One of the expenses you need to cut immediately is going out to eat, says Suze Orman.
“For you to have money, you have to learn to live below your means but within your needs. How do you do that? You do that by simply purchasing needs versus wants. What is a need? Need is food that you buy at a grocery store. What is a want? A want is going out to eat at a restaurant and doing it over and over again.”
Going out to eat contributes to massive credit card debt, too, which can weigh on you in retirement. Most people don’t realize how much money they spend by heading to the drive-through or going out to a fancy restaurant once in a while.
Some of us, including me, stop by Dunkin every morning and spend about $20 on coffee and a hot bagel, which comes out to about $600 a month.
Many of us are quite literally eating ourselves into debt.
According to Bankrate.com, “Americans say they’re willing to go into debt for the sake of experiences this year. Nearly 2 in 5 (38 percent) U.S. adults are willing to go into debt to travel, dine out, or see live entertainment, according to our Discretionary Spending Survey. The highest percentage of people would be willing to take on debt to travel, at 27 percent, followed by dining out (14 percent) and live entertainment (13 percent).”
Even a Coffee Habit is Draining Your Finances, added Orman
Finance coach Suze Orman says your coffee habit is costing you at least $1 million.
Right now, the average cup of coffee can cost about $7. If you got coffee once or twice a week, it’s not too bad. But if you’re doing it every day – which many of us do- it’s costing you $210 a month, and $2,520 a year.
“It would be one thing if you had a cup of coffee once a week, maybe three times a month, but that’s not what you do. You go in every single day,” she added, as quoted by Yahoo Finance.
While $2,520 may not sound like a lot, if done over 40 years it’s $100,800 for coffee.
Instead, according to Suze Orman, “$100 a month in a Roth IRA, over 40 years is $1 million. So, you need to think about it as you are peeing $1 million down the drain after you are drinking that coffee. If you just simply used your money to purchase needs versus wants, you would find the money to invest in your retirement account.”
The image featured at the top of this post is ©Koto Amatsukami / Shutterstock.com.