Common Sense Living

The $1.25 Million Lunch & Happy Hour

The next time you go for that Chipotle burrito, a McDonalds Big Mac meal, or reach for the bottle of Bud Light brew at happy hour with your friends, consider the tab to be a $1.25 million bill.  You read that right!  Your fast food and happy hour habits are costing you your retirement.  Sure, it doesn’t seem like that much, maybe $10.  What most don’t realize is how all those $10 amounts add up!

Average citizens in the United States spend $200 each month on fast food or beer with buddies.  For some, that figure may be much higher.  Here’s were the $200/month comes from……..

Suppose you have fast food twice a week for lunch, only buying for yourself.  At $10/visit, that is $20/week, and with 4 weeks in a month, that adds up to $80/mo spent on fast food.

On Fridays, you may visit with friends after work and buy a few rounds of beer at happy hour.  Suppose you hang with your buddies or coworkers twice a month.  $20 spent on  happy hour (including tip) would be conservative, and many will spend up to $30 or more if they buy shots of hard liquor, or rounds for their friends.  That’s another $60 each month.

Your good friend calls up with some problem and wants to talk.  Your brother has a birthday coming up.  Whatever it is, you will likely end up in a restaurant for various occasions a couple times a month.  Dinners average around $20 – $25.  The drinks are another $5.  With tip, tax, and other miscellaneous costs, dinner runs you about $35, or another $70/month.

Between these three items, you can see how most people will spend a minimum of $210/month dining out or drinking with friends.

If instead of spending that $200 on stuff that will find its way into treatment plants and landfill, what if you were to invest it?  If you invested $200/month for 40 years (480 months),  and you earn an average return of 10% annually (which is about the long term rate of return for the S&P 500 stock index), that $200/month will grow to $1.25 million!  See the chart below.

Growth of 200 dollars monthly

 

 

 

 

 

 

Even more interesting is that your overall contribution (the black line) was just less than $100,000.  Due to compound interest, the earnings on the money you invested ended at over 10-times what you actually contributed!  Because of compounding, most of the gain came in the final 10 years.

So the next time you reach for that drink with friends, or swing by that Wendy’s for lunch, picture the bill being $1.25 million.  Because that is what it is costing you!

 

 

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