Are you left wondering what is an acceptable tip in today’s standard?

One recent morning, on my way home from a trip, I figured it best that I stop and get a coffee before beginning my drive down the highway. There was no one in the drive through line as I pulled up and ordered my medium black coffee. When I arrived at the window to pay, the woman already had my coffee and the card machine ready for payment. After handing her my card, she then held it out the window and informed me it would ask how much I would like to tip. My options were 18%, 20%, 25% or no tip. I felt awkward as she gazed down at my selection, so I chose 20%, pulled my card out, took my coffee and drove away. While driving down the road it occurred to me that I have tipped for more things this past year than I recall doing so previously.

While reading through Kiplinger, I came across an article pertaining to this exact topic. The fact of the matter is most individuals feel tipping is getting a little out of hand. It is uncomfortable to decline a tip when an individual is standing there waiting for your choice. According to Kiplinger, people increased both the amount they were willing to tip as well as the places that they would tip during COVID. Because of this practice, organizations have built into their payment an option to tip each time instead of leaving it up to the patron to decide in order to continue this trend.

The article provided the “standard amount” of how much to tip and to whom you should be tipping. First and foremost, many would agree that the best tip you can give someone is treating them well and should be expected in all encounters. If you appreciate someone’s service they provided, tipping is always a good option to show that appreciation. According to the article in Kiplinger, the first group of individuals to tip are the servers at a sit-down restaurant. The standard amount to tip them is 15-20%. The second group is food delivery drivers, 10-15% is the norm for this. When ordering take-out, they recommend using your discretion but include that many individuals tip 10%. Finally, tip jars at coffee shops, ice-cream shops, etc. is something you should not feel obligated to do, but it is always appreciated, especially since many of the individuals at these establishments are young. The article goes on to mention that you should never feel guilty nor like you must tip when the screen turns around with a suggested amount. Instead come up with your own guidelines of what is acceptable even if that is declining the tip.

Tips to Improve Your Financial Well-Being:

The concept of how to build wealth (spending less than we earn) is not too difficult to understand, however, at times it may be difficult to navigate putting that concept into action. Building wealth will look different for all of us as we have varying goals and timelines. Below are a few ways to improve your financial situation.

The first tip may be the most obvious and the most talked about but it is something few individuals sit down to do. Creating a budget is one of the most important steps you will take in reaching your financial goals. The hardest part is once we create a budget, we must stick to it. Living within our means can not only be difficult but confusing when we are faced with things such as “good debt,” and “bad debt.” Knowing how to decipher what falls into each category all while trying to continue to put food on the table and a roof over your head can be a daunting task. Reviewing your expenses on a regular basis can help you stay on track and ensure your budget is up to date with your current situation.

The second tip is to automate parts of your finance. Not only will this save you time, but it also forces you, in a sense, to work towards your financial goals if that money is going to be automatically accounted for. Having part of your paycheck deposited into a retirement account can also help you achieve that goal. Automating your bills can ensure you don’t accrue any late fees. Part of your budget should be creating an emergency fund. Once again, automating a set amount to be going into this fund is a good way to create a cash surplus. Ideally, a fully funded emergency fund should have three to six months of living expenses, but starting small for things such as unexpected car repairs, etc. is a great start!

You should set aside time each month to review your budget, as mentioned before, but also your overall financial situation. It is good to get into the routine of checking on your 401(k), monthly subscriptions, insurance accounts, etc. When reviewing your expenses, such as insurance, on a yearly basis it is good practice to check in and see if you are eligible for a lower rate. Likewise, when reviewing investment portfolio, it is important to make sure it is performing as it should be.

These few tips can help achieve the reason for all of this and that is to have fun with your finances. When we budget well and live within our means, we can begin to put money aside for recreation. If our money is designated for this purpose, we can enjoy that money without it causing detriment to our day-to-day living expenses.

A few estate planning priorities:

Our health can take an unfortunate turn and decline unexpectedly. At times, this health decline may lead to death. Poor planning can result in loss of control over your affairs while you are still alive, it is important to document and communicate your desires to your loved ones and those you trust. The list of items you should include on your estate planning list is extensive, however, there are a few that should be prioritized.

