanded when when the restaurant didn't uh hire enough staff or doesn't have enough staff on time?
• 11:19
  SPEAKER_01: And that that's an important note is that at the end of the day, tips are subsidizing these employees' wages.
• 11:26
  SPEAKER_01: Like, you know, a typical business, you go work, the business pays you.
• 11:30
  SPEAKER_01: But these businesses, they're relying on their customers to help subsidize wages of their employees, which is you know questionable.
• 11:38
  SPEAKER_03: Yeah, yeah.
• 11:39
  SPEAKER_03: And there are some things in place.
• 11:40
  SPEAKER_03: Like, talk to us about not just inflation, right?
• 11:42
  SPEAKER_03: We have the surcharge, but there's also that automatic gratuity.
• 11:46
  SPEAKER_03: Can you break that down a little bit just based on your experience?
• 11:49
  SPEAKER_01: Yeah.
• 11:49
  SPEAKER_01: So, you know, I'm sure if you go to a restaurant, if if you see on menus commonly, parties of six or more, there'll be a gratuity included.
• 11:58
  SPEAKER_01: But we I, you know, I think we've all seen that creep into other places too, where sometimes like your delivery for for certain items, it's just automatically included.
• 12:09
  SPEAKER_03: And experts agree tipping is optional for non-tip reliant roles.
• 12:14
  SPEAKER_03: So, like we talked about the ones that we've never really been used to at, right?
• 12:16
  SPEAKER_03: Like your handymen, your movers, your lawn, you know, people that help with lawn care, Kim, like you described.
• 12:21
  SPEAKER_03: But how can consumers show appreciation without feeling financially stressed?
• 12:26
  SPEAKER_03: And I get nostalgic with this question because I think of being like eight years old and my mom running out.
• 12:31
  SPEAKER_03: It's winter time in the suburbs of Chicago and she's going to give a little gift basket to our garbage man, Frankie.
• 12:37
  SPEAKER_03: He was always so nice.
• 12:38
  SPEAKER_03: I knew his name, but you know, those little gestures go a long way.
• 12:42
  SPEAKER_03: Is there anything else that comes to mind for y'all?
• 12:44
  SPEAKER_01: If you, if you, if you ever gave me like a cupcake instead of cash tip, I would be so angry.
• 12:50
  SPEAKER_01: I'm sorry.
• 12:50
  SPEAKER_01: I hear what you're saying in the preview.
• 12:53
  SPEAKER_01: That's good.
• 12:53
  SPEAKER_01: This is good.
• 12:53
  SPEAKER_01: Yeah, I appreciate that you want to do these nice things, people, but I want money, honey.
• 12:58
  SPEAKER_03: I don't yes.
• 13:00
  SPEAKER_03: No, and that totally makes sense.
• 13:02
  SPEAKER_03: No too.
• 13:04
  SPEAKER_03: Yes.
• 13:04
  SPEAKER_03: So for those tip reliant roles, Warren, I would be PO'd if someone gave me a cupcake.
• 13:10
  SPEAKER_03: If my tip is reliant, it is part of that wage gap.
• 13:12
  SPEAKER_03: Do not give me a cupcake, give me my cash.
• 13:15
  SPEAKER_03: But for those non-tip reliant roles, there are still unconventional ways to show your appreciation.
• 13:21
  SPEAKER_01: So, how does this affect us?
• 13:22
  SPEAKER_01: How does how does this new tipping culture affect us?
• 13:25
  SPEAKER_01: We talked about how tipping is a hidden tax and you're it's it's gonna it's gonna cost you hundreds of dollars more a year than than you were originally planning.
• 13:34
  SPEAKER_01: But then on top of that, now because people are watching you while you're tipping at the kiosk, we're we're tipping more than we should, maybe.
• 13:42
  SPEAKER_01: We used to, we used to customarily always tip right around 20%.
• 13:46
  SPEAKER_01: But to Danny's point, because it's so easy to hit hit the 30%, now we're tipping like$2 on a six dollar latte.
• 13:54
  SPEAKER_01: Like that that's that that doesn't see now.
• 13:56
  SPEAKER_01: I'm just rambling on and on.
