We’re going to attack entertainment next. This may not be your second, third or even fourth largest category, but for most folks it is a category where the potential for cutting back is very high. Not fun, maybe, but very high.
Eating dinners out costs between 5 to 10 times as much as having the same meal at home. The exceptions are very inexpensive fast food, where the monetary cost is reasonable but the nutritional cost is horrendous, and very fancy meals where unless you are a cordon bleu chef you can’t make that meal at home, and if you can why on earth would you be eating out?
If you do eat cordon-bleu meals out, however, the cost is much more than 10 times the cost of eating the same meal at home.
Even lunches can add up. Inexpensive, but reasonably healthy meals like salads, wraps, or good quality, balanced lunch meals will cost you $15 or more on average, once you add in tax and tip. If you eat out every day, you could be spending $15 x 5 days per week x 50 weeks per year (we figure you take vacation) = $3,750! That’s just lunch; dinners are much more.
Many folks find out they are spending more than 20% of their gross income on dining out. Think about it. If you work Monday through Friday, you work all day Monday and Tuesday to pay for going out to restaurants that week. You don’t even start paying for other things until Wednesday morning!
And that $4 latte? It’s not a good idea, either financially or nutritionally.
Unless you are in serious financial trouble and are likely to be homeless unless you stop spending, you aren’t likely to give up dining out entirely. (Although it’s not a bad idea.) We encourage you, however, to cut back as far as you possibly can on this category so that you can use that money to get rid of debt, build up savings, and build a retirement fund.
Look at your typical lunch out and typical dinner out. Note how many times per week you do both. What do you typically spend per meal? You’ll want to reduce that by at least half, but more is good.
For lunches out, ask yourself how many times per week you need to eat out. (Sometimes you might have lunch meetings, or brown-bagging it may not be feasible.) Set your maximum based on need, rather than convenience. If you conclude that you need to eat your lunch at a restaurant every day of the week, go back to the beginning of this paragraph.
Then look at your average cost per meal. If lunch runs you more than about $15 (it will be more in large urban cities) then re-think your dining choices, and try to find healthy, inexpensive alternatives.
For your dinner budget you might get a little more creative. Figure out your monthly budget, and then figure out how you want to spend it. Some folks might want to go out for pizza once a week; that’s fine if they can afford it. Others (especially couples) might prefer to go out for a nicer meal once a month. Their budget could be exactly the same, but one chooses four inexpensive meals, while the other chooses one mid-priced meal.
And cut out the lattes.
Sara Colley, Staff Writer
Financial Help Desk