I did something last Friday I haven’t done in a very long time. I visited a fast food establishment for lunch. Yes, I have been out to eat a couple times in the last few months, but not for lunch, and not fast food. I was surprised at how expensive the so-called “value meals” were. I frequently see people looped around drive-thru windows on their lunch hour buying $6-$7 “value” meals. It got me to thinking – just how much wealth are we chewing away on our lunch hour?
The costs of fast food. These days the cost of everything seems to be going up, and few product costs are inflating faster than food. With the cost of milk, meats, eggs, and even bread rising across the country, fast food chains are passing the associated increases along to customers. As the price of eating out increases, so does the opportunity costs we pay by not pocketing that money and brown-bagging a lunch made from home.
Costs per month. The brilliance behind “the latte factor,” made famous by author David Bach, was that it got consumers to think long term. Carrying daily costs out to a weekly, monthly and yearly figure was a wake-up call to those who considered a $3 expense to have a minimal impact on their overall financial life. Take fast food for example. A $6 combo meal (which typically includes a drink, sandwich and side order of fries or salad) eaten every day of the five-day workweek will cost customers $30 a week. That $30 a week, times four weeks, adds $120 a month to your food budget.
Costs per year. Continuing our fast food example, that $120 monthly fast food bill becomes a $1,440 annualized expense. Staggering, isn’t it? Imagine the things we could do with $1,400! You could open a Roth IRA, start a 529 plan for your kids, take a couple courses at a local college to further your career, start an emergency fund, or take a paid-for vacation. All for the price of a $6 cheeseburger, french fries and soda. Next time I’m craving a cheeseburger, I think I’ll just make my own from home.
I picked on fast food establishments for purposes of this example, but they are not the only place we throw away hundreds of dollars every year. Pack-a-day smokers spend nearly the same amount to fund their habit, as do beer-drinkers and wine consumers. My vice used to be bottled soft drinks from my old company’s break room. I probably bought a drink or two a day for years over the time I worked there, at $1.00 a pop! All the while I complained about a $500 minimum investment required by a mutual fund I was interested in – where was I going to get $500? I should have started with the vending machine.