• 13:58
  SPEAKER_01: Experts are saying that you shouldn't let guilt drive you to spend even more on the tip than you would have otherwise.
• 14:06
  SPEAKER_01: So Danny, uh Kim, Chris, do you guys have any tips or or yeah, do you have any tips for how I can not feel guilty?
• 14:14
  SPEAKER_01: Like one suggestion that I've been reading is just make make a set rule.
• 14:20
  SPEAKER_01: Stop, stop pretending like like someone deserves 20% only when they've been the best server ever.
• 14:27
  SPEAKER_01: And just make a rule that every time you go out to dinner, you tip 20%.
• 14:30
  SPEAKER_01: That's just standard.
• 14:31
  SPEAKER_01: That way you don't have the psychological stress every time you give them the credit card, like, oh, do I give them 20 or 25 or oh it's it's my birthday and they they brought me a birthday candle.
• 14:40
  SPEAKER_01: I really owe them 30%.
• 14:41
  SPEAKER_01: Like it's just that that's that's not worth it.
• 14:43
  SPEAKER_01: That's that's not what we really want to do.
• 14:45
  SPEAKER_03: Sometimes when you're going to tip, you'll notice that the person actually will look away.
• 14:51
  SPEAKER_03: I actually just experienced it yesterday getting my Starbucks coffee.
• 14:54
  SPEAKER_03: Yeah, but it would seem that the guilt isn't just for you who's going to tip.
• 14:58
  SPEAKER_03: There's also something to be said for the person who's working.
• 15:01
  SPEAKER_03: Like that it's it's two-way, right?
• 15:04
  SPEAKER_02: Absolutely.
• 15:05
  SPEAKER_02: And you know what's funny?
• 15:06
  SPEAKER_02: And I know we talked about like how can we avoid the emotion from it, but an experience that we had recently, we were at this little coffee truck that I really like.
• 15:16
  SPEAKER_02: They're only open Friday, Saturday, and Sunday.
• 15:19
  SPEAKER_02: Um, Ram's there with me, my husband's with me, and the person in front of us um was like, hey, uh, y'all take cash, right?
• 15:26
  SPEAKER_02: And unfortunately, the truck did not accept cash.
• 15:29
  SPEAKER_02: She mentioned though, unless it's exact change.
• 15:32
  SPEAKER_02: And so he was like, okay, how much is it?
• 15:34
  SPEAKER_02: And it ended up being, I don't know,$22.
• 15:37
  SPEAKER_02: And the guy was like, oh, look at that.
• 15:38
  SPEAKER_02: I've got$22.
• 15:40
  SPEAKER_02: Well, when we were leaving, of course, after the fact, we get in the truck and Ram was like, he didn't even leave like 25, 26, like to uh also offer for the tip.
• 15:49
  SPEAKER_02: But then when it came up for us with our card, you know, we've got the card service fee, we've got all these things.
• 15:54
  SPEAKER_02: He only left the$22.
• 15:56
  SPEAKER_02: How could that person just be okay with it?
• 15:59
  SPEAKER_02: And so I was telling him, kind of to the point of like having these set rules, there are some people who were just like, you know what, this is what it is.
• 16:06
  SPEAKER_02: And that's if they said exact change, then that's what I'm gonna give is exact change.
• 16:11
  SPEAKER_02: So I know it varies, but I think that Ram felt bad for them not getting a tip from this big$22 order that he left a little bit extra from my$8 coffee.
• 16:23
  SPEAKER_02: And I was like, wait a second.
• 16:24
  SPEAKER_02: So this goes back to like definitely leaving a lot more than 20, 30% on our little coffee versus having people in front of us who are okay with leaving exact change where that didn't go to anyone else but the coffee purchase.
• 16:39
  SPEAKER_03: So where are we going with tipping?
• 16:41
  SPEAKER_03: We just talked through a bunch of different examples, what we're experiencing today, what we experienced through COVID, with everyone having such different expectations around tipping.
• 16:52
  SPEAKER_03: What are we really getting at right now and where is it going?
• 16:55
  SPEAKER_01: I vote.
