Little Expenses Can Add Up

Here's a piece from Yahoo that says little expenses can add up. They took six expenses that many people face and set a value of them (or foregoing them, specifically) if the person had instead saved the money and invested it at 8%. The results:

• Pizza delivery: $25 a week, $18,661 over 10 years, $158,731 over 30 years.
• Coffee/donut: $4 a day, $22,389 over 10 years, $190,453 over 30 years.
• Smoking:    $35 a week, $26,125 over 10 years, $222,223 over 30 years.
• Manicure: $40 a week, $29,857 over 10 years, $253,969 over 30 years.
• Lunch at work: $10 a day, $37,322 over 10 years, $317,462 over 30 years.
• Golf: $75 a week, $55,983 over 10 years, $634,924 over 30 years.

A few thoughts on these:

• Yes, little expenses can add up over time. Many people would say to forget about little expenses and focus only on big expenses -- if you handle the large ones, the others will take care of themselves. I say you need to address both big and small expenses because it all adds up.


• You have to be able to enjoy your life -- otherwise, what's the use of working? So some expenses (of course) are "fine." In fact, all expenses are ok for you as long as that's what you want to spend. After all, it's your money. But you have to be willing to live with the consequences too, which may be something you can't handle. So you need to balance out spending and saving to reach an equilibrium that fits you.


• We get pizza once a month (every two weeks at most) or so and it's not $25. Two large pizzas (that we pick up) from Papa John's are $15.


• I don't drink coffee and don't buy donuts that often (certainly not every day -- I'd be as big as a house!) I like my caffeine cold (Diet Pepsi) and we get these free at work.


• Costs from smoking here are simply the costs of the cigarettes. Add in healthcare and other associated costs and the price tag goes way up. I have never smoked despite the fact that my parents have for all my life. My dad has quit, but my mom still smokes. Ugh.


• Does biting your nails count as a manicure? ;-)


• Looks like taking lunch to work can save a bundle, huh? That's why I've been doing it for years (not to mention the fact that I often don't have time to go out for a meal.)


• I never took up golf. Financially, I'm glad I skipped it, but nice golf courses are some of the most beautiful spots you'll ever see.

While this list is easy for me, I have my own set of little expenses I have to watch: Snapple iced teas, extra trinkets for the kids, tools, and sports clothing are some of the areas where I can get out of balance if I don't watch it.

How about you? Do you have any small-spending temptations that you regularly fight?

Comments

[Jim]

$25 does seems like a lot for pizza delivery.

[The Money Drain]

Jewelry. Not expensive jewelry like diamonds, but hand-made jewelery from stones and copper are something I have to watch myself on. Course I try to go through my jewelry every so often and sell pieces that I no longer wear.

I've also been cooking from scratch a lot lately so my grocery bill is a lot smaller and cheaper, but then I'll get into the mindset of "Well I have extra money to pick up a few extras now", which sorta defeats the purpose :)

[Jonathan]

I am fortunate to have basically worked all such small expenses out of my life. At least as regular, recurring expenses. It helps that my wife cooks delicious dinners that provide leftovers (for lunches) and my office provides a fridge full of drinks.

[Jon]

I always like stories like this. Makes me realize how much higher the cost of living must be in other places than where I live. I swear they must only take surveys in New York City.

[No Debt MBA]

We eat out about two or three times a month. But that's pretty much it from the list. It's a balance that works for us.

[mysticaltyger]

I think they deliberately exaggerate some of these costs to make their point and I live in high cost California...although I personally have never had a pizza delivered. I guess I'm weird.

However, one thing they didn't do was show how much you'd have if you'd invested this money in a plain vanilla mutual fund like Vanguard Balanced Index (15 year annualized retuns of 6.76%).

At 6.75%, $100 a month invested instead of spent on pizza would be over 116K after 30 years. $200 a month invested instead of being spent on eating lunches out of the office would be over 233K after 30 years at 6.75%

[www.nosweatfinance.com]

It's not lunch at work that gets me, we always have leftovers. It's breakfast that gets me. I rush out the door and don't have time to make a full meal so I end up stopping at a breakfast stop 2 out of 5 days. The cost is usually $5 each time so that's $10/week. Over the course of a year, $520! That's a pretty big amount when you consider that I could make a similar breakfast, if not healthier, for about $3 less. I never buy coffee, we have a Keurig so there's always 30 seconds to brew a cup of coffee. Average cost of a K-Cup, $0.42/cup. Not shabby at all. Smoking is the one thing I can't stand. Spending all that money to give yourself cancer, stink like a bum, and offend everyone around you. Sounds like a lose-lose situation to me.

[tom]

I completely agree, what's the point in working if you can't enjoy yourself with little things.

I don't like these articles. I understand the point, but you can say this about everything. Let's try this out:

~Drinking anything but water - $10 a week, $1M over a lifetime
~Buying spices for food - $200 a year, $50,000 over a lifetime
~Eating anything but the very essentials - $20 a week, $20M over a lifetime
~Mowing your lawn - $10 a week in gas, $2M over a lifetime
~Having kids - $1M a year, $1 billion over a lifetime!!!

