Money Management

Tipping is expected with many services. Learn a few easy ways to participate in tipping culture without needing to overspend. 

Tipping has been common in the United States for a long time. But in the last few years, expectations have risen. More and more businesses are asking for tips. Some consumers have complained about being asked for tips in grocery stores, airport shops, and even places where they used self-checkout.

You might have also noticed businesses asking for larger tips. Some businesses have tip screens that start at 20% or 25% and go up from there. If you want to tip a smaller amount, you need to manually enter it.

Nobody wants to spend a huge chunk of their paycheck on tips. But tipping culture isn’t going away. Here’s how you can find the balance between tipping a reasonable amount without hurting your personal finances.

Plan for how much a tip will add to your bill

For situations where a tip is expected, estimate how much it will cost beforehand. Then, you can figure out the total cost of that service and see if it works for you.

Let’s say you’re planning a date night. You find a restaurant, and you see that dinner for you and your spouse will likely cost about $100. If sales tax is 8% where you live, that will be another $8. The standard guideline for tipping at a restaurant is 15% to 20% of the bill, before tax, which would be $15 to $20 in this example. In total, that dinner will likely cost $123 to $128.

If you were planning on spending $100 at most, then you’re going to get an unwelcome surprise. When you instead plan for the total cost, there are no surprises. You can decide if that amount works for you, and if not, you can pick a more affordable option.

Carry smaller bills to use for tips

I still remember an awkward moment during a vacation, when a bellhop helped me with my luggage. It wasn’t much work, and $5 would have been an appropriate tip. I looked in my wallet — I didn’t have anything smaller than $20. It was good news for him, at least.

That’s why I always make sure to have smaller bills in my wallet. More businesses than ever are accepting tips with credit cards, but that’s still not always an option. Some places only have tip jars, and there are also service professionals who only take tips in cash, including bellhops, valets, and housekeeping.

There are a few ways to get smaller bills. What I do is ask the cashier at the grocery store to break a larger bill. This is a convenient option, since you can do it any time you’re grocery shopping. Some ATMs give you the option of selecting the denominations you want. You can also visit one of your bank’s branches and ask for specific bills, which is one of the benefits of in-person banking.

Don’t feel obligated to tip more than you want

Tipping is your decision, not the business’s. Remember that:

You don’t need to leave a tip just because the business is asking for one. If it’s not a situation where you’d normally tip, there’s no need to do it because there’s now a tip screen at checkout.The amount you tip is up to you. The reason tip screens suggest high tip amounts is that many people will pick whatever’s available. If you were planning to tip less, stick to your plan.You don’t need to tip if there’s a service charge. This is a pet peeve of mine. Some businesses tack on a service charge and still ask for a tip. My rule is that I’ll either pay a tip or a service charge, but I’m definitely not paying both.

When in doubt, look it up

It’s good to have an idea of the situations when you should tip. But it can be hard to keep track of everything, and each culture is different, too. For example, in many Asian countries, tipping isn’t expected and can even be considered impolite.

Whenever you’re not sure if you should tip, or how much, search online. You can find tipping guidelines for just about any situation. Just make sure to find out in advance. It’s a little awkward to do this while you’re paying for a service. Use the info you find, plus what works with your financial situation, to decide on a fair tip that you can afford.

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Not every investment works out well. Read on to see why one mistake could cause you to get stuck with a losing investment. 

Ask anyone who’s been investing money for years, and they’ll probably tell you that their track record isn’t perfect. Rather, many of us inevitably wind up with a bum investment in our brokerage accounts or IRAs here and there for different reasons.

A given company could easily start strong — only to fall victim to poor management or market circumstances through the years, leading to a lower share price. And you shouldn’t necessarily beat yourself up every time an investment of yours doesn’t work out well.

On the other hand, you may wind up with a poor investment in your portfolio due to not taking the time to vet it properly. And that’s a more avoidable scenario.

Always do your research

In a recent Schwab survey, 16% said that careful research contributed to their most successful investment. On the other hand, for 20% of respondents, a lack of research is what led to their least successful investment.

What this tells us is that it’s important to take the time to research stocks before adding them to your portfolio — and to continue researching them once they’re in your portfolio. You can go about this in a few different ways.

