MONEY COMMENT
Treats, Vices And Sacrifices

By Cliff D'Arcy
August 29, 2003

Previously, we wrote about Five Unusual Ways To Make Money (including volunteering for police line-ups and helping to compile the electoral register). However, an alternative to boosting your income is to reduce your expenses, although doing both brings the greatest rewards.

Here are some examples of how to cut back on some unnecessary items:

1. Cigarettes

I'm a 'lung candy' addict myself, along with several of the Fool staff (you know who you are, you bad people). I once gave up for two years before starting again, so I know how hard it is to keep off the cancer sticks. However, I can't help thinking about the financial benefit of quitting the evil weed:

Four packs per week at £4.50 a pop = 4 x 4.5 x 52 = £936 a year, or £78 a month. Invest £78 a month for 25 years, growing at 9% a year, and you have £83,094.

2. Beer

If I drink an average of a dozen pints a week at £2.50 per pint, my weekly beer bill is £30. If I halve this by drinking a little less and having friends round for drinks more often, I could save:

£15 x 52 = £780 a year, or £65 a month. Invest £65 a month for 25 years, growing at 9% a year, and you have £69,245.

3. Lunch

I spend over £5 a day (and often far more) on breakfast, lunch, snacks and drinks. By making my own sandwiches and resisting temptation by not grazing on snacks at my desk all day, I reckon I could save a fiver a day:

£5 x 227 working days (excluding holidays and Bank holidays) = £1,135 a year, or roughly £95 a month. Invest £95 a month for 25 years, growing at 9% a year, and you have £101,204.

4. Takeaways

To compensate for my culinary clumsiness, I order a takeaway perhaps twice a week. They usually cost between £15 and £20, so let's call it £35 in a typical week. If I cut out my curry and pasta fixes, I'd save, say, £30 a week:

£30 x 52 = £1,560 a year, or £130 a month. Invest £130 a month for 25 years, growing at 9% a year, and you have £138,490.

So, if I completely gave up these treats and vices, I'd have an extra £368 a month to invest, which could grow to £392,033 over 25 years. However, as I'm not a great one for giving up my vices, my goal is to cut these expenses by a third, which would give me about £123 a month to invest. This could grow to £131,033 over 25 years.

It really makes you think, doesn't it?

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