Our son is working at a software development company this summer. It’s his first professional job and he has one more year of college before he is finished with his computer science degree.
We took him out for dinner last night and asked him what he was doing for lunch each day. He said most people in his group go out for lunch every day, but he was going to limit it to a sensible 2x a week. He said he simply brought a PBJ sandwich in a bag lunch today.
This got me thinking about how much a Starbucks ($3) and lunch out ($8) adds up to over time? That is, how many years longer do you need to work in order to afford these everyday pleasures?
I assumed $11/day and 220 work days a year across a 28 year career. I pegged the opportunity cost being a 7% rate of return since it is a long time horizon. These inputs resulted in a cost of $2,420 a year, which, if invested well, would appreciate to an amazing $195,000 by the time a college grad turned 50 years old.
Since the average college educated person in the US earns an average of $62,400 a year, the opportunity cost of coffee and lunch out each day represent a full THREE YEARS of extra work to enjoy the same retirement nest egg. On top of that, if you add in things like a big morning muffin, a premium parking spot, or frequent cocktails after work each day it could add up to a full decade of extra work.
I have to confess that while I’m not a coffee person, I ate out for lunch almost every day for my entire career. I’m sure I had NO idea of how much of a big impact it was having on our savings, although having relaxed time with coworkers can also be valuable.
How frugal were / are you with everyday costs like these?
Image Credit: Pixabay