Obviously these are gross exaggerations, but you get the point. As FMF said, you have to balance. You can't completely cut out the little expenses and joys that make it worth it to work hard everyday!

[Keith]

Small spending temptations that I have to decide on:
Dairy Queen Blizzard
Coffee at the local shop
An App from the App Store
An Mp3 file from Amazon
Some of these I buy with my blow money or it comes out of the miscellaneous catagory. I would not say that I fight these. They are allowable within reasonable limits. I guess one has to live sometimes.

[jbhk]

tom, I'm with you.

"~Having kids - $1M a year, $1 billion over a lifetime!!!"

We may able to spend all what we want by just save one kid!!

[Brent]

FMF - do you have Jet's Pizza in Grand Rapids yet? If so, try it out and bet you will switch! We eat it probably once a quarter and look forward to it every time.

[Claire]

Hmm, for us, two large pizzas at Papa John's are $20. That includes using their coupon. So $25 sounds pretty close to me for delivery.

[AdamIPST]

I agree with the need for balance.

When someone is in debt and looking to get out of debt, these kinds of articles are useful.

But at the point I'm at, I'm meeting all of my savings goals, so I have no problem going out to eat for lunch or buying coffee every few days.

Saving all that money would make my savings grow faster, but I don't see the point of sitting on a huge pile of money (as opposed to a moderate pile of money) in 30 years, when I could have had some more fun along the way.

[FMF]

Brent --

Yes, we do have Jet's. The kids and I LOVE it, but my wife thinks it's greasy. Hence we don't go there often. :(

[JP]

FMF -- Russo's off of 44th is not bad for pizza, it's a small family shop. Beats the chain pizzerias. Plus there's Delski's next door which has (had?) bacon at $1.99/lb, cheapest I've seen anywhere.

For the article, it's a balancing act. Depends on how much you value the small expenses in regards to your quality of life.

[FMF]

JP --

We also get one from a place (can't remember the name) that does 24-inch pizzas -- very good. Located at 52nd and Eastern I believe. Good for when we have company.

[JP]

Palermo's. I heard of them when I was living in GR - there's one on Gezon & Clyde Park - but never tried it. Heard it was good though.

[brooklyn money]

FMF -- I buy a ton of workout clothes for running since I run outside in all 4 season. I get "new with tags" items for 1/4 of the cost on eBay.

[Anastasia]

Yes- technological gizmos, new cellular phones - options to "exchange up" for a better model. At the moment I am using an ancient Nokia just to see how it feels - my trusty Nokia from 2005 finally gave out - it could more or less satellite around the earth - I really loved it, but six years is a pretty great track record for a cell phone. So this ancient one (no camera, needs charging every day... ) is kind of a pain, but we'll see how long it takes me to get fed up and get a new one. This month I am eligible for a freebie upgrade, but honestly wonder if it would last anywhere near the ancient and previous Nokias. And yes, I also don't buy coffee at work (VERY expensive! - I make my own and bring it in), and bring my lunch almost always. No big deal once you get the hang of it. Sure nice having pocket change most of the time, too!

[Strick]

Little expenses only add up if they are reoccuring. And being reoccuring makes them the norm, even habit, which makes the pleasure recieved from them less and less anyway. At that point these aren't expenses that help you "enjoy your life".

That 15th trip to mcdonalds in a month is absolutely disgusting, but that first Mcdonald fry that I eat after its been months is heavenly. That $4 coffee I get on a business trip is really nice. If I had one every morning, the pleasure derived would barely be noticable.

Moderation.

[FO]

This article is food-for-thought. It is so easy to let the little expenses eat up your paycheck. I am on a limited income, so I finally understand what my EX was trying to tell me when he insisted that I follow a budget.(Never could do that). I also didn't know the difference between wanting and needing. Yep, I have a problem! I don't eat fast foods often but I do love shoes and clothes. I'm getting better. Thank you for reminding me.

[Kenny]

I learned this from a book titled "$5 dollar a day to a Millionaire" or something along those lines when I was 24 years old. Today in my late 40's, I am living proof of making it to my targeted goals, and beyond my expectations.

It is possible to do this, and now I am teaching this to my kids, but this road is built with sacrifices where I drink premium coffee from Starbucks once every 3 months, instead of everyday, and we get $5 Pizza from a local store in our town, instead of buying PizzaHut or Dominos.

I NEVER do spontaneous buying or any impulse buying, since that is the BIGGEST CULPRIT of the spend beyond the pre-decided limits per day/month.

So, if you readers practice the savings of every $1 or $5 or $10, and put that to work, you can payoff your mortgage at 40, fund your retirement by 50, have all of the toys you want (at some point in life), and also teach your legacy to your kids.

Thanks for listening......