First of all, publicly traded companies are required to disclose certain financial information at regular intervals. So it’s a good idea to pay attention to cash flow and debt. If a given company seems to be burning through cash at a rapid clip and consistently increasing its debt load, it’s a sign it may not be on the best path.

Another factor to look at? A given company’s management team. What experience does that leadership team bring to the table? Has a volatile personality joined the mix with the potential to drag the company down? These are important questions to ask yourself.

Another good way to vet a company is to listen to its earnings calls every quarter — or read a transcript after the fact. You can often find this information in the investor relations section of a company’s website.

How to make the best of a bum investment

If a lack of research has caused you to get stuck with a less-than-stellar investment, the good news is that you now know how to avoid a repeat. But also, you may be able to use a poorly performing stock to your advantage.

If you think a given stock of yours that’s lost value has no chance of recovering, you can sell it at a loss and use that loss to offset capital gains in your portfolio. So let’s say you stand to lose $4,000 on a stock, but also recently made $4,000 by selling other assets in your portfolio at a profit. That loss would offset that gain, wiping out your tax liability.

You should also know that if you don’t have gains to offset, you can use up to $3,000 of investment losses to cancel out that much ordinary income. So if you have at least one underforming investment in your portfolio, you may want to sit down with a tax professional and see if selling it makes sense.

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Admission prices for events and concerts are soaring. Check out a few winning gift ideas that won’t break the bank. 

I’m all for experiences — I really am. Several years ago, I took my kids on a three-month road trip, and we filled out a couple of photo albums of us hiking, swimming, riding horses, seeing a rocket launch, and riding a mountain roller coaster.

In an effort to shun consumerism and spend more time with the people we care about, many Americans have been gifting experiences to each other for Christmas. Mostly, this is a good thing, but there’s a big problem with experiences these days: They’re expensive.

Admission prices for movies, theaters, and concerts rose 10.9% over the past year, and sporting event prices spiked 25.1%, according to the Bureau of Labor Statistics. And even less-expensive experiences — including going out to eat — are more expensive, too. The “food away from home” cost increased 5.4% over the past year.

I’ve been cutting back on experiences for a while because they haven’t felt worth the cost. If you’re in the same boat, you can still find thoughtful gifts that won’t derail your personal finances this Christmas.

A few simple gift ideas that won’t break the bank

I’m not going to score originality points here, but if you’re looking for a way to avoid higher prices for experiences, here are a few suggestions, each of which might cost you $25 or less.

1. Gift cards

Whether you love them or hate them, gift cards are a great way to stay within your Christmas budget because the price is set. You don’t have to wait to see if they go on sale or worry about overpaying for them. You can even score discounts on gift cards at Costco.

2. Cheap toys

If you’re buying for young kids, you don’t have to go all out. When my kids were little, they received some dollar store toys from family members that they played with for years. Years! Also, toys can be a great conduit for creating experiences. A few months ago, my kids took old Amazon boxes and glued them together. They made little forts out of them, and we set them up in the park near our house and had an hour-long Nerf war.

3. Books

If you’re hooked on giving experiences but don’t want to shell out the money this year, I’d recommend giving a book instead. Books are a fantastic way to give someone a thoughtful gift, and I’d argue that a good novel beats a mediocre concert any day.

4. Food

Taking someone out for a meal might be pricey these days, but there are plenty of other food gifts that you can give that are well under $25. Specialty doughnuts, chocolate, and coffee can fit into nearly any budget.

5. Photo book

You can score sentimental points and stay within your budget with this one. There are many companies with online tools to create and order photo books, including Google, Walgreens, Shutterfly, and Walmart. With a little time, a few photos, and less than $20, you can create a memorable softcover photo book.

Plan ahead to stay within your budget

I’ll let you in on a little secret: One of the best ways to stay within your Christmas shopping budget is to…have one. You’ll be far more likely to overspend if you only have a loose idea of your budget or how much you’ve already spent.

There are many great budgeting apps to help you keep track of your expenses, most of which connect to your bank account so you stay up to date as you shop. And if you need extra help tracking down deals, I’ve recently been trying out price comparison apps to help me find the best deals. You can even set deal alerts on some of them.