• 16:56
  SPEAKER_01: Let's well, something we didn't talk about, but I kind of wanted to get into it.
• 17:00
  SPEAKER_01: And we can talk about it really quick here is other places don't tip like the US does.
• 17:05
  SPEAKER_01: And a lot of other places, you know, you earn a living wage and you're not dependent on some random person that walks in and decides that they that they can't afford to tip you today.
• 17:17
  SPEAKER_03: Preach.
• 17:20
  SPEAKER_03: Um so, right, you were gonna tell us all we're gonna go to Europe, right, Warren?
• 17:26
  SPEAKER_01: So yeah, I mean, I I I'm not quite ready to be an ex-pat yet.
• 17:30
  SPEAKER_01: I don't know if anyone's gonna want me because I'm American, but um, but here we go.
• 17:38
  SPEAKER_01: And I, you know, I I I said it earlier, but set set your rules before you leave the house.
• 17:44
  SPEAKER_01: Decide these things ahead.
• 17:46
  SPEAKER_02: Well, and I like the set your rules before you leave the house.
• 17:49
  SPEAKER_02: Consider those things like before you go to the steakhouse restaurant that you know is gonna be a little bit pricey.
• 17:55
  SPEAKER_02: Also include that in this budget for depending on where you're gonna go, factor in that tip at least that 20% to Warren's point of, you know, if we're setting the role of it's gonna be 20% no matter what, think about those things ahead of time.
• 18:11
  SPEAKER_01: These tips, though, like they can make up a substantial part of someone's income.
• 18:16
  SPEAKER_01: If if it's like if it's a restaurant server, for instance, it can make up 80% or more of their incomes, is is tips.
• 18:23
  SPEAKER_01: If if it's some of these other services, not so much.
• 18:26
  SPEAKER_01: But you know, a big story I have is people will sometimes go out to dinner and then they they get the bill, and then they're like, well, I can't afford the tip.
• 18:39
  SPEAKER_01: And then and then they think that they're off the hook.
• 18:42
  SPEAKER_01: But then I actually have to pay, I have to tip out to to the other restaurant staff for for that meal.
• 18:50
  SPEAKER_01: I have to tip 20% to the kitchen and to and to whoever else into the bar, and and I have to tip out on on my bar sales.
• 18:58
  SPEAKER_01: So then your dinner actually costs me money.
• 19:03
  SPEAKER_01: Um so there's that.
• 19:06
  SPEAKER_03: Ask where your tip is going.
• 19:08
  SPEAKER_03: How is your tip contributing to them?
• 19:10
  SPEAKER_03: Is it going directly to the service worker who's helping you?
• 19:12
  SPEAKER_03: Is it being pulled and given to a bunch of different people?
• 19:15
  SPEAKER_03: Is it split amongst folks?
• 19:17
  SPEAKER_01: But can I ask?
• 19:19
  SPEAKER_01: Like what regardless of the answer, how is that gonna change your tip?
• 19:26
  SPEAKER_01: Ooh, that's a good question.
• 19:28
  SPEAKER_01: Ooh, spicy, right?
• 19:30
  SPEAKER_01: Because I mean you like if you find out that some of your tip is going to go to the restaurant staff, well, then does that mean you're gonna tip them less and then you are gonna shortchange them?
• 19:40
  SPEAKER_01: Or does that mean that you're gonna tip them more?
• 19:42
  SPEAKER_01: Or does it or just maybe just like heed to what I was saying, where just pick a 20% and stick with it.
• 19:47
  SPEAKER_01: That way it's consistent, it's it's culturally appropriate, it's it's easy.
• 19:52
  SPEAKER_02: And and also consider now after hearing Chris's story, I think I'm gonna start carrying cash so that I could just make sure to slip some people a quick little$10 bill,$5 bill, whatever, so that I can make sure, hey, if nothing else, this cash is gonna go to you in your pocket when you go home because of all the efforts that you're doing.
• 20:11
  SPEAKER_01: A lot of times the tipping is actually social pressure.
• 20:14
  SPEAKER_01: Like we we do it because we want to feel good about ourselves, or we do it because it's expected of us, or because we don't want other people to think bad of us.
