Published in: Banks | Nov. 11, 2019
By: Maurie Backman
Hint: It's something many of us spend far too much money on.
Many Americans struggle with credit card debt and stagnant or nonexistent savings. And often, the reasons boil down to a select few bad habits that wreak havoc on their finances.
For some people, the primary source of budget-busting is impulse purchases. For others, it's the exorbitant rent required to live in a major city. But for many Americans, it's none other than food -- restaurant food, to be specific.
The average U.S. household spent $3,459 per year on dining out in 2018, according to the Bureau of Labor Statistics. But while going to restaurants may offer you access to great food without the hassle of having to shop for groceries, cook, and clean up afterward, it can destroy your chances of saving money and even land you in debt. And that's reason enough to start cutting back.
Dining out is fun, easy, and convenient -- but the food you buy at restaurants can always be prepared far more cheaply at home. The typical dining establishment charges a 300% markup on the items it serves, which means that a meal costing $40 can be cooked in a home kitchen for $10.
Upgrade your checking account with one of The Ascent's to picks. From high APYs to budgeting tools and even cash back, these are checking account you can bank on.
Now, imagine you go out to dinner three nights a week and spend $40 per meal. Over the course of a year, you're overpaying for food to the tune of $4,680. That's a lot of money to part with. And if you are restaurant regular, it should serve as a wake-up call to start exercising a bit more self-control.
Of course, if your savings are robust, you have no unhealthy debt (namely, that of the credit card variety), and you're meeting other important financial goals, like building a college fund for your kids, then by all means, spend thousands of dollars a year on restaurant food if that's what brings you enjoyment and makes your life easier.
But if you're struggling financially, saddled with debt, and staring at a rather low savings account balance, then do your finances a big favor and stop dining out so frequently. You don't have to quit the habit cold turkey, but scaling back from three restaurant meals per week to just one would be a good starting point.
At the same time, set up a budget to see how much you can afford to spend on restaurants while also covering your remaining bills and meeting your various financial goals. Having those numbers mapped out in front of you could help you dine out more responsibly, whether that means doing so less often or opting for cheaper meals outside the home.
Incidentally, the same advice holds true for store-bought coffee and lunch. It's nice to enjoy a fancy latte or a loaded deli sandwich made by someone else once in a while, and there's no need to completely deprive yourself of these modest luxuries that make life a little easier. The key, however, is to strike the right balance so that you're indulging on occasion, but also keeping your finances reasonably intact.
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you more than 20x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2020.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool brand that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2020
The Ascent. All rights reserved.