Take it Easy on the Alcohol

by Justin Weinger on April 1, 2007

A while back I wrote about how much money smokers could save (and gain) by simply giving up the cancer sticks.  At the time, I meant to continue with the “series” and talk about alcohol, but I got busy writing about other topics and just never got around to it.

So, I figured it was about time to revisit the topic and talk about how much alcohol can negatively impact your finances.

For this example, let’s say that you’re over 21 and drink, on average, four beers each week nigh and six beers a day during the weekends, meaning you drink 32 beers each week.  Let’s also go ahead and assume that you can pick up a 24 pack of beer for $16, or roughly 67 cents per beer. 

Keep in mind, if you’re not buying the beers in a store but in a bar, you can expect to be paying at least four times this amount.

So, following the example laid out above, you could expect to pay about $22 per week or $1,150 per year if you did most of your drinking at home.  If you did most of your drinking in bars or clubs, you could expect to pay about $88 per week or $4,600 per year.

So, what would happen if you invested that money instead?  Below are two scenarios that show how much money you’d lost out by drinking, based on the examples provided above:

Scenario #1 – Investing in a money market account with an annual yield of 4%:

At Home Drinking

Year
Balance
5 $ 6,478
10 $ 14,359
15 $ 23,947
20 $ 35,614
25 $ 49,808

At The Bar Drinking

Year
Balance
5 $ 25,911
10 $ 57,435
15 $ 95,780
20 $ 142,455
25 $ 199,230

Scenario #2: Investing in a mutual fund with an annual yield of 8%:

At Home Drinking

Year
Balance
5 $ 7,287
10 $ 17,994
15 $ 33,726
20 $ 56,840
25 $ 90,802

At The Bar Drinking

Year
Balance
5 $ 29,145
10 $ 71,969
15 $ 134,892
20 $ 227,345
25 $ 363,190

In the first scenario, by investing the $1,150 you would have otherwise spent on drinking at home you would be sitting on $50,000 (pre-tax) instead of being out $29,000.  That’s a net gain of $79,000.  Now, if you tend to frequent the bars instead, if you would have invested the $4,600 you would have otherwise spent on drinks, you would be sitting on nearly $200,000 instead of being out $115,000, which is a net gain of $315,000.

In the second scenario, if you would have invested the $1,150 you would have spent on drinking at home, you’d have $91,000 instead of being out $29,000.  That’s good enough for a net gain of $120,000.  Finally, if you would have invested the $4,600 you would have spent at the bars, you would have saved over $363,000 as opposed to being out $115,000, which is good enough for a net gain of $478,000 – or nearly a half a million!

So, needless to say, you could certainly save a lot of money by cutting out booze from your daily routine.

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{ 3 comments }

Bookysa April 1, 2007 at 7:45 pm

Dude, 32 beers a week might not be high from some people, but even if you count in binge drinking, it’s up there.

You need to do the math for soda, since people drink far more of that and it isn’t proportionally cheaper. We’ve actually saved the most money by buying a Brita water cooler and drinking that exclusively during the week – it’s a hell of a lot cheaper than soda or beer.

Brian Carr April 1, 2007 at 8:06 pm

I agree, 32 might be a bit on the high side, but I’m sure there are plenty of people out there who drink that much, if not more.

I really like your idea about cutting back on soda. About a month ago I decided to stop buying the stuff and just drink water. Magically my food bill was down by $5 or $6 per week.

Frank April 16, 2007 at 4:46 pm

You might want to think about making your own home brew too. While people can go overboard and spend heaps on making this a serious hobby, it’s a great way to actually take in interest in what you are drinking and make some great tasting beer while saving cash at the same time.

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