7 Habits You Didn’t Know Were Derailing Your Finances Every Month
I can already feel the hate mail coming my way. The “you have to live” talks. The “you’re missing out on the best times of your life” talks. That’s OK, though. I like those talks. In fact, I love those talks. Each time someone tells me, “You have to live,” it reassures me that I am living like no one else now, such that I can live and give like no one else later.
A couple of years ago, my buddy Scott Trench posted an article about a few seemingly harmless habits that many Americans have. Because I 100 percent agree with Scott—and because I’m a numbers guy—I have taken many of his harmless habits and done my best to attribute a dollar value to show the impact of each of these activities. Think of the dollar values below as a unit of comparison; the actual amount may be more or less for you.
Before we get started, let me preface with a disclaimer that I am no angel. I take part in almost all of these activities and don’t expect you to cut them out of your life either. However, I am keenly aware of the impact of these activities and practice them significantly less than the average American. Now, it’s your turn to scale back.
This article is typically for younger people in their 20s to mid-30s who are seeking early financial freedom. If you have already joined the “financial freedom club,” do whatever you like. You’re there! Enjoy it! For the others, I suggest you keep reading.
1. Watching Television (Netflix, Hulu, Cable): $2,709/mo
Eight-ninety nine for an unlimited catalogue of TV shows, movies, and documentaries. That’s cheap, right? Wrong!
This New York Times article suggests that on average, Americans watch 5 hours of television every day. To me (and likely most of the readers of this blog), that sounds crazy. Let’s assume that we are better than the typical American and assume that the average reader of this blog consumes 3 hours of TV each day. That’s 90 hours per month, or $2,700 worth of your time, spent watching TV.
The total there is $2,709. This does not even include the cost of cable, a nice TV setup, and any other miscellaneous items such as snack food, soft beverages, or whatever other ancillary expenses are associated with watching TV.
Watching TV/movies is something I have totally cut out of my life. The only time I will watch TV or a movie is to spend time with friends or family.
2. Drinking & Bars: $2,220/mo
After looking deeply at the effects of drinking and nightlife have, it truly does shock me as to how many people do it consistently. Every Friday and Saturday night. I used to be one of these people. In fact, for about 6 years, I did not miss an opportunity to party with my friends on Friday and Saturday night. Thankfully, I have smartened up.
Let’s have a look at the impact assuming you go out 2x per week. Over the course of the month, you will spend at least $300 in alcohol, Ubers, “drunchy” food, etc. Not to mention the hours wasted. Between the pre-game (pre-drink for the folks outside the U.S.), the game, and the hangover, let’s say a total of 8 hours is wasted per night out. That’s a total of 64 hours per month.
If your time is worth $30 per hour (~$65k per year salary), that’s $1,920 per month! Plus the $300 in direct costs and that’s $2,220 worth of money and time down the drain. This does not even include the health issues and sicknesses to follow.
You keep drinking while the rest of us run circles around you.
3. Social Media: $1,800/mo
We all know that social media is a distraction. Still, the average person spends about 2 hours each day encapsulated in other people’s lives. That’s 60 hours per month—OR $1,800 worth of your time—each month dedicated to social media.
Get off your phones and start living your own life!
4. Listening to Music: $1,560/mo
According to a Nielsen study, the average American listens to 25 hours of music each week. Think about the time spent in the car, cleaning the house, cooking dinner, or doing menial tasks at work.
I am going to assume that many of us (including myself) listen to classical music for concentration purposes. I’ll cut this number in half to 13 hours per week, or 52 hours per month.
This is 52 hours each month that could be spent listening to podcasts, audiobooks, or having conversations with those around us. At $30 an hour, that’s $1,560 per month of time listening to music.
5. Driving a Car: $1,010/mo
When you have to go to the grocery store, a friend’s house, or work? What’s the first thing you do? Many of us jump in our cars and drive there. Think of it this way. Every single time you step on the gas, the break, or even turn the engine on you are opening up a hole in your wallet that your hard-earned cash trickles out of.
Let's break it down further. A new car purchase is $25k. Financed with a 6-year loan at 3% interest, this equals car payments of ~$350 per month. A new car is said to be worth less than half of its value after the first 3 years. So, $13k over 36 months is $360 per month in value lost.
Not to mention all of the added costs—gas, insurance, maintenance, etc. Let’s say that’s another $300 per month.
$350 car payment + $360 value lost + $300 in added cost = $1,010 per month
That does not even include the added stress levels of brought to you by traffic and the health benefits provided by walking and/or riding a bike.
Stop driving and start riding!
6. Watching Sports & Fantasy Sports: ~$1,000/mo
While this closely aligns with watching television, I like to separate it out because watching a sporting event is a different experience than watching TV. Typically, it is more of a social event.
Assuming you pay $0 extra to watch sports—you do not have a large HD television, you live in the same area as your favorite sports team, and you do not buy any extra food or drinks because of it—let’s quickly break it down.
Let’s say that the average amount of time spent watching sports is 6 hours per week. Obviously, this ranges during different times of the year. For example, in fall and winter months (September through March), you have the NFL (football) season and March Madness (college basketball), where the hours per week are higher than in the summer months where it is just the MLB (baseball). At 6 hours per week for 4 weeks, that is 24 hours per month or $720 per month watching sports.
With the explosion of fantasy sports, this gets even more costly. The average American pays $550 in fantasy sports dues over the course of the year. I presume, that’s skewed by the real high rollers so let’s say $150 per year. $150 per year, won’t kill you.
The real killer here is time. A study shows that the average fantasy football player spends 2 hours per week or 8 hours per month tinkering with their fantasy lineups. At $30 per hour, that’s $240 of time wasted per month on fantasy sports.
Adding these up, $720 watching + $240 of fantasy sports + any other form of dues, you are looking at close to $1,000 a month on sports. Again, this is before any miscellaneous costs
7. Eating Out: $900/mo
We all do it. We all do it more than we should. Eating out is one of the biggest killers for those in pursuit of early financial freedom. Not only is it expensive, but it’s time consuming AND unhealthy.
Let’s say your average meal out is $20 compared to the $5 it would cost you to buy the groceries and cook your meal. That’s a $15 per meal difference.
According to a study by the Boston Consulting Group, Millennials go out to eat on average 3.4 times per week. We’ll round that down to 3 times per week or 12 times per month. At $15 incremental charge, that’s $180 per month.
Each time you go out to eat is probably on average 2 hours of your time. This includes commuting to the venue, the restaurant experience, and the food coma we all fall into when we are done. That’s 24 hours per month, or $720 worth of your time.
$180 per month in additional food costs + $720 worth of time = $900 per month eating out
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See you at Safeway!
Again, I am no angel, and I do not expect you to be either. With the exception to watching Netflix, I still do all of these activities. I go out with my friends. I listen to music and am frequently on social media. I still take 3 hours every Sunday to watch the Patriots.
However, after thinking about what the impact each of these activities have, I have reduced the negative impact it has on my life. For example, I go out, but don’t drink. I watch sports, but ONLY my team. I listen to music, but have substituted half of the time to podcasts. I am an active user of Facebook, but I gray-scaled my phone so I naturally use it less.
The purpose of this article is NOT for me to tell you to stop doing these things. It is to make you aware of the financial impact each has. It is just to get you to scale back on some of these bad habits. Making small tweaks, will allow you to retain similar happiness levels while being on the fast track to financial freedom.
Do you agree that the above habits are counterproductive? Would you add anything to this list?
Let’s talk below.