• 20:21
  SPEAKER_01: Like most most of the reason that we tip it is is actually around social constructs, not because of not again, not because you have to.
• 20:29
  SPEAKER_01: I said it you know very early in the episode, but it it's a completely voluntary service.
• 20:34
  SPEAKER_01: But again, like you don't want to go, you you want to go to the pearly gates.
• 20:40
  SPEAKER_01: You you don't want to end up going, you know, downstairs after you pass because because you didn't skip it.
• 20:46
  SPEAKER_01: You don't want to be that guy that gets in trouble for that.
• 20:49
  SPEAKER_03: I totally think about tip karma, Warren.
• 20:51
  SPEAKER_03: You are so right.
• 20:52
  SPEAKER_03: I think about tip karma all the time because if I were in their shoes, I was relying on that wage gap, I would want to be the person receiving the 20% that I'm I don't want to use the word entitled, but honestly, if that's part of my role, it's something I should be able to expect.
• 21:09
  SPEAKER_02: Absolutely.
• 21:09
  SPEAKER_02: And then think about things like our hairstylists and we um think about like hotel staff, right?
• 21:16
  SPEAKER_02: Like, are they gonna come in to change your sheets and bring you fresh towels if you're not leaving a tip?
• 21:21
  SPEAKER_02: Or your hairstylist, like maybe they're gonna cut a couple of inches too short or go totally rogue from the picture that you showed them.
• 21:30
  SPEAKER_02: We don't know, it could happen.
• 21:32
  SPEAKER_01: Well, can we talk about that?
• 21:34
  SPEAKER_01: Do you all uh leave a tip for the person who turns over your room at a hotel?
• 21:39
  SPEAKER_03: Yes.
• 21:41
  SPEAKER_03: I do.
• 21:43
  SPEAKER_03: I make friends with them.
• 21:44
  SPEAKER_01: Kenny's making a face that makes me think, no, I I admit I'm bad about it.
• 21:48
  SPEAKER_01: I I don't as much as I should.
• 21:50
  SPEAKER_01: But often, and this is a terrible excuse, but it's because I was traveling for work, I can't leave a cash tip out out of my work card.
• 21:57
  SPEAKER_01: So so for all these business trips, I I hate to admit, I didn't leave a tip like I should have.
• 22:03
  SPEAKER_02: Right.
• 22:03
  SPEAKER_02: And and I to your point, sometimes we do stay cations here.
• 22:09
  SPEAKER_02: So it's like a one night, real quick little thing where I don't think about it.
• 22:13
  SPEAKER_02: I don't have cash.
• 22:14
  SPEAKER_02: But when we do like a resort stay, we go to Mexico.
• 22:18
  SPEAKER_02: I always make sure to have extra cash.
• 22:20
  SPEAKER_02: I leave that in the room always, always, without a doubt.
• 22:24
  SPEAKER_02: Any that's not, I that's why I make a fake.
• 22:27
  SPEAKER_02: Oh my gosh.
• 22:28
  SPEAKER_02: Like I don't think about it sometimes.
• 22:31
  SPEAKER_01: I I don't either.
• 22:32
  SPEAKER_01: I hate to admit it, especially if I'm only sitting there one night, but but I know that I should.
• 22:36
  SPEAKER_01: Okay.
• 22:36
  SPEAKER_01: Another thing I want to really quick talk about is Gen Z.
• 22:39
  SPEAKER_01: You do like a little bit of research, you see that Gen Z does not tip as good as your baby boomers.
• 22:45
  SPEAKER_01: Um but I mean, I I can say that my grandparents were the worst tippers I've ever met.
• 22:50
  SPEAKER_01: They they were older than boomers, but like 10% of the biggest.
• 22:53
  SPEAKER_01: Yeah, the break in the bank, right?
• 22:55
  SPEAKER_01: $1.
• 22:56
  SPEAKER_01: That's it.
• 22:57
  SPEAKER_01: Oh, like that.
• 22:58
  SPEAKER_01: That's all you deserve, you know?
• 23:00
  SPEAKER_01: You brought me your meal.
