DESTRUCTION IS IMMINENT. Well, kind of. Let’s take a long, honest look at how dropping too much cash on meaningless frivolities could do us more harm than it’s worth in the long-run.

My standard Chipotle order is as follows:

• Chicken fajita bowl with avocado, cheese, lettuce, peppers, and both medium/hot sauces.
• A set of three barbacoa tacos for my girlfriend.
• Chips and salsa, because this is my weakness at all establishments that serve it.
• A couple of blackberry Izzy’s.

That typically lands me around $20 dollars, give or take, depending on whether or not I go with my gf or by myself. The same ballpark price tends to be how much all of our quick dining meals go for: a couple of #9’s at Jimmy John’s (with added hot peppers, obviously) and two cookies will land you in the same cost range. My favorite “nice, but not too nice” ramen dining spot, which I will often go to by myself just to eat and catch up on reading, costs almost exactly $20 after taxes for the tsukemen. A little less if I go for the spicy ramen, instead.

I have no illusions about the damage that this does to my bank account, especially when I (or both my girlfriend and I) go out frequently for food. And she’ll occasionally pay, because she wants to and makes more than enough to cover it, but the general trend is still that my pocket is the one taking the brunt of it.

I can definitely feel the impact of these things on my immediate financial health, but how do things look further down the line for my retirement account? Is my retirement savings in danger? I have known some people who eat out far more than I do. Are we in the same boat, or are things even more dire for them?

Is destruction imminent? Let’s find out.

How Daily Dining Can Add Up Over Time

It's just…so easy to spend on meals and snacks without thinking about the long-term consequences, but over time, small expenses can add up significantly (I have no idea how much I’ve spent on energy drinks and to be honest, I’d rather not know). Whether you're grabbing lunch at work or going out for dinner with friends, it pays to be mindful of how your daily purchases will affect your finances beyond just the immediate.

“Some people become so accustomed to living in the here and now that they end up spending a small fortune on food,” says Leonard Kim of AdvisorCheck. “They might eat out during lunch every day of the work week, which could cost anywhere from $10-$20 a day. In the evening, they’ll go out to eat with friends or a significant other. If they’re out with friends, chances are they are splitting the bill, which could be anywhere from an additional $20-$50 just for a meal alone. With alcohol, it could reach the hundred dollar mark. If eating out with a significant other, those costs could double if you haven’t started speaking about splitting expenses as well. Eating out twice daily could end up costing some people thousands of dollars each month,” Leonard continued. 

The first step is to understand where your money is going when it comes to food. Start tracking what you're spending and organize it into categories such as groceries, restaurant visits, takeout orders, etc. This will help you identify areas where you may be able to cut back and save money.

You may also find that there are items that are draining your budget beyond what is strictly necessary; for example, as I write this, I’m drinking a small decaf caramel latte that I definitely didn’t need. But something about coffee just tells my brain “it’s work time now,” so it feels like an expense that, while not necessary, is ultimately beneficial.

The jury is out on whether or not that is just a beautiful lie I tell myself. But hey, at least it’s better than those $20 chipotle meals.

Right?

Retirement and Frivolous Spending

Unfortunately, frivolous spending can have long-term consequences that could significantly affect one's retirement efforts. The reality is that each dollar spent today is a dollar less towards retirement savings tomorrow.

Financial experts agree that a disciplined approach to budgeting is key when it comes to saving for retirement. That means setting aside part of each paycheck while avoiding unnecessary spending such as takeout meals or luxury items. If you're not careful with your budget now, you may find yourself unprepared later in life when it's time to retire. Investing in yourself today will ensure a better tomorrow—more money saved for retirement means more financial stability later in life.

But also, there’s a lot of importance on the definition of ‘frivolous’ and its varying levels of importance to different people.

Do I spend too much on Chipotle? Admittedly, probably yes. However, I do not feel bad for spending money on things I enjoy and which add richness to my life, it’s more a matter of further developing my skills of self-discipline and moderation to balance the cost with the pleasure. Too many impulse purchases and bad spending behaviors can turn into financial ruin (I once worked with somebody who’d resigned themselves to a life of student loan minimum payments, and spent all their disposable income on vacations and shoes), or at the very least, a suboptimal financial lifestyle that could be threatened by the first really bad day that hits you. But we also don’t advocate for total abstinence from joy.