According to Kiplinger, the first item on your list should be to document your healthcare wants, this includes a few things. Assigning a healthcare proxy for to make medical decisions for you in the event you can not make them yourself is important. Forming a living will can instruct others what level of life saving treatment you want and what kind of long-term care you desire. Making arrangements with a funeral home and cemetery can save your loved ones a lot of trouble in the event of your death, ensure that these arrangements are documented well. Next, you should choose an executor of your estate. This individual will be in charge of dividing up and distributing your assets. Protect your assets by assigning a power of attorney over your finances. Additionally, you should assign one or more successor trustee. Finally, create a file of need-to-know information. This document will likely be extensive but is very important. It should include things like your legal documents of your power of attorneys, copies of your life insurance policy if applicable, banking information, where to find vehicle titles, deeds, usernames and passwords, etc. This is one of those documents that almost can’t have too much information. Planning all of this should be done regardless of your age or level of wealth.

Recent ‘IRS letter’ Scam to Watch Out For:

In previous years, avoiding a scam was easier as you could follow the principle that the IRS will never initiate communication through e-mail, text, or social media which are the most common platforms that scammers use to reach their victims. However, there have been recent reports of letters through the mail being sent to individuals that are a scam. These letters appear to be real as they are printed on IRS letterhead and will include contact information for you to reach out to. They will often be seeking sensitive information such as phone numbers, routing numbers, social security numbers, photo of driver’s license, etc. A claim will often be made that to receive your refund, you must send the information requested back to the sender.

A letter that is fraudulent will often include poor punctuation, awkward wording, and inconsistencies in deadline dates. A true letter from the IRS will always include a section about your rights as a taxpayer, part of your tax ID, and a notice number somewhere near the top or bottom of the page. If there is any question on the legitimacy of a letter you receive, you can always contact the IRS directly using the contact information on their website (www.irs.gov).

Your retirement plan should not be based solely on social security income:

Social Security is typically the beginning cornerstone of one’s retirement plans, however, it also tends to be a misunderstood topic. There is ample misinformation about Social Security that tends to scare individuals into make decisions without examining the truths. One of the most common myths about Social Security is that it will go “broke” and disappear. Although the number of retirees has increased, individuals and employers are still paying into the system. For Social Security to run out of money, the entirety of the workforce would need to stop paying in. An additional misconception is that you must be 65 to begin collecting. According to ssa.gov, you can begin collecting at the age of 62, it will just be a reduced amount. For some individuals it will make sense to begin collecting early, others may want to hold off until full retirement age to collect the full amount. Finally, many individuals think that Social Security will not be taxed if they keep working. Depending on your income level, your Social Security will be taxed which is one reason it makes sense for some to defer receiving the Social Security income until full retirement age. On the other hand, some individuals have been made to believe that you can not work at all if you plan to receive Social Security which is also not true.

Regardless of any myths or facts surrounding Social Security, one thing that we believe to be true is that it should not be what you rely on solely for carrying you through retirement. According to Kiplinger, 74% of Americans said that they are relying on Social Security benefits for their retirement. Although it will not go away, the Social Security benefits can change depending on who is in office, if it changes enough, it can alter your retirement plans. Utilizing IRAs, company pensions, etc. are a much better was to take control of your retirement and use the Social Security to bolster your income verses having it be your entire income.

Have you had a financial conversation with your aging parent?

The thought of our loved one’s aging can be difficult to face but is something that should not be ignored. According to the National Caregiving Alliance, over 11 million Americans are caring for an adult family member at home while also raising children. There are many uncomfortable topics to cover with our loved ones, but if we do not cover them, it can become burdensome. Per a Wells Fargo survey, almost half of Americans with aging parents have not had a financial discussion about the current, or future, financial plan. Here are a few tips on the things you should know about your aging loved one’s finances.