• 23:01
  SPEAKER_01: That's what you get.
• 23:02
  SPEAKER_01: Um, but you know, I I I want to push back on on this idea that Gen Z is terrible on tipping.
• 23:09
  SPEAKER_01: I'm sure that they aren't as good as as us older older folks, but I think that has something to do with the amount of money that they make.
• 23:17
  SPEAKER_01: Uh, you know, like I I hate to admit I was that awful 18-year-old that didn't leave a tip at Denny's.
• 23:25
  SPEAKER_01: You know, they're they're they're working in the middle of the night.
• 23:27
  SPEAKER_01: They need the tip more than anyone, they deserve it.
• 23:29
  SPEAKER_01: And I didn't leave a tip.
• 23:31
  SPEAKER_01: So I I I think that's what's going on with the Gen Z thing, but I, you know, who knows?
• 23:35
  SPEAKER_03: Krish, can you attest to this?
• 23:37
  SPEAKER_00: Uh oh, actually, I've gotten I've gotten better at tipping.
• 23:41
  SPEAKER_00: I know I also see that that 18-year-old who, because at some point it was like, well, like, I work at like this place, I don't make enough.
• 23:48
  SPEAKER_00: And like, of course I'll try to tip where I can give a tip.
• 23:50
  SPEAKER_00: I'll tip if there's really good service, of course I'll tip.
• 23:53
  SPEAKER_00: Like, of course I want you to like have that extra like book or two to like just to keep your day going, you know.
• 23:57
  SPEAKER_00: But to some extent, like now, like compared to before, I realized like a lot more about the value of tipping and how like these people like they genuinely need like the money to like make a good living.
• 24:08
  SPEAKER_00: And it's but one place where I don't like hesitated tip is when I'm traveling to foreign countries.
• 24:13
  SPEAKER_00: Like what Kim said earlier, when we're going to a resort in Mexico, those people, and because we we speak to them, we like like conversing with them, we like getting to know them.
• 24:20
  SPEAKER_00: They work 12 to 20 hours a day and they barely make any money.
• 24:24
  SPEAKER_00: So just giving them that extra couple dollars is is what really keeps their day going.
• 24:28
  SPEAKER_00: So I think for me, it's just like, where am I putting my money to, which would make the most impact to those workers?
• 24:34
  SPEAKER_02: Well, and the currency trans transition of it, or forgive me, on exchange, currency exchange, like the dollar that we give them equals two or three dollars in their country or whatever it is, like you know, thinking about that as well, where it might not seem like a lot because we're just taking a couple of dollars here or there, they bring us our drink, whatever it may be.
• 24:55
  SPEAKER_02: But like you're saying, they work so many hours to try to earn this tip.
• 25:00
  SPEAKER_01: Like, and it's you know, we've been talking about how the cultural pressures make a big difference.
• 25:05
  SPEAKER_01: I recently went on a cruise where the folks live an earning wage, but it tipping so ingrained in me.
• 25:11
  SPEAKER_01: I I still left a tip because I felt I felt so strange not leaving a tip, even though it said all over the materials, you know, not required to leave a tip.
• 25:20
  SPEAKER_01: These, but still, it just I I wanted to.
• 25:23
  SPEAKER_01: And like I I also I really believe that if you can afford a tip, then you should be paying the tip.
• 25:29
  SPEAKER_01: Like you should always be paying the tip.
• 25:31
  SPEAKER_01: And if you could afford it, you should really be, you know, uh putting your putting your your fair share in.
• 25:37
  SPEAKER_03: 67% of US adults say they feel tipping is expected in too many places.
• 25:41
  SPEAKER_03: Do y'all agree or disagree with that stat?
• 25:44
  SPEAKER_01: Uh do our baristas make enough money?
• 25:46
  SPEAKER_01: Uh probably not.
• 25:48
  SPEAKER_01: So should I be tipping them?
• 25:51
  SPEAKER_01: Probably.
• 25:52
  SPEAKER_01: But ultimately, I wish Starbucks would just pay them more money.
• 25:56
  SPEAKER_01: So I wouldn't have to pay them that tip.
