Nick Maggiulli made a good observation in a 2020 weblog post:
> All the expense tracking and goal setting in the world cannot make up for an insufficient balance.
* https://ofdollarsanddata.com/the-biggest-lie-in-personal-fin...
The bottom 40-50% of US households can either barely or not-at-all cover the basic necessities: housing, food, transportation, healthcare. Note that this doesn’t include any money for education, clothing, or any form of entertainment.
> That’s why the biggest lie in personal finance is that you can be rich if you just cut your spending. And the financial media feeds this lie by telling you to stop spending $5 a day on coffee so that you can become a millionaire.
[…]
> Instead of trying to convince everyone that they can be rich, we should be trying to convince everyone that they can be not poor. Now that would be a start to undoing the biggest lie in personal finance.
The issue is that you also mentioned dining in general, which takes that $1k of coffee to a completely level.
Bottom line is drinking coffee at home and cooking save you a lot of money.
- Eating out is a big expense. I eat quite well on 5€ a day. Eating out would cost me about 25€ a day. That's a 7k€ per year difference.
- Housing is a huge, but mostly unavoidable expense. Yet my rent went from 950€/month to 550€/month when I moved out of the centre.
- Health insurance is another big expense. At one point I paid more for insurance than rent, because I'm self-employed.
- The things I tend to skimp on (subscriptions, quality food) make nearly no difference.
I'm thrifty as well but that is stretching it.
I mean, I eat meat and only buy organic free range stuff if I can, which is of course, more expensive, but as long as I make a dev salary, why would I eat lower quality stuff to save a few bucks if I can afford the best quality?
I feel like when it comes to what you put inside your body you should not make compromises if you can. There are other areas in your life you can save money(car, subscription services, eating out, fancy clothes), but food is not one of them, as long as you can afford it.
Every Saturday we make a plan for the next week. For example last week we had (note that we don't buy prepared meals):
(Day: lunch / dinner)
Monday: Salad + egg + wrap / Udon soup (spring onions, asian noodles, tofu, miso, egg)
Tuesday: Salad + beans + wrap / Chili sin carne + rice
Wednesday: Salad + veg. schnitzel + wrap / Sweet potato curry
Thursday: Salad + roasted vegetables + wrap / Backed potatoes + mix of vegetables
Friday: Porridge + apples / Carrots in oven + smashed potatoes
Saturday: Pancakes + leftovers / Vegetables soup + bread
Sunday: Brunch (fruits, joghurts, cheese, bread, etc) / Pizza
We now have a list of maybe 20-25 recipes we rotate between, cooking takes a bit of time but that's something I really like to do to relax. I personally do not eat the morning and my life partner eats some simple cereals + joghurt + fruits. Food like chili sin carne or a curry is something ridiculously cheap to do and is very easy to do in huge quantities. Also we really like to eat wraps filled with salad for lunch as you can see :). If you alternate the filling and salad sauces that's not too boring and doesn't result in an after-lunch food comas!
We buy almost everything at Lidl and do not eat meat.
Basic ingredients are cheap as long as we ignore quality and where I live, you're not getting any good quality wine and cheese in your 5 Euros a day.
Cheap supermarket budget brands full of chemicals, hormones and preservatives? Yes. Quality stuff? No.
As for diet - A typical day would like this.
Breakfast.
(them) Home made pancakes for breakfast with a drizzle of honey. (me) Muesli.
Lunch, Salad Wrap/veggie heavy (other half is vegetarian) or KaposztáS TéSzta (cabbage/noodles).
Evening Meal - Spaghetti Carbonara or Tuna Steaks/veggies.
My other half loves cooking (she's hungarian) and it's completely the norm that for her/where she is from to just do everything from scratch.
Lots of fresh seasonal veggies, lots of soups, noodles, pasta etc - it's a good diet tbh and seems to suit my health issues.
This is in the EU, regulation basically prevents excesses like that in most cases.
Furthermore, price doesn’t have to be a predictor of quality. E.g. LIDL/Aldi (budget chains) commonly win awards for best vegetables.
I used to spend ~150-200 on food per month when I was living by myself and wasn’t strictly managing it for low cost. Now with a family of 3, we spend 300-400€ a month on groceries (incl bread and meat) and are never holding back on anything because of price.
So, 5€ per day doesn’t sound unreasonable even in the Netherlands. Note: we eat vegetarian 5 out of 7 days, without that we’d probably spend 100-150 more.
