Читать книгу Retirement Planning For Dummies - Matthew Krantz - Страница 42

Most personal finance writers demonize the morning brew from your local coffeehouse. But to me it’s a perfect example that pulls together everything you’ve discovered in this chapter.

Next time you drop $4 on a cup of coffee at Starbucks, consider the following questions, which apply to any type of spending:

 Have I taken care of my overhead, savings, and tax? If you've paid your mortgage (or better yet, paid it off), have maxed out your 401(k), and are paid up with Uncle Sam, a $4 cup of coffee won't hurt you. But if you’re behind on any of these, the math changes.

 Is this a habit? Are you buying coffee every day solely out of habit? Routine spending can add up while the happiness you get from it declines. If you spend $4 a day on coffee, that's $1,460 a year. After you calculate your run rate, decide whether the $1,460 a year translates into that much happiness. Think of another budget item that costs about $1,500 a year. Does that spending make you as happy, or happier, than your coffee habit?

 Do I understand the total cost and is it worthwhile? Spending has an opportunity cost. For example, you could have saved or invested the $1,460 a year that you’re spending on coffee, bringing in even more money.

Here’s a fun exercise. Figure out the monthly cost of a discretionary item. Then log in to MSN’s Time Value of Money calculator (www.msn.com/en-us/money/tools/timevalueofmoney), put that amount in the Monthly Investment field, and change the Present Value field to 0. Select the Calculate button and look at the results. For example, if you put the monthly amount for morning coffee ($122) into a savings account paying 2.5 percent annually, it would be worth $16,613 over 10 years, as you can see in Figure 2-6.

FIGURE 2-6: Calculate how much that daily latte really costs.

And check this out. If you invested the $122 in the stock market and got an 8 percent annual return, you would have $21,208 in a decade.

Again, I’m not here to tell you to skip your morning brew. If it gives you joy and your overhead, taxes, and savings needs are taken care of, partake. The key to building a retirement-savings plan is understanding the true cost of things you buy and making sure they’re worth it. Only you can decide that.