An old college buddy of mine had an uncle who would visit him often, and I met this uncle a couple of times. He was a slightly older fellow right at the cusp of retirement (I’d guess around 61 or 62), and he was absolutely replete with wealth. A wealth that I didn’t know he had until later, when my college friend told me his uncle was saving it mostly for rainy days and his twilight years. He was frugal, it seemed, nearly to a fault, and had anxiety about spending more money than necessary on anything, ever, because what if there was an emergency? What about his retirement years?

So his uncle sacrificed decades of small pleasures and family trips and opportunities to experience life, in the hopes that he would all make up for it later in life.

I learned that information about 12 years ago. This uncle passed away unexpectedly in 2019. I don’t know if the man ever really retired, or how he was spending his retirement years if he did, but assuming the best, he was indulging in the fruits of his labor for only about 8 years. Something like 40 years of possible wonder and fulfillment, blocked by financial anxiety and traded for (maybe) 8 years of solid retirement.

I’m assuming (but can’t know for sure) that his wealth will be inherited, but still. I can’t help but feel a bit sad that all that planning and effort went into a dream he barely had a chance to live, instead of allowing himself a healthy balance in his earlier life.

Impulse buying is destructive, yes, but total, financial authoritarianism leaves no room for joy. You can be financially wise and future-oriented, while allowing yourself the occasional international trip with friends and family, splurge on that skydiving jump you’ve always wanted to do, or yes, even dropping $20 on something as mundane as Chipotle.

Just something to keep in mind, going forward.

Social Security and Retirement Benefits

Now, into the nuts and bolts of why you should care about retirement, and steps you can take to make your retirement and related accounts look happy and healthy.

Retirement benefits and social security are essential components of financial planning and should be taken into consideration by anyone looking to have a flexible financial health. In today’s economy, it is especially important to understand the value that these benefits can bring to your overall retirement strategy.

Social security can provide you with an additional layer of income while you are retired, allowing you to supplement your other sources of income, such as a 401(k) or investments. Additionally, good retirement benefits can help protect against inflation, providing a steady stream of income throughout the years that keeps up with growing prices, without any additional effort on your part. 

For those who have yet to start saving for retirement, taking advantage of social security and retirement benefits are essential in helping you begin your journey towards financial freedom.

Approaches to Investing for Retirement

Speaking of investments.

Retirement may seem like an age away for many, but the earlier you can start setting up investments, the better. To newcomers, investing often feels complicated and intimidating, but with some research and guidance you can set yourself up for success. Here are the steps to take when setting up your investments for retirement. 

• First, determine how much money you will need in retirement. Estimate the amount of income you’ll require each month, taking into account inflation and other market fluctuations that could affect your savings.
• Determine the total amount of money needed for retirement, and start planning which types of investments are best suited for meeting those goals.
• If you need support, take classes or seek out a financial advisor for professional guidance.

The Power of Compounding Interest

When it comes to retirement planning, one of the most important tools you have at your disposal is compound interest. Compound interest has long been known as one of the greatest financial inventions ever created, allowing people to generate exponential wealth over time from their investments and savings. With compound interest, you can grow your portfolio so that it provides a steady income stream during retirement that runs parallel to, or surpasses inflation.

Compound interest works by reinvesting any earnings generated from an investment back into the principal amount. Over time, these reinvested earnings accrue additional returns and add up significantly. For example, if you invest $100 at 10% rate for 30 years, your initial investment will have grown to more than $1,000 due to compounding effects.

Benefits of Investing over Saving

Diversity is important. We recommend both investment accounts and savings accounts, each for their own purposes. But if you don’t know why we’re pushing investments so much, let us touch a little deeper into the merits of investing’s power over saving, especially as it relates to retirement.

In short, the chief difference is that savings are generally for purchases and emergencies, operating on a relatively short-term basis compared to investments, which require long-term cultivation and market research to bring to fruition.

Having money saved up is great, but investing can help you see a return on that money over time. Investing offers the potential of growing your wealth while saving simply keeps your funds accessible without much or any growth. 

There are many different ways to invest, such as stocks, mutual funds, bonds and other options. Each type of investment offers unique benefits depending on the type and goals of an investor. For example, stocks provide the opportunity for rapid growth, but have a higher risk than other types of investments; however mutual funds offer diversification with less risk. 

Ultimately, investing allows people to grow their money faster than traditional savings methods, like putting money into a bank account or certificate of deposit (CD).