I’m still a big fan of experiences, but with prices rising for so many of them, now seems like a good time to scale back. You’ll probably miss out on a concert or two, but you might also gain an epic Nerf battle.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.

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It’s time to give your brokerage account some of your attention. Read on to see what items you should be focusing on. 

Your brokerage account is not something you should be checking every day. Peek in too often, and you may find yourself tempted to react to stock market volatility. That could cause you to make rash decisions that result in needless losses.

Instead, it’s a good idea to review your brokerage account every few months. And it’s especially important to take a closer look toward the end of any given year. As such, in the coming weeks, you should make a point to review your portfolio — and take these specific actions.

1. Compare your portfolio’s return to the broad market

As of this writing, the stock market, as measured by the S&P 500 index, is up about 12% year over year. Now, that doesn’t necessarily mean that you’re going to see a 12% gain in your portfolio. But it does pay to compare the performance of your investments to that of the broad market. If there’s a huge discrepancy, you may want to take a deep dive to see why your personal mix hasn’t been doing as well.

To be clear, you can probably leave your portfolio intact if you’re otherwise happy with it and are seeing a 10% or 11% return over the past year. But if you’re only seeing a 2% return or, worse yet, a negative return, then it’s time to see which stocks of yours are the worst performers and why. You may also want to replace some poorly performing assets with shares of an S&P 500 ETF if you don’t expect those investments to start gaining value.

2. Make sure your investments are still diversified

Over time, stocks can gain and lose value. So what might happen is that you start off with a diverse investment mix, only to have things get skewed due to certain stocks of yours gaining a lot of value while others drop in value.

Now’s a good time to make sure your portfolio is as balanced and diversified as you want it to be. Because the broad market is up right now, it may be a good time to sell off some assets for a more even mix. So if you find, for example, that your portfolio suddenly comprises 45% tech stocks, you may want to sell some shares now and replace them with shares from other industries.

3. See if it makes sense to dump losing investments before the end of the year

It may be that your brokerage account contains a few stocks that have just consistently lost value since you acquired them. Not every stock can be a winner, and there’s no need to beat yourself up if you make a bad call here and there.

But one thing you should know is that selling off a losing stock before the end of the year could benefit you from a tax perspective. So if you have an asset that’s unlikely to recover, the time to unload it is soon — before 2023 wraps up.

Let’s say you decide to sell a stock this December at a $2,000 loss. If you have a $2,000 gain in your portfolio, that loss will cancel out your gain, getting you out of paying taxes on it. And if you don’t have investment gains to offset, you can use a loss to offset up to $3,000 in ordinary income each year.

As you’re busy counting down to 2024 and finalizing your holiday plans, take the time to give your brokerage account a close look. The moves you make in the coming weeks could really set you up for a more financially successful year ahead.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Not sure how to invest your savings? Read on for a strategy that might work really well. 

Maybe you’re saving $200 a month for retirement in your 401(k). Or maybe money is tight and your monthly contributions are limited to $50 right now. No matter what your monthly contributions look like, give yourself a pat on the back for putting money into long-term savings. That’s not an easy thing to do. But you should also know that the money in your 401(k) shouldn’t sit in cash. Rather, you should invest that money so it can grow into a larger sum over time.

But how to invest your money is a different story. And if you feel fairly clueless about that, you’re not alone. A recent Schwab survey found that 73% of savers would like personalized investment advice for their 401(k) plans. Gen Zers are especially likely to want personalized investment advice, with 83% saying they’d like customized tips.

The good news is that if you want personalized advice for your 401(k), there’s a way to get it — hire a financial advisor. But if you’re not ready to take that step, there’s another investment option you may want to fall back on.

Look to index funds

When you have an IRA for retirement savings purposes, you can generally put your money into individual stocks. But 401(k)s usually don’t let you do that. Rather, with a 401(k), you’re typically limited to a number of different funds.

One type of fund you’ll commonly see in a 401(k) is a target date fund. In fact, in many employer plans, target date funds are the default investment option — so if you don’t choose investments for your money, you’ll land in a target date fund.

