You might think that if you had more money, you would regularly tip higher than the standard 15%. But is that really the case? Does how much you earn actually affect how much you tip people in the service industry? The amount you tip depends on your occupation and what you do. Is there a connection?
read: I'm a Millionaire — 3 Ways to Maintain a Frugal Lifestyle
learn: 6 genius things all wealthy people do with their money
To gain more insight on this topic, GOBankingRates reached out to financial experts to get their thoughts on who tips more between the wealthy and the middle class.
sponsor: Do you owe the IRS more than $10,000? Schedule a free consultation to see if you qualify for tax relief.
life experience
Erica Kullberg, founder of financial advice website Erika.com, said the amount of a tip may have less to do with the amount of money and more to do with where someone worked.
“Typically, the people who tip the most are people who have worked or currently work in the service industry,” Kullberg says. “Those with experience in the service industry know firsthand how important tips are for service workers, especially those with low base salaries like restaurant waiters.”
According to this theory, someone who comes from a wealthy family and has never worked in the service industry may not fully understand how important tips are to employees. Therefore, the ability to tip may not be as high. Conversely, if you're a wealthy CEO who has worked in the service industry, you'll probably tip more because you know what it's like to work for tips.
“If you've ever had a job where tips matter, whether you're the CEO of a Fortune 500 company or just the average person walking down the street, you know that you're just as dependent on the tips they give you. It's very easy to empathize with people, and in the future you'll be able to offer a variety of services,” said Scott Sturgeon, founder and senior wealth advisor at Oread Wealth Partners.
Discover: 7 main signs you've achieved financial freedom
affordable price
This is the flip side of the life experience argument. Consider a scenario where tipping is appreciated. Things like going out to eat, going to the salon, and valet parking. Typically, these examples are provided by people with more spendable income, especially when prices have increased recently. The more money you have, the more activities you are likely to participate in.
In fact, rising prices have made chips less likely at all. One could infer that the only people who still tip are those who can afford to do so.
A study by CreditCards.com found that higher-income earners tend to pay more at restaurants, and Kullberg said it could be argued that the wealthy tip more because they are simply more likely to be in those situations.
“Restaurant prices are now so high that people who are considered wealthy still spend money on going out to eat, getting their hair done, and other services that tend to require tipping. They are likely to pay for it,” Kullberg said.
Kulberg added that if you're having a hard time tipping someone because you don't have the money, you might want to reevaluate whether you should participate in the activity in the first place. “If you feel like you can't now afford to tip for a service you would have tipped in the past, it might be a sign to cut that expense out of your budget entirely.”
value
Ms Sturgeon said there was another factor that influenced how much to tip, and that was how much you thought the service was worth based on your personal values.
“My hunch is this. [tipping] In reality, it depends more on their values as a person than on their income or net worth,” Ms Sturgeon said. “If you're a generous person and value good service, you'll be more likely to tip more, or at least tip a larger percentage of the transaction.”
Tammy Trenta, founder and CEO of Family Financial, said tipping trends have a lot to do with how people think about money in general. “It comes down to whether a person has a scarcity mindset or an abundance mindset. If you're not stressed about money, leaving a tip won't make you feel financially stressed. there is no.”
This can also extend to culture. Trenta said your background can influence how you think about tipping. “In some countries, tipping is considered compulsory and generous; in other countries, tipping may be seen as unnecessary or even insulting.”
Values can be based on so many things: how you were raised, what your parents did for a living, who you were surrounded by, and so on. There is no clear way to define the values of the middle and upper classes, so there is no surefire way to determine who tips more.
GOBankingRates Details
This article originally appeared on GOBankingRates.com: The Rich vs. the Middle Class: Who Tips More?