I spotted this article on the Young Money site today. 🙂 It’s a nice companion to the Cost of Eating In vs. Dining Out article I posted earlier.
Eating on a Budget
By Emily Olson, Virginia Tech University
Whether itâ€™s work, school, the gym or any other activity to fill the day, young adults can always make an excuse to find food anywhere but their own kitchens.
Being young and uncommitted is the perfect time to enjoy such luxuries as dining out, because before long a spouse and kids will keep you dining in nearly every night. But maybe these simple luxuries today are worth passing up for the larger luxuries in the future â€“ quite possibly a million dollars worth of luxuries.
According to the National Restaurant Association, households headed by persons under age 25 spent 46.8 percent of their total food dollar away from home, which is nearly half of all meals. The restaurants in the business have certainly wreaked the benefits of this outrageous spending with a predicted $440 billion in sales last year, according to the NRAâ€™s 2004 Restaurant Industry Forecast. Simply put, the restaurant industryâ€™s huge profits are turning out to be our major loss.
Ruby Tuesdayâ€™s vs. Your Cooking
I set out to do a few comparisons to see just how much these meals were truly costing us. Since young adults spend nearly half their meals out, I selected three lunch meals and three dinner meals to compare against the same meals made at home.
If itâ€™s assumed that most people eat three meals a day (21 meals a week), half of all weekly meals should come out to about 10 meals. The six meals I selected will come in slightly below that figure, which means there is potential to earn even more money, but weâ€™ll start with these numbers.
The three dinner meals came from Ruby Tuesday, a restaurant known for reasonable dinner prices, however once you see the mark-up it wonâ€™t seem so sensible. Ruby Tuesday charges $12 for their Top Sirloin steak, which can be made at home for $5â€”a savings of $7. The Creole Catch made with Tilapia fillets comes in at $10 but can be made at home for $3 â€”another $7 in savings. Finally, Ruby Tuesdayâ€™s Church Street Chicken will run you $10 at the restaurant, but when made at home it will only cost $4â€”a savings of $6.
Better Than Hardees
The lunch items came from Hardees, which had fairly low prices to begin with, but there was still room for savings. The Charbroiled Chicken Sandwich costs $4 in the restaurant, but could be made at home for $2.50, which comes to savings of $1.50. You could purchase a Western Thickburger for $4 or make it at home for $2, which would save you $2. Finally, the Roast Beef Sandwich made by Hardees will cost $3.29, but will only run you $2 at home, saving you $1.29.
The savings from these six meals totals $24.80, which averages about $3.50 per day. This may seem like pocket change these days, but $3.50 a day paired with the power of compound interest has the potential to become much more than a few paltry dollars.
According to Robert Allenâ€™s book â€œEasy Money: Financial Freedom on a Dollar a Day,â€ if you started investing that $3.50 a day at the age of 20, at an average rate of 10 percent interest, and continued to invest that same amount until you reach retirement at 65 you would total just over $1 million.
â€œToo many young professionals say, â€˜Retirement can wait, I want X today,â€™ not realizing that the earlier they start saving, the greater the pay off in the end,â€ said Ruth Lytton, a registered financial consultant and financial resource management professor at Virginia Tech. â€œEarly investments are highly leveraged dollars.â€
If you squander those dollars now and wait to start investing, it will be a lot tougher to reach that $1 million goal. If you decided to forego investing until the age of 30, you would have to bump up your daily contribution to $8 a day, which is more than double the $3.50 in order to have a million by the time you reach 65.
So the next time you are hungry and tempted to grab a bite out to eat, think about the potential $1 million you could be missing out onâ€”it might just be worth it to make a date with your kitchen.
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