A 1.2 Million Dollar Lunch

by mike on March 3, 2011

I often have clients tell me that they don’t have enough money to start saving for retirement. I know most of you know you should and would love to start saving, but just don’t know where to get the money from. But, I would argue that if you could find just $5 per working day you could make a huge impact on your retirement savings.
You might be thinking “that’s great, but we don’t have $5 per day to spare.” I would challenge you to really take a look at that. For everyone it’s something different. The way our society is set up right now it is easy to waste a few dollars here and a few dollars there. Whether it’s grabbing a soft drink or candy bar when you stop to get gas or grabbing a coffee at Starbucks, it all adds up. One of the biggest culprits is going out to lunch every day you are at work. It is easy to spend between six and ten dollars eating out for lunch. If you brought your lunch to work with you from home it would probably cost only one to two dollars. So, that’s easily more than $5 per day right there.
It may be something different for you, but most of us have our things we like to waste money on. If you don’t think you ever waste money, I would challenge you to write down everything you spend money on for one week. I have a feeling you will be able to find some fluff in there that could be trimmed if saving for retirement is a priority.
Let’s see how much eating out for lunch every work day could cost you. If you took that $5 saved every work day and invested it in a good, growth stock mutual fund, compound interest will work in your favor. Depending on your age, it may work for you in a HUGE way. If you invested the $5 a day (roughly $110 per month) starting at age 25, it would grow into roughly $1,294,000 by age 65! Those are some expensive lunches! Even if you started at age 35, it would grow into $384,000 by age 65! Starting at age 45, $108,800 by age 65.
Just think about those numbers the next time you are too lazy to make your own lunch. Any time you spend money on one thing, you lose the opportunity to use it for something else (the fancy word for this is opportunity cost). I’m not saying you should never have fun with money, but you must have your priorities straight. I know eating at a restaurant is much better than eating lunch meat sandwiches every day, but I don’t think it is 1.2 million dollars good!
I would waste money on restaurant lunches everyday if I had no self-control, what’s your “small splurge”?

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