We’ve got to talk about it. I’m sorry. I’m not telling anyone not to drink, and this budget logic won’t please everyone. I love alcohol as much as everyone else, but I can’t in my right mind run up anymore insane bar tabs like I used to. When I first graduated from college, I did it all the time without too much care about how much I spent. If I kept it around $100, it was a “success”. And I have a bunch of good memories from doing it, believe me. I enjoyed going out and acting like a jackass at a bar as much as you did or still do! But it really can destroy a budget, given that you are paying a huge markup in order to have your beer bottle opened for you as opposed to doing it yourself at home.
When I said there is a lot of excess in our free spend, a lot can be alcohol related. It’s something we completely don’t need. Even a completely unhealthy McDonald’s hamburger provides us with some nutritional value. Alcohol is simply, by definition, excessive. I’m not going to tell you to avoid alcohol at all costs, and I certainly don’t. But given that this is a website on saving money instead of spending it, we should probably talk about your booze fund (let’s get it over with quick, like ripping off a band-aid)….
Here are a few examples of normal spending behavior and how much they’d cost you per year:
Drinks at dinner for two (assuming 4 total drinks costs $25 in cost + tips)
Once a week: $1,300 per year, $6,500 every 5 years
Twice a week: $2,600 per year, $13,000 every 5 years
Three times a week: $3,900 per year, $19,500 every 5 years
Cost adds up quick, especially out at dinner. With an average dividend stock that has a 3.5% annual yield - $1300 returns us about $4.00 per month, forever. $3900 returns us about $12.00 per month forever. Before you say “it’s only 4 dollars”, think about the word forever. For the rest of your life and probably the rest of your kids’ lives and their kids’ lives, and so on. You can have the two drinks at dinner, OR enjoy your meal and go home and crack open a few beers for $1 or so each (which only costs you a fraction of the amount per year).
I sound like such a buzzkill…don’t worry I can hear it too and its making me sick. But spending at a bar is the definition of wasteful. As long as you recognize that up front, you can enjoy the hell out of it while you’re out at bars. None of us can avoid the bar in our 20s or 30s and maybe later, but we can certainly limit our spending once we are in one. Getting that 4th, 5th, or 6th drink is probably only adding to our hangover and not adding to our enjoyment of being out with friends.
Let’s assume the average bar tab is around $50. I’ve seen a lot more on a regular basis.
Once a week: $2600 per year
Twice a week: $5200 per year
Three Times a week: $7800 per year
I know people who go to the bar and spend/spent at this rate, but it might be a little high to say people do it three times a week. I’m sure people do this 1-2 times a week regularly. Again, looking at what stocks would return us with this money, $2600 gets us $7.50 per month forever, and $5200 gets us $15 per month forever. These numbers are getting pretty high for just drinking sessions.
Alcohol is bad for us, and we all should know it by now. We open bottles of wine regularly in our house, so I know the value of a relaxing drink. And sure, I tell the doctor I have about 5 drinks less per week because I don’t want them judging me, just like you do.
When you decide to drink out at bars you are being charged anywhere from 300-1000% of what drinks actually cost. For this reason, when we go out to dinner, we usually don’t get any drinks and tell ourselves we can stop by the grocery store on the way home and grab something to drink for home. Clearly, it’s saving us quite a lot of money. When budgets are tight, this can be just enough to free up some extra cash each month and kick start your savings. As with everything budget related – sometimes realizing how much things cost can naturally trim off money just by being aware of their cost.
And if your reaction to this post is something to the tune of: “Fuck this dude, I’m going out drinking right now!”…there are certainly other ways to cut down on your spending that aren’t related to booze. I’m going to go crack a bottle of wine for having to write this post, and now know I should have told my mom that I wanted to be a buzzkill when I grew up.