Edit: I get that this doesn’t work everywhere. When I lived in the US (NYC) and tried to cook my own meals I couldn’t believe 1) how few supermarkets there were and 2) how high prices for basic food were. Eating out was basically cheaper :/
During this season it’s also soup time. Our favorite is butternut two oignons a bit of butter and cream or coco milk. Super cheap. Makes 2 to 4 servings depending on dilution and veggie size. Add 1€ for bread (for 2). And bit of cheese and / or fruit.
But the thing is, a lot of people could easily make additional 7k€ if they switched jobs / renegotiated their salary / tried out other ways to make more money. Especially if you enjoy eating out from time to time, it's probably not worth the effort to try and save a few thousand not doing it when there are other, much more impactful choices to be made.
Instead it’s far more likely the most efficient way to get more money is to work on your career and not learn how to cook well, fix your own car, or extend your commute way out into the country.
That doesn’t mean you can’t have a hobby of cooking, if that’s what you love—go for it, but be honest with yourself. If it was about getting to FIRE you should order in a pizza and working on leetcode.
Having googled this I presume you meant Financial Independence Retire Early.
Health insurance is also really expensive as an employee, but people dont notice because half of the cost is completely hidden for them ("paid" by the employer) and the other half also never reaches their bank account but is on listed in the monthly payroll notification.
It is as compulsory as the others.
I'm curious, what role does health insurance play in Germany? I'm been curious about the prospect of at least temporarily living in Germany (from Canada), but don't have a great sense of that yet. Here we have socialized medical, but you'd get insurance to cover out of country emergencies, regular cost of drugs, and dental, among other things.
Snacks can be a bit more expensive, but it's still (literal) peanuts in the budget.
I do shop at Lidl, and I do pick the store brand most of the time. However, I don't consciously try to save money on groceries. Good food is good living.
This was an eye opener to me, after meticulously tracking my finances for a year.
There’s two takeaways. (1) on the days where you don’t feel like cooking, do not feel bad about ordering take out or dining out. (2) consider how you can minmax your staple grocery items, by buying in bulk, joining a food co-op. Etc
You win a lot more by shaving dimes off every pound of oatmeal, integrated over a lifetime. And it’s recurring returns on a one-time investment of finding the best source in your neighborhood.
Buy the coffee every once in a while if it brings you joy. Everything in moderation, of course.
You'd be surprised at how much a lot of people eat out. As of 2016, total spending among all Americans was higher on restaurants than on groceries. The average American (although not necessarily the median one) spends more on restaurants than groceries.
Only if days you cook for yourself (heavily) dominate days you order a takeaway.
Also, 'groceries' probably accounts for a lot more alcohol (assuming you drink of course!) really tilting the balance. Not least because if you order a takeaway you're probably still drinking something from your grocery order.
If you eat three meals a day and have staple breakfasts and lunches (for us it’s oatmeal/muesli in the morning with fruits, sandwiches for lunch) and only ever order in for dinner, at least ⅔ of your meals each day automatically come from “groceries”. And home cooked dinners are usually the most expensive meal of the day (if they feature the typical dinner meats).
Trading off for takeout, many restaurants are overjoyed to give you two servings in the name of one, and that makes at least one meal for the next day! At least this is how it works for us.
Alcohol is a good point though! It can definitely make groceries look more expensive than they are.
Maybe let me add, when I buy a bottle of wine, it's a $5 bottle.
> 'groceries' probably accounts for a lot more alcohol
I spend 150€/month on groceries. Reducing that would be really difficult, and involve changing my diet and buying cheaper ingredients. Even then, I wouldn't save enough to make a difference.
A restaurant meal is 10-15€.
For most people the biggest thing is a car. If you can not own a car at all then you're laughing. But if you have to then I recommend buying old, undesirable cars from good brands like Honda, Toyota or Ford, but always research the model first as every brand has made stinkers over the years. You can drive these cars until they are scrap and pay a fraction in depreciation that you would have on a newer or more desirable car.
Of course, if you want to own a car then by all means do it. But just be honest with yourself that it's not an essential thing and you'll be making sacrifices elsewhere for it.
It's totally possible that the lowest hanging fruit on some people's trees is things like coffee. But the important thing is to record your expenses and budget so you can identify what the lowest hanging fruit it.
