Recently, on a beautiful summer afternoon, I sat on the beach with my 31-year-old sister and had a pretty serious talk about a topic that many can relate to: her money (or lack thereof).
As background, my sister, while also being funny, smart and beautiful, has a great job in the entertainment industry and is based in New York City. She earns a robust salary and is not, by any means, frivolous with her money. But she simply cannot save. In fact, she is genuinely amazed by people who can and desperately wants to get on track. So we dove in and tried to uncover the hidden mysteries behind her cash flow. Here is what we found:
My Sister Spends A Lot Of Money On Nonsense.
I don’t mean to pick on her because she really is not irresponsible with her money; however, she is also not aware of where her money goes each month. For starters, we quickly realized that her beverage budget is out of control. Yes, you read that correctly—her beverage budget. If you were to add up the money she spends each month on coffee, juice, smoothies, and alcohol, it would really give you pause. If you just calculate her coffee budget each month ($5 per day times 30 days), you are already at $150. Let us not forget the day she gets a second coffee, or decides she wants a carrot juice after yoga. Based on my experience, many city dwellers her age spend between $200-500 per month on just beverages.
Next, we looked at her takeout and delivery purchases. She actually cooks for herself more than most and still spent over $200 that month on food delivery. This doesn’t include her daily lunches that cost approximately $12 per day. Finally, we looked at her transportation costs. Oof. She had taken twelve Ubers that month. She had also charged five cab rides on her card. Her cab and Uber rides that month were over $200. Between drinks, delivery, lunches and cabs, she had spent over $650 that month alone and had nothing (other than some caloric intake from the food) to show for it.
She Has Somehow Mistaken Wants For Needs
First, before I get on my soapbox, I will say that New York City is an insanely expensive place to live. Rents are sky high, food, toilet paper—just about everything (other than flowers maybe?)—are more expensive in the city than they are everywhere else. I understand that when your first paycheck of the month hits, it mostly goes to the rent. However, somewhere along the line, my sister (and many others who have similar situations), have mistaken things like dinners out with friends, weekends in the Hamptons, weddings in Mexico and vacations to France (she’s there now), as necessities.
Often, when I speak to people who have a hard time saving, they begin by telling me their fixed costs (rent, cable, cell phone bill) and before I know it, they have outlined a pretty fantastic travel schedule from the past 6 months. Allow me to put it you straight—travel, dining out, take-out and personal trainers are all luxuries. If you are having a hard time saving, take a long look at what you spend each month and decide if any of it can be eliminated.
Kristin Merrick is a money expert financial advisor at O’Keeffe Financial Partners LLC serving the New York and Los Angeles media markets. Learn more information about her: https://okeeffefinancialpartners.com/our-team/kristin-okeeffe-merrick/about-kristin-okeeffe-merrick/