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.Â
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.