Tipflation: How tipping culture is changing in America

America has long been a tipping culture. Most people agree that the decision whether or not to tip depends largely on the situation. It's common practice to tip your server at a restaurant, for example, while how much to tip for takeout is up for debate. 

One thing is clear: Our tip culture is changing. Nearly 3/4 of U.S. adults believe they're expected to tip more often than five years ago, according to the Pew Research Center. This phenomenon, known as "tipflation," is the gradual increase in expected tipping percentages across various service industries. 

According to another survey, 66% of Americans feel pressured to tip more due to these heightened expectations. For families trying to stick to a budget, this can create additional financial pressure.

What is tipflation?

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Tipflation refers to the increasing pressure to tip higher percentages for services where tipping is customary. This trend has been exacerbated in part by digital payment systems in more establishments that suggest higher default tips, such as 20%, 25%, or even more. 

Gratuity requests are increasing for less traditional services as well. Credit platform Square reports that 75% of remote food and beverage purchases prompt for tips now, from touchscreens at drive-thru windows to self-serve vending machines.

How does tipflation impact families?

While tipping is a way to show appreciation, the modern twist has left many feeling obligated to contribute more than they might comfortably be able to afford. 

Prices for just about everything have gone up due to inflation, which started spiking in 2021. Even though the data shows inflation is finally slowing, that doesn't mean prices will follow suit. 

Adding elevated tipping expectations to the mix can strain anybody's budget. For instance, a $50 dinner with a 15% tip would be $57.50, but with a 25% tip, it jumps to $62.50. Over time, this difference adds up.

It's not just about calculating the meal cost but also navigating these social expectations. Putting customers on the spot to tip in non-traditional situations can feel awkward for both parties - and potentially lead to spending more than you intended.

Navigating tipflation: Practical tips

1. Set a tip standard: Decide on a consistent tipping percentage and practice that fits your budget. Choose which business types you will generally tip and which you won't. Share it with your kids and family for consistency. For example, you might pay a percentage at restaurants but maybe a fixed amount for other services. 

2. Share your family's financial values openly: Have conversations with your family about financial priorities and how to balance generosity with financial responsibility. This transparency helps kids understand real-world economics and the value of money. You can make it a part of your overall family values. 

3. Use a family money app: Seeing where your dollars go every day can help you spend less and save more. With a debit card of their own, kids and teens learn to spend wisely, keep an eye on balances, and track their spending.  

4. Beware of convenience fees: Between Amazon, Uber, and all the food delivery apps, you can get just about anything delivered. But convenience often comes with a premium price. Many popular retailers charge more per item through third-party delivery services. So your $10 lunch combo might be $15 if you're ordering online. Add on the typical service charge, delivery fee, taxes, and tip, and suddenly, your bill may be double or even triple what you'd normally spend.  

How Greenlight can help

Greenlight's family money and safety app provides an all-in-one place where parents can educate kids about money management, including understanding inflation and responsible spending. You can set and track financial goals together, making it easier to get ahead of outside factors like inflation and tipflation. 

With Greenlight, parents can also assign chores, set savings goals, and even control spending with parental oversight. 

Managing the evolving economy together

Tipflation is an emerging trend that can affect how families budget and spend their money. By setting clear guidelines, discussing financial priorities openly, and leveraging helpful tools like Greenlight, parents can help keep family spending under control and set kids up for financial success.

This blog post is provided "as is" and should not be relied upon as a substitute for professional advice. Some content in this post may have been created using artificial intelligence; however, every blog post is reviewed by at least two human editors.