The True Cost of Your Spending Habits

Posted by Rebecca Prince on February 27, 2023

The True Cost of Your Spending Habits

Every one of us has a habit which could be costing us thousands of dollars a year, and we may not even realize it. While some of us may have one single habit that is costly, even those fast-food trips and coffee stops add up and could be costing you more than you think.

Costs Continue to Rise

While most of us have seen a decline in savings account interest rates due to the economy, what we know for a fact is our everyday costs continue to rise. Furthermore, the willingness of many people to save for retirement is also on the decline. If you ask most people why they have not started saving towards retirement, they will tell you the same thing: I cannot afford it. The fact is most people are wasting money daily on one habit or another without even realizing the larger financial impact.

What Do You Spend Daily?

There are some things we do that we never think about, such as stopping on the way to work to grab a coffee and muffin, having lunch out with coworkers on Friday, or stopping on the way home and picking up a lottery ticket. The fact is if you saved the money from these simple things that you may not even be thinking about, you’ll have more money to put towards your retirement or a specific goal, such as a family vacation or a down payment on a new car. Take a look:

Starbucks Coffee & Muffin - $4.75 - if you pick this combination up once a day, five days a week for 52 weeks, you have spent nearly $1,200 for the year on coffee and muffins, and that is assuming you take two weeks off for vacation.

Weekly Lunch with Coworkers - $9.75 - those who go out for lunch and have a modest meal with coworkers are likely spending slightly less than $10 for their meal. If you do this one time weekly (and again assume 2 weeks vacation), you're spending almost $500 annually. Do this more than once a week, and it's easy to see how that can add up. (If you go to Happy Hour on Fridays, you could easily more than double this amount!).

Lottery Ticket; Taking a Chance - $2.00 - one lottery ticket one time per week will cost you over $100 a year. While this may not seem like a large amount of money, it is important to take it in context of your overall spending habits.

While these three items are inexpensive on their own, combined they result in you spending nearly $1,800 per year. Even with a modest rate of return, these dollars add up to a substantial amount of money that you are spending without thinking on a daily, weekly, and annual basis.

Spending Habits Curtail Savings

Saving money is not always easy, even when you are thinking about putting money away for a specific goal like taking a vacation, purchasing a new television, or planning for retirement. Each of us could benefit from thinking more about the money we are spending. Without doing so, in the long run, it could mean we've lost the ability to save money for the things that really matter to us over time.

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