A favorite annual rite I enjoy is to “mosey” through Target with my wife while Christmas shopping, sipping on a mocha latte grande from Starbucks. It costs a bit more than five bucks, but it’s a pleasant treat. Note that I said “treat,” because spending that much for a cup of coffee is an exceedingly rare event for me.
I’m reminded of a conversation I had many years ago with a patient who had recently graduated from high school and worked at my local bank. I asked if she had signed up for the bank’s 401(k) plan, but was surprised when she advised me that she’d have to earn a lot more money before she could put anything aside for retirement.
I asked her if renting an apartment was consuming most of her income only to learn that she was still living at home. Then I asked if she had bought a new car, but was told she was driving the same vehicle her parents had given her in high school. When I suggested that she could surely put twenty to twenty five dollars per paycheck away for her future she told me she didn’t see how.
After her appointment, we sat together in my consultation room and wrote down her typical expenditures each day. It seems that this bright young lady started each day at Starbucks, purchasing a latte and muffin, dined out for lunch at Chick-Fil-A, and purchased an afternoon pick-me-up from Starbucks during her afternoon break. Finally, she celebrated the end of each work week by meeting friends for a steak dinner at Longhorns.
When we added her typical weekly purchases together, she realized that she was spending nearly $200/week on food. She didn’t need to earn more money to fund her retirement. She just needed to modify her spending habits. In fact, she was richer than she thought.
A 2023 survey by the federal government found that few Americans could afford a financial emergency of $400 or more. I wonder just how many could improve their financial situation by evaluating their elective purchases? I’ll bet a lot of folks are richer than they think…
“A penny saved is a penny earned.”
Ben Franklin
