What’s the issue?

It’s a little known fact that it’s the smallest costs that have the greatest effect at lightening your wallet. Small spending on coffee, gum, magazines, snacks, and lunches out are easy to brush off as little more than pocket change. With no one large bill, it’s easy to convince yourself that you can afford that extra cup of coffee without sacrificing your saving plan. But small costs add up in a huge way, working against budgets, savings and retirement plans.

Take for example, the following day for the average Canadian. On your way to work, you stop by your favorite coffee place and pick a cup of joe. Then it’s off to the office, with a quick pit stop at that great sandwich place with your coworkers for lunch. On your way home you stop to gas up your car, gathering some gum, a magazine and a drink while waiting at the register. You go home, where you and your spouse are going to discuss a budget to save up for that new car, dream house or for your children’s education.

The Real Cost.

By applying some cautious estimates with the story above, let’s say you spent around $15.00 (not including gas). In 2015, the average Canadian had around 250 work days. If you spent $15.00 every day at work, in 2015 you would have spent $3,750! Even more startling is this doesn’t include how much your spouse spends. If we double the $15.00 a day to include your partner’s costs, we get $7,500 a year in meaningless spending!

Now let’s say you took that money and invested it at 5% compounding annually. Over 20 years, adding $7,500 to your investment each year and not withdrawing in that 20 year period, you would end up with over $260,000! That’s more than enough to send your kids through university, with spare for that flashy convertible you’ve always wanted. 

Start saving a little bit each day.

By planning your day around your usual spending habits – try bringing coffee and lunch from home – and working to curb impulse spending, you and your spouse can make a serious dent in those mortgage and car payments. All the while working to become debt free, retire, or buy your first home together all the sooner.

By taking a closer look at the true cost of small expenses, you can learn how to better your financial health without a drastic lifestyle change.