A few weeks ago I was reminded of my days as a bachelor. I was out with friends, all single males with good jobs, wonderful lives, spending many a night out in clubs and bars seeking women and partying until dawn.
As we were ordering another round of drinks, one of them suddenly turned and, in utter disbelief, reflected upon the amount he had spent over the last year during those party nights. He estimated that he had spent in excess of €10,000 on partying. He was not alone, as we ran the numbers, most of those at the table came up with similar numbers.
Granted all of them earn wonderful salaries and are single and thus priorities shift; yet it is a hefty sum.
The thing: it is relatively simple to splash out such huge amounts of money.
€10,000 for a year’s party
Let’s break it down: € 10,000 per annum divided by 12 months equals about € 830 on booze and dance. If we break this down further, the weekly amount spend on nights out is € 208. With a minimum of 2, 3 nights out per week that is between € 69 and € 104 in one night. A couple of cocktails and long drinks at € 12 and a € 20 entrance fee to a club or bar, we are merely talking between 4 and 7 drinks in a respective night. It can in fact be really easy done.
While this might be a rather extreme example, but we all spend money on small luxuries that are too easily forgotten. Each individual indulgence might not appear expensive; but over a year they represent a massive share of our hard earned cash that will be lost forever.
I don’t think that we should ever sacrifice a memorable moment in order to save a few bucks, but when it is little luxuries that don’t add anything substantial to our lives; we should maybe rethink whether they are worth the loss of money. Just like too many drinks lead to a terrible hangover taking instead of adding life quality so does spending on unnecessary clothing items cluttering up our living space or splashing out on unnecessary taxi rides home instead of walking or cycling. The latter two keep us fit and add to the quality of our lives over the long-term.
A few years ago I was working in an office with a trendy café in the midst of it. It was only a minute walk from my desk and did not even require me to leave the building. They sold coffee in all shapes and sizes; from the regular coffee to the fanciest mix of chocolate, vanilla, and what not syrup. Plus some nice chocolate sprinkle on top. Obviously their sales were helped by the two extremely gorgeous sales staff, which made spending the € 3 to € 5 much easier.
On an average day, I went on about two to three coffee breaks with colleagues. At € 4 for a cup, this added up to a massive € 60 per week. We could have bought a fantastic coffee maker between us and brewed our own coffee for the fraction of the price. But it is one of these things; everyone knows things could be different, but all are waiting for the other to do something about it. In the meantime we go about spending our hard earned cash on fancy coffees.
Big little expenses
But this article is not about coffee or the famous latte you are told to live without to save some extra buck. It is about being more conscious when spending and realizing how quickly the little things add up. Take the following example:
One coffee in the morning at € 3, another after lunch for another € 3. That is € 6 spent on coffee every day.
A quick sandwich at € 7 rather than running to the supermarket or preparing lunch at home for a fraction of the price.
A taxi home twice a week from the bar instead of taking the metro, bus, or the bike: € 30.
While these are little sums that we hand over the money each time, over a month or a year, each little amount starts looking less tiny:
The coffee: € 6 per day (€ 120 per month)
The sandwich: € 7 per day (€ 140 per month)
The taxi: € 30 per week (€ 120 per month)
These three items alone eat up 380 of your financial crew members that are supposed to be working hard to get you to financial independence.
Over the period of a 47 work weeks (not taking into account holidays and days off), these three little items suddenly turn into a massive € 4,465.
Big little savers
Undoubtedly we need those breaks and treat ourselves, but a coffee from your own coffee maker shared amongst colleagues is just as good. The experience is even more social, as while making the coffee you are already doing something together. And rather than waiting in line, you no longer need to queue and get to decide yourself on how strong you want your coffee to taste.
Or take another example: going to the fancy bar instead of the less pretentious bar. When I first came to Paris and the barman in the upmarket bar demanded € 12 for a pint, I fell backwards. I had never paid more than € 6 for a pint. And that was in a chic bar in town and a rather occasional evening. Most nights I would spend € 4 for a pint; still a very nice bar.
But for the people I first met when starting work in France, the € 12 pints were the norm. It communicated a sense of belonging to the ones who could splash that money. But the difference of € 6 between the € 4 and the € 12 bar is enormous. Over the period of a year, the difference, even if you only have four drinks per week, is a massive € 1,248. That is the equivalent of some people’s monthly salary.
Whatever little expensive pleasures we indulge in, choosing to skip the occasional one or finding alternatives will make us much richer for it. Just enjoy the speed of your galleon of wealth pick up speed.