Tips for Making Investing Easier

Lightning round. Here are some hard and fast tips for how to bridge the (admittedly somewhat intimidating) gap for how to go about your investment journey.

Start Early

As early as possible, anyways. Don’t allow yourself to get down about having not started already. That way lies frustration and disappointment that you cannot change, and which might ruin your ability to focus on the change you can create right now. As the old proverb goes, the best time to plant a tree was 20 years ago, yes, but the second best time to start is right now.

Set a Goal

Set a goal, and where possible, also set sub-goals. “Chunking” is a common piece of wisdom for goal-setting, because it allows you to create goals that feel digestible and achievable, which feed into a larger, ultimate objective.

An example of a major goal would be “I want a diverse investment portfolio worth at least a million dollars by the time I retire.” Several possible sub-goals to that could be (but are not limited to):

• Have a healthy mutual funds account
  • Research “mutual funds” and inquire with my financial advisor about best options
• Invest at least 20% of my income into 3 high-cost stocks
  • Research which stocks feel possible and beneficial to reach this goal.

Those are a couple of loose examples, for a very big subject. Inquire with a financial advisor for a more detailed answer tailored to your needs and abilities.

Educate Yourself

Knowledge is power. Empowering yourself to know the in’s and out’s of the investment ecosystem is a lifetime journey. Fortunately, there are classes, mentors, and advisors you can seek out to kickstart your education as soon as today.

Use the Right Tools

In the modern era, there’s no shortage of softwares designed to facilitate investment education or participation. These can show you how to trade, help you track the stock market, help you automate your investments, learn about companies, and more.

Some of the best apps to accomplish these goals include Acorns, Robinhood, Public, Betterment, Charles Schwab, Invstr, among many more.

Also never doubt the power of newsletters and memberships like ours.

Automate

Once you’ve answered what you want for your short-term and long-term gains, and the investment options to focus on towards raising those things, then it’s time to set up automated transfers from your bank account into your chosen investment account(s). This will ensure that money is consistently being invested on a regular basis, and you’re free to mostly forget about it.

We would still recommend checking on with the account regularly just to make sure everything is on track and there’s no surprises.

Monitor

Keeping in with the spirit of that last sentence, once everything is up and operating, your only goal now is to watch your investments grow, ideally while continuing to educate yourself, expand your portfolio when it’s wise, and keeping your finger on the pulse of the market. If at any point things start to go south, consider pulling out of your accounts where possible and regroup. Seek advisement if/when necessary.

Find Practical Guidance in a Financial Advisor

Let’s bring this all together, shall we?

We spent a bit of time drilling into the importance of investments, and how they can set you up for long-term success, but we don’t want you to lose sight of why we did that. It was all in service of ensuring that you didn’t accidentally sabotage yourself, and how an overabundance of reckless or frivolous spending can reduce the total health of your retirement account.

Is your $20 Chipotle order destroying your retirement account?

By itself, no. Enjoy your burrito, mate.

But if you are eating out for $20 every day, or even the majority of the week, then yeah, probably. That $20 will build up quickly and prove an incredible hurdle to overcome. Assuming you eat out for $20 four days a week, that’s $320 a month, $3,860 a year, and $115,800 over the course of 30 years. Using a compound interest calculator, if you put that $320 toward retirement each month instead, over the same 30 years, at an investment rate of 10%, you’d end up with $729,704.

That’s ONLY accounting for this specific spending pattern. Think of how much higher that could be if you invested the money you spend on say, vintage guitars, video games, shoes, or whatever else you personally drop too much money on. Be honest with yourself, that’s the only way any of this matters. You can have some fun with those things, but don’t have fun at the total expense of your future wealth and financial comfort.

If you need help striking that delicate balance, a financial advisor is waiting in the wings to help you bring all your financial questions and concerns into sharp focus. With the right hand guiding you forward, as well as enough time and patience, you can turn any financial situation into a win. Need help figuring out the best approach for your investment portfolio? Start here.

Find your advisor through our intuitive search tool.

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Written by Cooper Barham

Fact checked by Billy Quirk

Reviewed by KJ Kim 

Disclosure

The information provided in this article was written by the research and analysis team at AdvisorCheck.com to help all consumers in their financial journeys, by providing the resources and the insights to help improve one’s financial health, make it through recessionary and inflationary periods of time, and save their earnings to use them towards building a secure financial future. 

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