April 17th, 2008 by john 
in Categories: 
Up until about seven years ago, we would eat out 2-3 times a week, on average. You would typically find our family dining out Friday, Saturday and Sunday. Occasionally we would venture out during the week as well. Not only did this have a negative impact on our health, but it had an equally adverse effect on our wallet.
We decided to limit our dining out to once a week. This was extremely difficult at first! We had to spend more time grocery shopping, for instance. Also, we had to cook dinner alot more often! But the rewards have made it worth all of our effort.
The first benefit was to stabilize our weight. In other words, we stopped gaining weight. I believe this has also contributed to our ability to loose weight. Many times when I would eat out, I found it easy to justify in my mind the ordering of entrees that were REALLY bad for me and that I would never cook at home. Menu temptation as I like to refer to it! I have found that it is much easier to control myself at home.
Secondly, and the reason you are probably still reading is the $25,480.00! This is real savings and here is how I got there. As usual, I am going to use very conservative numbers. Our savings are probably much greater.
I am using the following assumptions: Family of four (4), $35.00 per meal and reducing the number of restaurant visits by two (2) per week. So here we go!
The average dinner of $35.00 * 2 per week = $70.00 * 52 weeks in a year = $3640.00.
We have been saving $3640.00 * 7 years = $25,480.00
This just represents the raw savings number, I have not taken investing this savings into consideration, yet.
And now for the retirement run down! We will initially assume an 8% annual average return. This is a very conservative number which can easily be achieved by placing the money in a Total Stock Market Mutual Fund.
THE BIG PAYOFF
$70 per week * 52 weeks / 12 months = $303.33
Invest 303.33 every month for 30 years
At retirement you could have $310,770.00 after paying $74,235.00 in taxes!
If you put it into a traditional IRA you could have $385,005.00 at retirement!
Let’s Take It Up A Notch!
Lets get a little more aggressive and assume the historical 11% stock market return.
$70 per week * 52 weeks / 12 months = $303.33
Invest $303.33 every month for 30 years
At retirement you could have $461,978.00 after paying $133,038.00 in taxes!
If you put it into a traditional IRA you could have $595,016.00 at retirement!
All this from skipping two (2) restaurant meals a week! Small changes in our behavior can and will have a huge payoff. I try to always look at the big picture. I look past the $1.75 for a soda. I figure out that $1.75 * 4 *52 weeks * 10 years = $3640.00! Now there’s some motivation for behavior change!
In Conclusion
I hope this provides some food for thought and gets you motivated to make some life changes! If you have a similar story I would love to hear it!
On A Side Note
Edward Lorenz, father of the chaos theory, died this week. Lorenz was perhaps best known for the butterfly effect in which stated that a butterfly flapping it’s wings on one continent could create a tornado on another continent. Simply put, small variations in behavior can produce huge changes in the long term outcome. So why am I attempting to give you a science lesson, you may be asking yourself? Because, I think this theory holds true in many aspects of our lives. For instance, small behavior changes, such as asking for water in restaurants can equate to $93,474.64 in your retirement kitty. Not bad considering the average drink costs just $1.75! Or, as in my example above, a change in our family eating habits will add up to huge savings over the course of our lifetime. So, the next time you try and convince yourself that saving a little here and there won’t make any difference, think of the butterfly effect! Live long and prosper!
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My name is John.
{ 5 comments… read them below or add one }
I eat out way too often. I’m more concerned about the health effects than the financial effects but it is good to see I would benefit financially as well from cutting back on the restaurant meals.
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John reply on April 19th, 2008 8:02 am:
Andy – In this post I was focusing on the financial aspects, however, I personally feel that the health benefits out-weigh the monetary ones. After all, if your health fails, you can’t enjoy any amount of money!
Just out of curiosity, when eating out, do you find it difficult to make healthy choices?
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Boy, John, I have to learn how to invest! ( I went to grad-school with a John B and the way you break things down sure reminds me of him. )
8yrs ago, my husband and I cut down our eating out to 1x per week as well. Now we only eat out about 2x per month at the most. The biggest impact for us was cutting out Starbucks. From that alone we saved $400 per month.
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John reply on April 19th, 2008 8:07 am:
Jenn – Along the way, I plan on discussing some investment and saving strategies, stay tuned! Congratulations on the 8 years! Way to go! In my experience, most people have no idea how much money they spend on things like eating out. And, they don’t understand how unhealthy alot of restaurant food can be. On the Starbucks, that is an easy area to save lotsa mullah! Great job! I work in an office where probably half of the employees stop on the way to work and buy coffee. The same people eat out every day! It amazes me how much discretionary spending goes on! Did you find it hard to stop frequenting Starbucks?
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With three very active teens, we eat out often from necessity from being on the go between activities, meetings, sports, etc. But you are absolutely right about the savings. Even cutting out one night per week helps over the long haul! Nice post.
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John reply on April 20th, 2008 10:59 am:
Angie – I hear you! When our kids were younger it was much more difficult to cook meals every night. Between softball, soccer, karate, Girl Scouts and school activities, we were always on the go! You are correct, just cutting one meal a week will help with both your health and your finances.
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Cutting out Starbucks was hard at first, but we invested in a good coffee maker and travel mugs. The amount we saved in one month, we could of bought a super deluxe machine, but we didn’t. Anyway, we realized our coffee was much better all around, especially if we grind your own beans.
Now, I don’t even drink coffee or soda. It is interesting how those habits just slowly disappeared once we stopped buying our coffee and ordering soda at restaurants.
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John reply on April 20th, 2008 11:16 pm:
The coffee pot is the way to go! I only drink one cup in the morning now. I would like to eventually quit altogether. One thing at a time!
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Simply put, small variations in behavior can produce huge changes in the long term outcome.
That’s right and eating out is a great example of how reducing it can produce larger benefits; weight loss and savings for example. Not to mention preparing the food you want to prepare in maybe a more healthful way as well as more realiztic portions [especially good for people who tend to need to eat everything on their plate!]
Good information!
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John reply on May 4th, 2008 6:03 pm:
Samsara – I like cooking at home. I can prepare things the way I want, as you pointed out. I also tend to eat better, maybe because I am not being tempted by the sights and smells of a restaurant. Do you find that you order things you know you shouldn’t simply because of menu presentation? I do!
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