Every Thursday on the way into the office I stop by the coffee house for a medium coffee and a pastry. I need the extra motivation to get through the rest of the week. Friday is its own reward but Thursday, I need help. The bill comes to $4.50, not much in the overall scheme of things. But this one little habit is costing me over $225 per year. Is it still worth it?
A few years ago I started looking at expenses in terms of annual cost, not just the immediate cost. It was enlightening, and really changed my spending habits! One $5 habit once a week is over $250 a year. A $40 dinner out every Friday night is $2000 a year. I wasn’t getting ahead, or saving, because I was spending so much money on little things.
I have choices when it comes to my morning pick me up. Coffee is available for free at the office. I can buy pastries at the market for a fraction of the cost of the coffee house. I could have the same meal for $0.50, saving $200 a year. In this case, I still choose to buy my breakfast once a week. I’ve given up many of these little money wasters, and save a big portion of my paycheck. But if you’ve got a spending problem and aren’t saving like you want to, try this little trick. Look at the annual cost of that habit, you might change your mind when you see just how much you spend each year.
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5 comments:
I do the same this. It makes much more of an impact when you look at your expenses this way.
This is inline with looking at things as reality as is, which means for us to looking at income/expense in appropriate proportion.
By that weird senstence, I mean, if one looks at his expense in monthly term, so too must he look at his income in monthly term. If he looks at his income in yearly term, so too must he look at his expense in yearly term.
I liked this post a lot. I like that you look at the total cost, you are fully aware of how much you are spending (and how you could save) but then made a choice based on your personal goals and happiness. This is something you do for yourself, and you do it with purpose, knowledge and the money to back it up. You also know that if you had to drop it, you could. That is how I think finances should be - an informed balance.
This is a great post. The total cost is such a hard thing to look at sometimes. When I sat down and figured out I was spending nearly $400 on television a year I nearly choked. I like TV - but I don't think I like TV THAT much, yanno?
I didn't stop to think about calculating the annual expense of my once a week Starbucks. Kinda makes me want to make up a list of all my "treats" with the annual cost on it and put it in my car. Just to remind myself as I'm driving past Starbucks how much money I'm REALLY saving. =)
You know how you get that W2 from your employer every January and you see what take-home pay was, and you think "where did it all go?" I think that assessing spending habits as an annual cost and thinking of it as a proportion of that number would be a huge eye-opener.
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