Wednesday, November 14, 2012

Bringing home-made lunch to work

I've picked up a few habits from Mr. Money Mustache that, while they seem small at first, compound greatly over time. Making your own lunch is a great example. Eating out on any given day doesn't cost that much money (if you're debt-free). But eating out every day, or even just a few times a week, adds up fast. And in the same way you can have an eating-out habit, you can also cultivate a bringing-leftovers-to-work-for-lunch habit that will save you tons of money over the course of your working life.

Let's dig in with some numbers.

Restaurants around me charge anywhere from $5 to $12 for a lunch. I think this is relatively high-cost: even when I worked in San Francisco there were $5 lunch options on every corner, whereas the only $5 lunch I know of around here is Subway. Let's say buying lunch from a restaurant costs $8 on average.

Bringing lunch from home is much cheaper. On average you should be spending around $1 per person per meal in frugal mode. I know that a lot of people do better, too, reconstituting dry beans and mixing up delicious vegetarian meals with rice, lentils, and fresh veggies. But even if you confine yourself to the frozen meals section of your local grocery store, I bet that you can eat for less than $2.50 a meal. Let's agree on a very generous amount of $2 per meal that you prepare yourself and bring to work.

If we work 50 weeks per year on average, with 5 days per work week, that's 250 work days per year. If you bring your lunch every single day, it will cost you $500 for the year just to eat lunch while you're at work. If you buy lunch every single day, it will cost you $2000, for a difference of $1500 above and beyond the home-made lunch option. At a safe withdrawl rate of 3%, you would need $50k to generate the additional I-can't-be-bothered-to-cook-my-own-lunch income.

But the real world is rarely all-or-nothing. Let's take the scenario of buying lunch once per week. That's $6 extra per week, for fifty weeks out of the year, for a total of $300 extra dollars spent per year — a 60% increase over never eating out. That represents $10k in your stash (at 3% SWR).

Here is that same calculation for one extra lunch purchase per month: $6 per month is $72 per year, which requires $2400 in your stash (at 3% SWR). This scenario is much more reasonable. I think many debt-free Mustachians could find an excuse to treat themselves to lunch at a restaurant once or twice per month, especially in the company of some awesome co-workers who can all celebrate at least in part about all the money they've been saving by eating leftovers.

I have been watching my eating out for about a year now, ever since I started reading MMM. I would estimate I used to buy lunch two to three times per week; now I buy lunch perhaps one to two times per month. So my more-spendy self would spend somewhere between $36 and $66 dollars per month more than my less-spendy self. Let's take the average and say I've saved $50 per month, just on lunches at work, thanks to reading Mr. Money Mustache. That means that in just the past year, I've become $600 richer than I would have been. Just from lunch at work!

I hope these calculations can be yet another data point on how small incremental changes to your lifestyle can yield big effects.