Target date funds work by adjusting your investment mix based on where you are in terms of a specific target, or milestone. In the case of retirement, a target date fund would have you investing more aggressively early on in your savings window and then investing less aggressively as retirement nears. Target date funds are a good “set it and forget it” investment. And that may be what you want. The problem is that their fees can be enormous.

Similarly, your 401(k) probably has several actively managed mutual funds for you to choose from. But those are also notorious for imposing high fees. That’s why a better bet for you may be to put your money into index funds.

Index funds are passively managed, and their goal is to simply match the performance of existing market indexes. So if you put money into an S&P 500 index, you’re effectively investing in the 500 largest publicly traded companies.

The reason index funds are a good bet for 401(k) savers is that they offer built-in diversification without expensive fees — fees that can eat away at returns over time. And they’re also the type of investment you don’t really have to think about. After all, the broad market is going to do what it’s going to do — there’s not much you can do about that.

But over time, the broad market has a history of rewarding investors who stick with it. So if you put your money into index funds, chances are, you’ll enjoy a similar reward.

It still pays to get customized advice

There’s nothing wrong with wanting personalized advice for your 401(k). And the best way to get that is to find a financial advisor and allow them to help you devise a strategy that’s conducive to meeting your goals. But in the absence of that, you may want to fall back on index funds in your 401(k) until you’re ready to sit down with a professional advisor, or until you find the right person for the job.

Our best stock brokers

We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool recommends Charles Schwab and recommends the following options: short December 2023 $52.50 puts on Charles Schwab. The Motley Fool has a disclosure policy.

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Buying gift cards at Costco could save you $10 to $30 per bundle. Learn which new gift card Costco has started offering to its members. 

Buying gift cards at Costco is one of the best little-known perks of being a member. Often, Costco will add 10% to 30% of value when you buy its gift cards in a bundle. That means, for a gift card with a $100 value, you would only pay $70 to $90. That’s not a bad deal, especially if Costco sells a gift card to a retailer you like. The money you save could pad your savings account balance.

In the past, Costco’s best deals have often been restaurants, spas, and airfare. But recently, Costco added one of the most exciting gift cards I’ve seen in awhile. If you like to travel, or you’ll be staying in a short-term rental for the holidays, you’ll be excited to know that Costco is now selling an Airbnb gift card. If wanderlust gets your heart pumping, here are the details.

The gift card that can pay for your experiences

The Airbnb E-Gift card at Costco has a $500 value and is priced at $449.99. That’s a 10% savings — all for buying this online at costco.com.

The card will be delivered to your email, after which you can use it on multiple bookings (in other words, you don’t have to use it all at once). The gift card doesn’t expire, so you could hold on to it indefinitely. The only limitation is that you can’t buy more than one per membership.

What could $500 buy you on Airbnb? How about five nights in this Hobbit hole in Bainbridge Island, Washington. Or five nights in this gorgeous Mexican bungalow that comes with a dive pool. Or 18 nights in these dome houses in Sacred Valley, Peru. In all of these options, the extra $50 is more than enough to cover Airbnb’s service fee, eliminating a pesky charge that catches many starry-eyed travelers off guard at checkout.

If you’re planning a trip to Central America, you could combine this deal with a Southwest Airlines gift card from Costco. These gift cards are also worth $500 but sell for $449.99, offering a 10% discount. Better yet, you can buy up to five gift cards per membership, which could add up to $250 in savings.

Pro tip: If you’re planning to travel on Southwest in the future, keep an eye out for Costco’s frequent deals on Southwest eGift cards. Often, the warehouse will sell you a $500 gift card not for $449.99, but for $429.99. That gives you a savings of 14% off your airfare.

Always check Costco’s gift card racks

You never know what deals you’ll find in-store on Costco’s gift card racks. At my local Costco, I find these racks at the front of the store, and they’re often stocked with cards for local businesses and restaurants. In my experience, the in-store gift cards offer the highest savings, many going as high as 30%. For example, in the Pacific Northwest, we have a paint store called Miller. At my Costco, I’ve seen $100 gift cards for Miller Paint selling for $69.99.

All in all, if you’re traveling for the holidays, this Airbnb gift card is a great deal for your budget and personal finances. It’s just one of several reasons why a Costco membership could really pay off for your holiday spending.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.

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