• 25:59
  SPEAKER_03: I think that's part of the deeper resentment, though, with tipping and consumers, right?
• 26:03
  SPEAKER_03: Is because back to it, like we don't know what our tip is contributing to.
• 26:07
  SPEAKER_03: Is it really going into the pocket of the service worker that turned our day around?
• 26:10
  SPEAKER_03: Or is it going back to the company that's not paying them enough money to bridge the wage gap of the tips that are essential to their income?
• 26:19
  SPEAKER_02: And what about the people who are picking up the popcorn in the movie theaters?
• 26:23
  SPEAKER_02: I think they deserve a tip before my Starbucks barista.
• 26:27
  SPEAKER_02: I'm sorry, controversial.
• 26:29
  SPEAKER_01: No, that that's a really good point, Kim.
• 26:31
  SPEAKER_01: Like, like the airport bathroom clean, like cleaners, like they they deserve a tip.
• 26:36
  SPEAKER_01: Like, if there's any place that deserves a tip jar, it's like I should be able to tap tap my Venmo on the way to the app to the bathroom.
• 26:43
  SPEAKER_02: Where's the QR codes?
• 26:44
  SPEAKER_02: And exactly.
• 26:46
  SPEAKER_02: And thank you for handling my luggage with care to the people who are loading up the airplanes.
• 26:50
  SPEAKER_03: Like yeah, it's interesting because like tipping's in all these places, right?
• 26:55
  SPEAKER_03: But then the ones where we would be more willing to tip, they're still not as widely accepted.
• 27:00
  SPEAKER_03: That's interesting.
• 27:02
  SPEAKER_01: So one other idea that I have that I just wanted to throw out there for ways that we can save money in tipping is uh plan.
• 27:13
  SPEAKER_01: Plan ahead.
• 27:14
  SPEAKER_01: Like I would say, you know, experts uh when I looked when I did a really weak Google search, uh, experts said that at least$500 it goes towards tipping every year.
• 27:25
  SPEAKER_01: But knowing how that's expanded and if you're a generous person, budget$1,000 a year.
• 27:30
  SPEAKER_01: Like sorry, I I I shouldn't say amounts for people, but budget a healthy amount that uh budget a realistic amount that you think you're gonna need to tip people.
• 27:39
  SPEAKER_01: This is an until the US changes its ways, this is this is an essential way that people make money.
• 27:45
  SPEAKER_01: Um, this is a voluntary service.
• 27:47
  SPEAKER_01: So if you get something delivered and you don't have the cash, uh you don't you don't need to kill yourself to go run to an ATM.
• 27:56
  SPEAKER_01: Like it the these these things happen.
• 27:58
  SPEAKER_01: And I mean, I I I've even asked a delivery person if if uh if if they had a Venmo, just so I could or if I could sell them the money, just because I didn't have any cash on hand.
• 28:08
  SPEAKER_02: But absolutely, yeah.
• 28:10
  SPEAKER_02: And my father-in-law uses a full-on tip calculator on his phone, so he's got no shame in his game and bringing out his phone, looking up his tip calculator, plugging in how much his total is, and making sure that to the penny he's putting what is appropriate.
• 28:26
  SPEAKER_01: Well, I and that's interesting, Kim.
• 28:27
  SPEAKER_01: Did you I working in restaurants, different people calculate tips different ways?
• 28:31
  SPEAKER_01: Like I have some, I had some customers, they would only tip pre-tax.
• 28:35
  SPEAKER_01: I always tip post-tax because it just I don't know, it's just always the way I've done it.
• 28:40
  SPEAKER_01: I've also encountered customers that won't tip on the bar tab.
• 28:43
  SPEAKER_01: I I I talk in different parts of this episode about how that doesn't that that that that costs me as the server money because I have to tip out the bar.
• 28:50
  SPEAKER_01: But either way, um it just interesting.
• 28:53
  SPEAKER_02: Yeah, yeah.
• 28:54
  SPEAKER_02: And I think his theory is he doesn't trust the numbers that are either on the receipt that's printed with the 15, 18, and 20% or that comes up on the screen.
