Recently I posted on one of my social media pages that if a person spent $27.40 per day — or $191.80 per week — on unnecessary items, they would blow through $10,001 in a year. Think about that.
If you spend Friday night at the bar, drinking alcoholic beverages, and indulge a couple times during the week on other items, you will succeed in spending over $10,000 in the space of a year.
Now, some of you are undoubtedly questioning that claim so let me break it down into an easier-to-manage reality. The average cost for a beer at the bar these days sits at $4.75 and the average cost for a shot is $10 and up. The average cost if you order a cocktail such as a margarita is much higher, so expect to pay $15 or more per margarita because tequila, triple sec, lime juice and agave nectar don’t come cheap … to the customer.
According to bartenders who were surveyed by the Washington Post, people tend to drink three drinks in the first hour or two beers in the first hour or one and a half mixed drinks in the first hour. After that first hour, that customer is either done drinking or ready to dive in head first. That means in the first hour, the beer drinker has spent nearly $10 plus tip (because you always tip your server or the bartender), the shot drinker has spent $30 plus before including a tip (because you always tip your server or bartender), and the margarita drinker has spent just over $20 with a tip added to that amount (because you always tip your server or bartender).
Very few people who are at the bar — especially on a Friday or Saturday night — are going to leave after that first hour, so it’s easy to see how the amount spent is almost always going to increase. Add to that any rounds bought by that drinker and in no time, that bar tab will hit around $200 for the night.
That’s just for one night, and none of the fast food meals, gourmet coffees bought at fancy coffee shops, must-have sales at your favorite stores, and more have been calculated into that amount yet!
This is why having a budget and keeping to your budget is so important to your bottom line if you want a healthy financial picture.
I’m not saying a person should never celebrate or should never spoil themselves from time to time. What I am saying is that maybe this is the year to really tighten your belt and look at how much you may be spending on unnecessary expenditures, and how those expenditures are dragging you down.
Let’s say you live in the U.S. where the 401(k) annual contribution limit was $19,500 in 2021 and is set at $20,500 for 2022 ($26,000 in 2021 and $27,000 in 2022 for those age 50 or older). Likewise, the IRA contribution limit was $6,000 in 2021 and is 2022 ($7,000 if age 50 or older). Isn’t it a wiser move to cut back on the activities that allow money to slip through your fingers unnoticed and invest a large portion of that into your retirement savings for later on down the road when you’re really going to regret being so far in debt and having nothing to show for it?
How about saving up that ‘misplaced’ money for three to five years, and slapping down a nice chunk of downpayment change on an affordable house where the mortgage payments and upkeep cost are going to be less than the rent paid on a property that will never love you back?
Over the past two years while the pandemic raged, renters have been worried about evictions once the rent moratorium ended (it’s ending this month in New York). That wouldn’t be a problem if most of them had thought ahead and banked a lot of ‘misplaced’ money instead of surrendering it so willingly and so easily on things most of them don’t remember having bought in the first place.
Yes, live life for today. Enjoy living in the moment. But remember that there are a lot of moments coming up down the road that will need to be tended to and taken care of as well. The time to plan for those moments is now when you have money to toss about on unnecessary purchases.
14 January 2022