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Minimum wages have gone up this year in several provinces, and more increases are scheduled for next year. A reader of this newsletter asks if a rising minimum wage should affect the amount of tip you leave in a bar or restaurant.

He wrote after visiting a restaurant where food prices had risen somewhat to offset the higher minimum wage. The restaurant is charging more and the waiters and waitresses are making more – should this be reflected in a lower tip?

Here are some thoughts on that. First, people who work in restaurants and bars and thus receive part of their income through tips are in many provinces subject to a lower minimum wage. In Ontario, for example, the minimum wage this year is $14 in general and $12.20 for “liquor servers.”

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ROYALTY-FREE -- THINKSTOCK Busy waiter and waitresses working at bar thinkstock

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Second, a reduced tip negates the benefits of a higher minimum wage on people who not earning extravagant paycheques. There’s no question that the cost of restaurant meals has gone up as a result of higher minimum wages, and that diners don’t have infinite capacity to keep paying more. But restaurant meals are a discretionary expense we have total control over. We can eat out less, choose less pricey restaurants or order in. There are lots of ways to adjust to higher costs for restaurant food.

One question remains: What’s a fair tip? Here are some sensible guidelines that start with 15 per cent for okay service and gradually increase to as much as 30 per cent for exceptional service.

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Rob’s personal finance reading list…

The $121,500 guestroom

A guy and his family buy a house with an extra bedroom so they can host family and friends and save them money on a hotel. Problem is, the extra bedroom costs them in all kinds of ways they never expected. A lesson on the risks of stretching yourself to spend a little more.

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How to get more from the Canada Child Benefit

The lower your adjusted family income, the more you’ll potentially receive through the tax-free CCB. How can you lower your adjusted family income? This blog post has some suggestions.

Drunk online shopping is apparently a problem

A survey found that Americans spent hundreds of dollars on average last year on purchases made while inebriated. The most fixable problem ever. Shop sober, everyone.

How to buy cheap movie tickets

It says here that theatre operator Cineplex is partnering with companies and retailers to offer bulk movie passes that can save you money on tickets and concessions.

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Today’s featured financial tool

Wondering what the penalty would be to break your mortgage before it comes up for renewal or matures? You’ll find links here to penalty calculators for a long list of mortgage lenders.

Ask Rob

The question: “Would you provide a layman’s explanation of the difference between hedged and unhedged ETFs with some examples?”

The answer: “Hedging means using financial instruments called derivatives to eliminate the distortions that currency fluctuations can have on returns from investments outside Canada. The S&P 500 stock index averaged a total return (share price changes plus dividends) of 9.7 per cent annually over the past 10 years in U.S. dollars. In Canadian dollars, the average annual return over that period was 12.7 per cent. Our dollar fell in value over the past decade, which means it helped augment returns from the stocks in the S&P 500 when priced in Canadian dollars. A rising dollar would have undercut the index’s returns when expressed in Canadian dollars. If you have a long-term investing horizon the difference between hedged and unhedged is less of an issue. The 20-year return for the S&P 500 in U.S and Canadian dollars is 6.9 per cent and 6.3 per cent, respectively.”

Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length.

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In case you missed these Globe and Mail personal finance stories

- Talking to kids about money: An age-appropriate guide

- Tips and traps when filing your tax return

- The dark side of dividends: Ballooning corporate debt (for Globe Unlimited subscribers)

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