Working from home and loving it.
I believe that indulging in the little things should only take place on special occasions. Many people make “treats” into things that should happen everyday. This actually can suck up a lot of extra money that you can be using for other things that may be important. I myself like a pizza now and then, but when it comes to eating one every week that can cost you expanding your belt and shrinking your wallet.
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We all do it. We spend little amounts regularly on things like lunch, Starbucks lattes, manicures, golf — maybe even for having a pizza delivered while you watch a weekly game on TV.
These seem like reasonable decisions about relatively small expenses. It’s hard to imagine how much they add up.
The harsh reality is that each dollar that’s spent today isn’t available for something else tomorrow. And these little purchases have a way of robbing us of the things we really want.
Why? Most of us haven’t stopped to consider whether that daily latte is truly precious to our well-being, or if it’s just a habit. If it’s precious, it’s worth doing — at least part of the time. But is it worth giving up the convertible Mustang that all those cups of coffee could otherwise have purchased?
These are actually the trade-offs we make when we don’t look at the long-term costs of niggling day-to-day expenses. The chart below makes the trade-offs clearer by providing a 10-year and 30-year cost.
Expense Today Over 10 years Over 30 years Pizza delivery $25 a week $18,661 $158,731 Coffee/donut $4 a day $22,389 $190,453 Smoking $35 a week $26,125 $222,223 Manicure $40 a week $29,857 $253,969 Lunch at work $10 a day* $37,322 $317,462 Golf $75 a week $55,983 $634,924 *work days only
The presumption is that if you hadn’t spent this money, you would have saved it and earned an average of 8% on your investments. The expense figures are estimates, of course. Things like golf green fees can vary widely. And your personal money pits are probably different — maybe you buy songs or videos each week, or regularly drop $10 to add games to your iPad.
That’s not really the point. You can probably relate to the notion of $20 or two inexplicably dropping out of your pocket for things you never really focused on buying. When you see how those little things add up, you might choose to pay more attention.
What’s your money pit? Have you ever tried to calculate the long-term cost? If you want to play, use the comments section to say what you buy regularly and what it costs. I’ll do the math to let you know the long-term cost — and even work it out for whatever time frame you want. 18 years? Game on.
This article is part of a series related to being Financially Fit