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  • I just love this place, don't you?

  • I know it's kinda expensive, but everything's so top-notch!

  • Hey folks.

  • You know what you want?

  • Yes!

  • I'd like to eat the Down Payment on a House, with a side of Flambéed Emergency Fund.

  • Excellent choice.

  • And for you, sir?

  • I'm pretty hungry, so I'm gonna have Our Retirement Savings, and... what the heck, a bottle of Our Daughter's College Tuition.

  • Very good.

  • Do you think we spend too much on dining out?

  • Maybebut everyone else is doing it.

  • Besides, what's the alternative?

  • Cooking at home?

  • At least the breadsticks are free.

  • 21% of Americans have no retirement savings, and another 10% have less than $5,000.

  • It's even bleaker for millennials:

  • nearly 6 in 10 have nothing saved at all.

  • Now, there are a lot of reasons for this:

  • the increasing cost of housing, health insurance, and of course, student debt.

  • But for many people, those costs are relatively fixed.

  • If you're looking for practical areas to cut back, one sticks out like a fly in your soup:

  • dining out.

  • In 2015, for the first time in history, Americans spent more money on bars and restaurants than on groceries.

  • With the average household now spending more than $3,000 annually onfood away from home,” representing between 5 and 7 percent of their total spending.

  • Even though restaurant prices are increasing faster than inflation, and grocery prices are holding steadyor even falling!

  • The average diner is still eating out around 5 times a week.

  • How much is this costing us?

  • Well, restaurants typically mark up their food by around 300%, meaning the price on the menu is about 3 times what they actually spent on the food.

  • If that seems like a lot, remember, you're also paying for the restaurant's rent, labor, equipment and overhead.

  • So if you live in an area where real estate values are increasing, that also applies to the surface area of your local restaurant's tabletops.

  • And that doesn't even include drinks!

  • A survey by Zagat found that the average restaurant bill per person is over $36.

  • If you do this just 3 times a week, that's over $5,600 a year!

  • By contrast, the average meal cooked at home with groceries from the market is about $4 per person.

  • Now you can see why so many financial advisors focus on dining out as a place to save money.

  • How much money could you potentially save?

  • I think it's time toRun the Numbers!

  • Let's say Jake here goes out for dinner 3 times a week, spending $35 each time.

  • He starts every workday with a latte and croissant at his local coffee shop and buys lunch at the local food court 4 days a week. (Fridays are pizza day at the office.)

  • In one year, he's spent over $9,000 on commercially prepared food and drinks--

  • over 12% of his yearly salary of $75,000.

  • What if Jake could get those 3 dinners down to just one a week?

  • And what if he started making coffee and breakfast at home, and brown-bagged lunches at work?

  • Assuming that all those homemade meals would come out to around $5 each, that would mean a yearly savings of $4,420!

  • That's enough for a Hawaiian vacation!

  • But wait, we're not done!

  • What if Jake took those yearly savings and put them into an account earning 7% compound interest?

  • In just 10 years, he'd have over $65,000.

  • Enough for a down payment on a house!

  • In 20 years, he'd have almost $200,000!

  • All from just eating at home more often.

  • Jake's example demonstrates that even in an era of burdensome healthcare and student loan obligations, you might have some wiggle-room in your finances.

  • Even a small cutback in dining out could allow you to finally pay off an onerous debt or build an emergency fund.

  • This might be easy advice to give, but harder to put into practice.

  • Many of us dine out because we're too busy or tired to cook after a long day of work.

  • If we know how to cook at all.

  • And going to restaurants isn't just about the food.

  • It's a social event

  • a place to see your friends, to connect with co-workers, to take the edge off a stressful day.

  • So we're not saying "never go out to eat!"

  • But if you want to cut down on this expense, you first have to know why you're spending the money in the first place.

  • Is it a convenience or a luxury?

  • If it's a convenience

  • in other words, if you're eating out because you don't have time to cook at home, well, the problem might just be a lack of preparation.

  • After all, brewing a pot of coffee and toasting a bagel can be less time-consuming than waiting in a Starbucks line.

  • And can potentially save you hundreds of dollars.

  • There are lots of resources on the web for how to make shopping and cooking cheap and simple, including this video we made about navigating the supermarket.

  • But if you're still intimidated by the prospect, you could ease yourself into it by utilizing ingredient-or-grocery delivery services like Blue Apron or Instacart.

  • These are definitely more expensive than doing your own shopping, but still cheaper than eating out.

  • We like to use cash at the supermarket to stay within a budget, but if you're trying to incentivize yourself, you could look into a credit card that gives rewards for grocery purchases.

  • And it's always a good idea to keep some convenience foods like microwavable dinners in your freezer.

  • That way, on days that you really don't feel like cooking, you'll have an alternative to stopping for take-out or ordering in.

  • On the other hand, if eating out is a luxury

  • that is, if you're doing it for social or psychological needsthere still might be ways to achieve that with less spending.

  • For instance, you can share an entree.

  • Restaurant portions are typically much larger than the average diner's appetite, because it makes it easier for businesses to justify high prices.

  • If you're there for the service and the atmosphere, you can get that without overeating to the point of discomfort or leaving uneaten food behind.

  • If you have favorite restaurants you know you visit often, it might be a good idea to sign up for their email lists or check Groupon for details.

  • But beware that these "bargains" are intended to make you visit more frequently.

  • Same goes for "diner's reward cards".

  • If you're not careful, these strategies might actually increase your monthly dining expenses.

  • Alcohol is one of the biggest markups for restaurants, so if you like to have a drink with dinner, you might want to find places that allow you to BYOB.

  • Similarly, going to an ice cream shop after dinner is usually much cheaper than ordering dessert at the table.

  • And lastly, if you find yourself buying lunch just as an excuse to get out of the office, no one's forcing you to eat at your desk!

  • Hopefully.

  • Take your brown bag to a nearby park or public space.

  • It's the same psychological benefit without the cost.

  • Dining out is a big part of our culture, and it might be an important aspect of your social or professional life, so we're not suggesting you cut it out cold turkey.

  • But you shouldn't accept any large, regular expense without asking yourself three fundamental questions.

  • How much am I spending on this?

  • What do I get out of it?

  • Can I get the same benefit for less money?

  • And that's our two cents!

  • Do you have any tips on how to save money while dining out?

  • Go ahead and share them with us in the comments!

I just love this place, don't you?

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A2 US dining jake spending eating restaurant yearly

How Eating Out Keeps You Poor!

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    Mackenzie posted on 2019/10/08
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