First and foremost, knowing the assets they have is crucial, any retirement/investment accounts, real estate , etc. should be well documented. Additionally, knowing what debts they carry such as a credit card debt or mortgages is equally as important. Any source of income should be discussed as well, whether it be from social security, pensions, or part-time work. Ensuring they have an up-to-date estate plan is also very important. According to Caring.com, over half of Americans 55 years of age and older do not have estate planning documents. The next step would be to plan for potential healthcare costs. Unfortunately, many individuals do not plan for healthcare associated costs when in reality, they can add up to thousands of dollars, especially if considering a long-term care home. Finally, be vigilante about potential financial scams and abuse directed towards the elderly. According to the FBI, in 2021, individuals 60 years of age and older were victim of over 1.7 billion dollars of fraud. Although the topic is not pleasant or easy to talk about, having open and honest conversation with your aging loved ones can save a lot of hardship down the road.

At what age should you stop financially supporting your children?

According to a survey from savings.com, 45% of parents are currently supporting at least one adult child. The monthly price tag for this works out to be approximately $1,400 a month. Some of the main contributors to this dollar amount are things like car payments/insurance, cell phone bills, subscription services (cable/internet, Netflix, etc.), credit card bills, groceries, and a large one being housing cost (mortgage/rent). Many individuals will support their children through their younger years and lose sight of the many things they are paying for or adopt the mentality that paying the way for their children will put them ahead in life.

Supporting your children for a long time truly is a double-edged sword. On one side, it is consuming money that you could be investing or using for your own leisure, and on the other side, it is preventing the children from learning fundamental money management skills. One issue often seen is that there comes a time where the parents either do not want to or cannot support the children anymore. When this occurs, the children are cut off cold turkey and do not know where to begin on making ends meet. Although there is no set age when you should have your child fully supporting themselves, a general rule of thumb would be that as soon as they start making money, you should be forming financial goals with them and having them help out. One of the main goals should be to gain financial independence, and working towards that will allow a smooth transition from being supported to being independent.

Is your credit score hurting or helping you?

Credit scores are something we here all about. The concept is frequently advertised on TV and brought up whenever looking to purchase larger items or open a credit card. What exactly is a credit score and why is it important? Put simply, a credit score is a number that provides information on a consumer’s creditworthiness. According to Kiplinger, this number will typically range between 300 and 850. Most lenders use the FICO scores, and some may additionally take into consideration the VantageScore. If an individual is borrowing money or opening a credit card, a good credit score will allow for significantly better rates which leads to saving money in the long term.

For the FICO score, above 670 is good, above 740 is very good and above 800 is excellent. To achieve these numbers and continue the pursuit of bettering your score, you can start by utilizing these four simple tips. The first would be to pay your bills on time and if possible, in their entirety. Although this may seem obvious, plenty of people forget the due date or struggle to pay the bill in full. The second tip is to keep your credit usage low, ideally, under 30%. Increasing the credit limit on a card may initially impact your score negatively, but will quickly recover if you use that increase to keep your usage lower. Third, do not close old credit card accounts out. If you find yourself “stuck” with an annual fee, contact the company and see if they will roll the account into one similar that does not have a fee. Even if your card has no activity, that will be significantly better than closing it out. Finally, periodically check your credit score, many apps, such as credit karma, will inform you of what your score is and on ways to improve or maintain your score.

Will you need to report your income from third party apps like Venmo and Cash App? :

Initially, it was anticipated that for tax year 2022, any income over $600 would need to be reported on the IRS Form 1099-K for payments made to you through apps such as Venmo, PayPal, Cash App, Square, etc. According to Kiplinger, just prior to year-end, the IRS delayed the “$600 rule” back to tax year 2023. What does this mean for you? The threshold for reported income of these apps will remain at $20,000. If you received income over this dollar amount, you are required to report it.

The $600 threshold will very likely take place in 2023 so it is crucial to be informed about the Form 1099-K and plan your taxes accordingly. It is important to differentiate between what does and does not qualify. The form 1099-K for those over the threshold is sent to you and the IRS so it is important to claim the qualifying taxable income as it will likely be flagged if you do not.