How much cheaper is it to prepare meals at home? The answer may scare you.
In my last post I noted that using a restaurant as a kitchen is one sure way to go broke. Many middle-class people do this, convinced they are "too tired" after work to cook (so they order a Pizza) and "too much in a hurry" to leave for work , so they waste 20 minutes at the drive-through at McDonald's. They put this all on a credit card and wonder why, a few years later, they have thousands of dollars of intractable credit card debt.
If you took any aspect of your life budget and multiplied it by a factor of four you would end up in trouble, whether it is clothes, automobiles, or housing, or food. When you take something that is cheap and make it really expensive, well, you create trouble for yourself.
We were in the grocery store the other day and buying breakfast supplies, and I marveled at how cheap it was to buy these basic foodstuffs - which constitute the cheapest meal of the day. For the cost of one restaurant meal, you can make four or more at home!
Let's take as a simple example, the morning breakfast meal. A simple egg sandwich on an English Muffin is easy to prepare and inexpensive. It is also easy to compare with a similar meal from a fast-food restaurant:
Egg Sandwich with hash browns made at home:Walmart English Muffins: $2.28 for package of 12 or 19 cents each.WalMart brick of Cheddar/Swiss Cheese: $19.98 per package of 120 or 16.65 cents each.WalMart Eggs, average $1.25 per dozen, or 12 cents each.Hash Brown Pattie, frozen, $2 for package of 10, or 20 cents each.TOTAL COST: 92 cents.Egg McMuffin: $2.79Hash Browns: $1.00Coffee: $1.00Total: $4.79
Egg McMuffin "Meal" : $3.99 (a savings of 80 cents!)
For the cost of one McDonald's meal, you can make four of the same meal at home, perhaps more.
I did not calculate sales taxes as they vary from State to State. Some States, such as New York and Georgia, do not tax groceries. Other States tax restaurant meals more highly than other sales. In Georgia, restaurant meals are taxed at 4% at the State rate, and there may be local taxes as well. The McDonald's meal would likely cost $4.25 with State and Local sales taxes, enough to buy 1/4 of another meal. The government here is encouraging us to buy basic foodstuffs and discouraging eating in restaurants. Interesting, eh?
Overall, you can make four breakfast sandwiches with a side of hash browns and coffee for the cost of one meal at a fast-food place.
In other words, one meal at McDonald's costs nearly as much as an entire workweek of eating at home.
In other words, when you eat at a restaurant, even a "fast food" restaurant (which people claim are a bargain) you are multiplying your food budget by a factor of at least four.
Note that the source for the pricing data was online. Local prices can vary. For some reason, I have never gotten away from a McDonald's for $4.25, at least in recent times. I suspect costs would be higher, particularly if you opted for a bagel sandwich or the like.
So, let's assume two people live side by side. Fred wakes up every morning, makes his coffee (or tea, for additional savings) and while waiting for the pot to boil, fries an egg and makes toast. He spends about a buck a day on breakfast, or about $365 a year.
Sam lives next door and is "too much in a hurry" to make his own breakfast, so he stops at the fast-food place, wastes 20 minutes in line at the drive-through, and spends $4.25 on the same meal Fred has. Fred's tastes better, of course, as the English Muffin is actually toasted, not soggy and limp. Let's also assume that on the weekends, Sam has more time and makes his own breakfast. Sam spends $23.25 a week or $1209 a year on breakfast alone.
Now, we're talking just breakfast here. Just one meal. The cheapest meal in the day. And the savings are $844 a year.
Now, some might say, "Well, I make a hundred grand a year! I can afford a measly $844!"
And as I noted in an earlier post, you really can't. If you make the vaunted six-figure salary, perhaps 10% of that is disposable income. And you're going to spend over 8% of that on fast-food breakfast?
Now add in the cost of other meals. If you "go out to lunch" as a cubicle dweller, and spend $10 on a sandwich, chips, and soft drink (not hard to do in the city) you are spending $7.50 more than the guy who brown-bags it with a sandwich. Here, Fred spends $912.50 a year on lunch, while Sam spends $55 a week, or $2860 a year - or $1947.50 more than Fred dies. We're up to nearly three grand now, and we haven't even touched dinner.
Assuming Dinner is $20 at a restaurant versus $5 at home and, well, Fred spends $1825 a year while Sam spends $110 a week or $5720 a year - $3895 more than Fred. Dinner is the most costly meal of the day, particularly at a restaurant. The savings really add up here.
Overall, Sam spends $6686.50 a year by eating out in restaurants five days a week. Invested over 30 years at 7% interest, that comes to $675,824.89 in your 401(k). In case you were not listening, that is a shitload of money.
Now, you might argue with some of my assumptions here. Say you "only" buy lunch at work and only go out two nights a week. OK, let's say that. Do the math again, and you will still see thousands of dollars in savings and hundreds of thousands missing from your 401(k). And of course, Fred is going to go out to eat once in while, so you have to factor that in. The point is, do the math and understand where all your money is going.
Today, many people in the middle class are falling behind and they cannot understand why. They think the reason is that the "1%'ers" took all their money away. The real reason is, they gave all their money away to the 1%'ers, who own the banks and credit card companies. You see, in addition to money missing from retirement accounts, squandering money in restaurants is also how many people end up with a personal credit card crises at least once in their lives.
This is not to say one should never eat in a restaurant. But if you are going out to eat on a weeknight, or ordering $20 worth of pizza, because you are "too beat to cook" - maybe you need to ask yourself where this is all going. If you want to get ahead in life, you have to work hard and things and make sacrifices. No one ever got ahead in the world by constantly indulging themselves.