• 29:04
  SPEAKER_02: So he's like, let me just make sure that this really is 18% before I just plug in the numbers.
• 29:10
  SPEAKER_03: You mentioned social norms too, Warren.
• 29:13
  SPEAKER_03: And I think a lot about how us here on this episode, for the most part, I think half of us have like work experience being service workers, being folks that relied on tips.
• 29:24
  SPEAKER_03: And I think that empathy is pretty game-changing.
• 29:26
  SPEAKER_03: So a challenge I'd pose to all you listening, talk to your friends who are service workers, talk to people you know, get a little bit of inside empathy of how that tip truly does change their income and therefore their financial lives.
• 29:41
  SPEAKER_01: Absolutely.
• 29:43
  SPEAKER_01: And then another really interesting, uh, another new or interesting thing that's going on with tipping right now is that uh there is a tax ex there's a tax exemption for uh for for tips.
• 29:55
  SPEAKER_01: You can uh eligible workers can deduct up to$25,000 of qualified tip income.
• 30:01
  SPEAKER_01: Um, this is this is huge.
• 30:02
  SPEAKER_01: This is this is savings.
• 30:05
  SPEAKER_01: This is uh you know, money that you previously would have had to pay in in taxes.
• 30:09
  SPEAKER_01: So huge crazy.
• 30:12
  SPEAKER_02: Um so thinking about you know tipping yourself, a really cool shameless plug that we have also here with our affiliate credit union that we just recently launched is pocket change.
• 30:25
  SPEAKER_02: Like I didn't realize how often I was using my debit card until I enrolled in pocket change because I thought, oh, this is something that won't really be too much money that I'll save because I don't really use my debit card.
• 30:38
  SPEAKER_02: I tend to use my credit card to earn the points.
• 30:40
  SPEAKER_02: Anywho, no, I have saved well over$40 into our account already just from using pocket change where you set it and forget it literally, and it rounds up whatever transaction dollar amount you are spending.
• 30:57
  SPEAKER_02: So whether it's$13.50, if you're using$13.50, it'll round it up to$14 and push that 50 cents into the designated savings account that you set it to.
• 31:07
  SPEAKER_02: And then you just start accumulating this essentially savings, but you know, feel free to use that for your tipping funds or that kickstart to a savings or whatever you want.
• 31:20
  SPEAKER_02: But it's such a cool feature that I started using recently that I have been pleasantly surprised with how quickly I've accumulated some pocket change.
• 31:31
  SPEAKER_03: Perfect.
• 31:32
  SPEAKER_03: Well, thanks so much, everyone.
• 31:34
  SPEAKER_03: This was awesome.
• 31:35
  SPEAKER_01: Thanks so much for having me, Danny.
• 31:37
  SPEAKER_01: Don't forget to tip your service people.
• 31:39
  SPEAKER_02: Danny, thank you so much for having me on.
• 31:41
  SPEAKER_02: I feel mortified that 15 years ago I did not leave a$2 tip to the Sonic worker that helped me out.
• 31:47
  SPEAKER_02: And I will be sure to implement that change effective immediately.
• 31:51
  SPEAKER_03: And you should go try out skates so you can have a little more empathy for them.
• 31:54
  SPEAKER_03: Absolutely not.
• 31:55
  SPEAKER_02: I already have the empathy.
• 31:58
  SPEAKER_00: Danny, thank you so much for having me.
• 32:00
  SPEAKER_00: Uh I learned a lot of new things about tipping, and I promise I'll start tipping better from now on.
• 32:04
  SPEAKER_00: So thank you.
• 32:05
  SPEAKER_03: As a reminder, Life Money U is a financial well-being program owned by BCU, a credit union fiercely committed to your financial well-being.
• 32:12
  SPEAKER_03: Through LifeMoneyU subscription, you get credit union membership eligibility and access to a boatload of money-saving products and tools, one of which is free financial coaching.
• 32:23
  SPEAKER_03: So you can meet with a financial coach on your time to talk through boosting credit, crushing debt, or building an emergency savings fund.
• 32:29
  SPEAKER_03: We hope to have you on the next one.
• 32:31
  SPEAKER_03: Thank you all for joining.