Also, just because something is a bigger expense, doesn't mean it's a lower hanging fruit. Most people spend most of their money on housing. But you need a roof over your head. You don't need coffee from your local hipster outlet.
Well it's easy to know if that argument holds true or not... just track your expenses. It holds true for me.[1] Once I started WFH during COVID my weekly expenses got in much better shape.
[1] Edit: combined lunch + coffee + snacks during the work week were equivalent to about 15% of my rent (and rent is high where I live). I did not include weekend dining out with friends/family in that figure, or it would have been even higher. (The reason is that during the work week I always get food or coffee from the same merchants so it was easier to track, but during weekend it varies more).
Edit 2: solution was to pack lunch/snacks, and use the office coffee maker. Packed lunch is less than half of the previous amount, and office coffee is free. Now the figure is about 5% of my rent.
Edit 3: a positive side effect is that my snacks started consisting more of things like an apple or an orange, rather than the crappy processed-food sugary snacks I was buying at the cafe.
If there's 2 of you and you eat out 5 times a week for the length of time you would own a car... then it might be equivalent? There's that old paradoxical saying about how the rich are rich because they don't buy anything.
You buying the occasional overpriced, poorly made coffee doesn't hurt in the grand scheme of things. The compounding habit does. For whatever reason, a majority of Anglo saxons and anglo culture just dont understand compound interest in general. Maybe it's because western culture adopted Protestant ideals more than they think. My half jewish, half catholic background doesn't jive well I guess. Anyways, let's get into examples, shall we? And no, I won't get into the Lamborghini/Ferrari endgame. Italian cars are crappy anyways. They catch on fire too often.
3 dollar coffees a month, that's 90 bucks. I go through about a bag of coffee a month, at $15 a bag of BRCC, I only save 75 a month. That's only 900 a year extra I have by being slightly snobbish about my coffee routine (french press or cowboy coffee it). Let's also do your eating out example, because habits are not in a vacuum, they're holistic and systemic. Most things I would want to eat at a restaurant are 15 to 20 bucks. I won't get into a decent steak or seafood because that's too easy to prove my point. Let's do, I dont know, chicken alfredo, I made that a week ago while babysitting my buddies kids. I spent like 25 bucks, but that included popcorn and icecream. So 20? This fed a toddler, 6 yr old, preteen and my own fat ass, with enough left overs for lunch the next day for everyone. If we went out, that's 15 for me and then 15 for the preteen and then another 15 to split between the younger ones. So 45 bucks. 25 dollar savings. However, there would have been no left overs. So let's say an extra 20 in savings, 45. Alright, to get just me on the savings, I'm thinking about 6 adult portions. 7.50 in savings per meal for myself when I want a fully proper dinner on average. You say 3-5 times you eat out a week. 4 for an easy average. That's 30 a week, 120 a month, 1440 a year. My average savings for not eating out and drinking crappy coffee is $2,340 a year as a single guy. $195 a month. Thats the advertised payment of a new Jetta. Choosing to be at the whim of someone who brews coffee like shit and people who over charge for super simple meals or doing things myself.
Let's nix the car. Let's think opportunity cost. Are you really maximizing your extra 10 minutes saved ordering dinner? Are you reading earnings reports or geopolitical negotiations? Maybe the latest white paper for next 5 minute programming fad? No. You're watching netflix. Stfu. I watch netflix and cook. Well, that and audible and curiosity stream. I also buy lots of books. And I do the occasional masterclass and random course online.
That extra 2k a year isnt enough to be a market mover. It is however enough to invest in yourself pretty well. Which goes all the way back to my immigrant comment. Your philosophy is investing in the market. That's dumb as hell especially when you're young. My philosophy, and most immigrant families that pinch pennies, is about investing in yourself. I think most people agree that a person's greatest investment is themselves, not outside endeavours. So yea, is that overpriced cup of coffee worth not investing in yourself?
While the point is true, I think your time is best spent worrying about other things.
90% of money problems seem to come from a few things: * Expensive cars - bought with debt. * Expensive housing - again bought with debt. * Expensive schooling - even more debt.
I've never bought (pun intended) the argument that dining out in any form (including coffee) even comes close to these other items. Even if you're eating out 3-5 nights per week, it's just not expensive enough. I guess if you're always feeding a family of 5 and buying expensive bottles of wine while you eat, then maybe.
I also think that time spent worrying about trivial stuff like coffee would be better spent trying to make more money.