Quit The Bar Scene
Yes, I am talking to you Mr. or Ms. 25 – 35 years old. You have had over 4-7 years now (depending on your legal drinking age) to roam the bar scene, learn and/or master terrible dance moves, damage your vocal cords and ear drums, wear your booze goggles, and drink hundreds of dollars’ worth of bottom shelf liquor and sugar filled pop only to regurgitate your hard earned money in the parking lot before you get into a cab and head off to make some questionable decisions with a new friend, or loudly sneak into what you hope is your house and pass out with your clothes on.
We’ve already taken a look at the numbers and seen that a real party animal – someone who spends $300/night, three nights out of the week, every weekend, for the entire year, will spend $46,200. That is $200 MORE on booze, cabs, and pizza than the average Canadian earned in 2012; UNREAL. But we all know someone who has done that. But for the average person who still engages in the bar scene on Friday and Saturday, three weekends out of the month, all year long, they are spending $11,398 a year. What are some other activities a person could engage in if they reallocated that bar money?
Travel: Travel is a huge category. Many, many, many people talk about “seeing the world” but few actually do it. Last minute Europe trips can be as little as $1,500 to places such as London or Paris, having $2,000 for currency exchange, shopping, and food totals $3,500. You could go on 3 trips to Europe with the $11,398 currently being spent on the bar. All inclusive beach trips to places like Mexico, Cuba, Dominican Republic usually comes in around $1,100. Add in $900 for shopping and you’re looking at $2,000 for a relaxing week on the beach. You could take 5 beach trips, in one year, instead of going to the bar and still have money left over.
Invest: If a person who was spending $11,398 on going to the bar decided to invest that same amount of money each year for 10 years (age 25-35) at an annual return of 6% they would have $159,248. If that person decided to reinvest their money for 30 more years at a safe 6% and made absolutely NO additional contributions they would have $914,639 at age 65. How nice would it be to know that you could prepare yourself for retirement in just 10 years of investing in yourself rather than the bar? How nice would it be to not have to contribute a single additional dollar to your retirement from age 35-65 and still have a great nest egg? Consider that you would get to use ALL of your annual income for those 30 years on yours and your family’s happiness and quality of life!
School: According to the education cost projection calculator from CanLearn.ca (which assumes a 3% annual inflation trend since 2009), if a student were to start a 4 year education program in 2013 their education cost, if they lived at home, would be $47,496. If the average person reallocated the $11,398 that they would (or do) spend on going to the bar every year they would be $476 short of paying for their ENTIRE 4 year degree! It is very, very rare for a student to complete their education without debt. How great would it be if you didn’t start your career almost $50,000 in debt? Imagine all the fun things you could do when being able to use your entire income now that you’ve gotten the high paying job you went to school to be qualified for.
Real Estate: Real Estate is a great investment area, but it is also a very functional and realistic area for everyday people. Most people dream of owning their own home and attempt to do that by signing into a 30 year mortgage when they’re in their 30s and ready to settle down. Sticking with reallocating the money that the average person spends per year at the bar, consider that 5 years’ worth of reallocating $11,398 into an investment account at a safe 6% would yield $68,104; if a person did that from the age of 25 -30 that is a substantial down payment on their first home. If a person decided to invest their bar money ($11,398) for 10 years at 6% possibly from age 20-30 or from age 25-35 that would yield $159,248. That is half of a $320,000 house. Or if you decided to by a condo, you could pay for it in cash! No mortgage needed. Imagine the amount of money that would free up every single month if you didn’t have a mortgage payment.
Prepare: Preparation is huge regardless of the task. You prepare for business meetings, speeches, going to the grocery store, dates, vacations, exams and school projects. So why not prepare for life events? Every single person knows that children cost money, so why don’t people save up before kids? We’ve even looked at the average wedding costs right here on this blog, yet people still pay for them with credit. It has been identified that financial stress is the leading cause of divorce and relationship strain. Weddings and children are two of the (aside from their mortgage) that a couple will face yet, they don’t prepare for them. Different sources identify that the average Canadian wedding cost between $23,000 to $35,000 (without the honeymoon); if you stay closer to the high end of the average consider that if you reallocated 3 years’ worth of bar money without interest you would have $34,194. If you continued to save up after your cash wedding for another 2 years you would have $22,796 saved up in order to cover first kid costs which, according to BabyCenter.com’s calculator will be $10,128. Congratulations you can afford to have twins!