Let’s begin with a bit of backstory. I started my career off at Goldman Sachs working in the foreign exchange department fresh out of college. I was making pretty decent money for a young grad and had very little expenses for as I was just in a small apartment with my brother. I was in a fortunate enough spot to begin saving money. I was able to save a pretty good portion of my money, as I worked a lot, I didn’t really have enough time for entertainment or other things that people typically spend their disposable income on. However, as the months dragged on at this extremely stressful job, I found that I was spending a large portion of my income on the one thing I did have time for, lunch and dinner breaks with coworkers. I went out to eat with my coworkers every day that I worked we’d often go to chick-fil-a and get the Spicy Deluxe Chicken Sandwich off of the menu and I’d get the meal everyday as well.

Now, at least, where I was located it didn’t cost a whole lot, about $8.68 according to my YNAB budget. However, I found if I did this every work day, my expenses began to add up. For example, $8.68 every work day is $43.4 dollars a week. What I was really doing was trading about 1.8 hours of my time every week for the pleasure of leaving the office with my coworkers and eating a Spicy Chicken Sandwich. But as the weeks go by you just end up spending more and more on lunches and eating out. It begins to add up. Over a month it costs roughly $174 to do this every work day.

Opportunity costs

However, that isn’t the entire story. While, I’m sitting there eating out with my coworkers and enjoying that Spicy Sandwich, my money is being drained from my bank account. Indeed, if I was smarter and more frugal, I could have opted to bring my lunch everyday and eat with a different set of coworkers in our break room. If I eat a PB&J sandwich and a granola bar everyday for lunch, I spend roughly 76 cents on the PB&J sandwich and another 19 cents for the Quaker Chew Granola Bars that’s a total cost of less than a dollar for lunch, or 95 cents. Or in other words, my cost to eat out was $7.73 per day. However, that’s not my only cost to eating out with my coworkers. I have to factor in my opportunity cost of choosing not to invest that $7.73 dollars per day.

I built a calculator which allows you to input the price of your reoccurring charge – in this case our lunch – and see how much you’d need in investments in order to pay for the charge. You enter in your after-tax hourly income, the frequency of the charge, and the price of the charge and it spits out how much you would need in investments to cover that charge safely, for the rest of time (assuming a 4% withdraw rate and a 7% rate of return). I’d need $94,048.33 sitting in investments in order to pay for my daily lunch meal.

My lunch was costing me wayyy more than I anticipated it was. Per year my total cost (actual cost and opportunity costs of not investing) was $2081.52. In fact, after a year of eating out, the cost of my food alone was $3,179.80! That’s without factoring in what I could have made in the market!! The reason was I mixed up where I went to lunch so I ended up paying MORE than the normal cost for a Spicy Sandwich.

The realization

After realizing how much I was spending just for a freaking sandwich at chick-fli-a I decided to buy a lunch box and start eating PB&J and a granola bar for my lunches. Over last year I have been able to save around $2000 since I stopped eating out every day with coworkers. It was a really good decision as I was able to invest some of the money and put some of it towards an emergency fund.

However, lets apply some of this math to a more applicable case. Netflix is raising its price to $17.99. You’re paying this every month, and as a result, after the first year it will cost you $222.94 in total costs. If Netflix never changes its price from 17.99 for the next ten years, this will eventually cost you $3,113.80. Or if you would like to cover Netflix’s monthly cost, you’d need $7,196.00 in investments with a 4% withdrawal rate.

Overall, small monthly and daily costs can really add up to impact your net worth a lot overtime. So, the next time you go to work and consider getting that cup of coffee or getting that sandwich, try to consider the true costs of doing that every day. But, this is all just a way of saying that we should be trying to look at our expenses and earnings as carefully considered assets on a way to build wealth. Lastly, if you are trying to make better, more logical decisions regarding your personal finance YNAB is a great resource and getting started using a budget is a great starting point. But if you’re already past that and are trying to build wealth and want to invest, try using m1 finance (you’ll get an extra $30 dollars with the referral link) it’s a great platform for long term investing. It even lets you automate your investment so you don’t have to personally manage it, reducing your recency bias. And finally, if you’re looking for further ways to enhance returns check out our high risk and ultra-high risk newsletter.

 Note: the m1 referral link gives the reader $10 extra dollars to invest with if they choose to fund a taxable with $100 dollars within 30 days of opening the account or fund an IRA with $500 within 30 days of opening an account. The author of this article will receive a $10 dollar compensation as a result of the reader opening an account. The compensation for both parties occurs 30 days after the deposit occurs and assumes the full amount is retained in the account until the end of 30 days from the deposit day. YNAB offers a free month of use this will be given to both the author and reader if the reader subscribes after the free trial period and buys a month of subscription. The author uses and endorses both YNAB and M1 Finance and both links are affiliate links.

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