Are You Wasting $300,000 on Lunch?

It seems obvious that a serious handbag habit, or a penchant for champagne might damage your finances. But lunch? Seriously? Afraid so.

I know, I know. Lunch is hardly an extravagance. We all need to eat, and picking up something to take out is a far easier option than preparing something at home.

But did you ever really consider the long-term costs? Although the small daily outlay on a restaurant or cafeteria lunch (not to mention coffees, sodas, and snacks) may seem insignificant, it adds up over time. If you're like the average American office worker, you could be spending about $3,000 on lunch and coffee this year. Just imagine how that mounts up over a whole working lifetime.


But turn this on its head, and there is some really good news. Bringing in your own lunch to work could save you so much money, you could take a vacation, save for a new car — or even knock years off your planned retirement date. Put down the double skinny caramel latte, and read on to check out how.

1. Crunching the Numbers

According to survey findings, 82% of working Americans spend at least $20 a week on coffee, and no fewer than 89% spend at least $35 every week on lunch. That works out to at least $57.49 per week. So, let's take an average Joe example:

Spending $57.49 a week on lunch and coffees, for 50 weeks in a year, means you're handing over $2,874.50 to eat an unsatisfactory (and probably unhealthy) meal at your desk daily. And if you spend more than $11 or so per day on lunch and coffee (as many of us are guilty of doing), that figure increases rapidly.

What better use could you be putting that money to?

2. The Beauty of Compound Interest

You're reading a personal finance blog — so you probably already know that compound interest is your friend. Interest earned on an initial deposit is added into the overall sum held, meaning you get interest paid on interest already accrued. The net result is that small sums of money, over a long period of time, can grow. And grow. And grow. It's a personal finance nerd's dream.

This effect is shown even in a relatively conservative — but slow and steady — account that will give you a 1% return on your cash (and don't forget that interest rates will fluctuate and are likely to rise at times over the course of your working life). With compound interest, and time, even a small regular deposit can grow to something worth having. The longer you squirrel it away, the bigger it gets — and remember, in the case of saved lunch money, this was cash you hadn't counted on having. You should not miss it.

For example: If, instead of buying lunch — for this year only — you invest the $2,874.48 saved in a skimpy 1% interest savings account, it could become a "happy retirement" holiday once you get to the point of ditching work, turning into $3,874.85 over the course of 30 years. Just by sitting there! Putting the same amount of cash aside into a vehicle that mirrors the S&P 500 over 30 years, based on a historic average return of 7%, your savings would turn into $23,409. Of course, additional contributions will lead to even greater gains.

3. How to Retire — Effortlessly

Okay, 30 years is a long time, and the idea of sacrificing your convenient sandwich for something that far hence might not sound so appealing. But how about if quitting your sandwich habit could actually bring your anticipated retirement forward?

Don't shout about it, but it can. Here are the sums:

By continuing with your "average" annual savings from ditching takeout lunches over the course of 30 years, your pot, even at a low 1% yield, would become just over $100,000 thanks to the magic of time and compound interest. If you learn enough about investing to achieve that historic average of 7% from the S&P 500 over that period, you could accumulate an astonishing $312,362. Enough to change your retirement plans?

By simply squirreling away that tiny amount of lunch money every day, you can either increase your total lifetime retirement savings by hundreds of thousands of dollars, or retire years sooner, altogether.

Does giving up that sandwich or passing up Chinese takeout still sound like such a sacrifice?

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Guest's picture

I worked all my life, I always took my lunch to work..I saved and saved what happened my husband was not able to retire when he wanted and we needed the savings..Now I am not a rocket scientist but savings is savings, my parents never owned a home, we do free and clear, they never had a car, we do free and clear, I walk everywhere and bike when I can I fractured by right shoulder and I am right handed but I manage. My husband goes to the Library each day, I clip coupons and we have tried ROKU for free, HULU for free and our only gave us 5 years of Netflix, how much time can a person spend on mini series and old movies, we get out and about go to the shore, take Amtrak to the big big city and I pack a lunch then tooo, we know the city and get a full lunch for less than $5.00 with beverages included this is crab or shrimp sammies mind you with salads, where the police and fire dine, the owner knows us and allows us to enjoy the fruits of his sons seafood ventures in his tiny café..why do people throw their money away? I have never understood that. choices and most people don't get to retire when they want now since 50 is the age most private companies want to get rid of their valuable employees, my hubs was in a union and the last to keep his job, most died one full week after retiring for what?? They never even got one retirement check, give me a break something is better than nothing!