09 August 2012

Paraphrased Ben Bernanke: "Pack your lunch to work"

See, it's not just me! Federal Reserve chair Ben Bernanke thinks you should bring a sack lunch to work every day, too:
Financial education supports not only individual well-being, but also the economic health of our nation. [ ... ] Financial education also provides a context for students to develop important skills that can be applied more broadly. Making good financial decisions requires that consumers seek out relevant information from trustworthy sources, and that they use critical thinking, quantitative reasoning, and decisionmaking skills.
Via Consumerist. Say what you like about how the Fed is handling (or not) the economy, he's right on target to assert that young people need to learn how to manage their money and plan for the future. The more money you shave off your expenses every week or every day, the better you can weather an emergency; the better you can handle a stretch of unemployment; the better you can withstand an uninsured loss; the earlier you can retire; the more relaxed you'll be when you take the vacations you can now afford. How about some do-the-math on my lunch today?

How can you have any pudding if you don't do your math?

I brought a cheese sandwich on home-made bread and a chopped apple and peach. I drank water. To compare, I looked for the lowest-priced hoagie at Wawa and identified a lunch cart in Center City Philadelphia that offers fruit salad and chose the smallest size.

Internet research unverified by a walk to Wawa (because it is too hot and muggy at the time of writing) reveals that a four-inch Junior Hoagie at Wawa costs $2.99. While this hoagie would include condiments and accompaniments that my sandwich did not, I'll stay with that price for two reasons. One, my bread is heavy and wholesome, enough so that that I honestly think that my sandwich may actually weigh as much as a four-inch Junior. And two, as you'll see, I'll win even if you take $2.00, or two thirds, off Wawa's price. As for fruit, I found a cart selling a small salad for $3.00. I will knock $1.00 off that price because I used only two pieces of fruit, even though I think my container was holding the same volume as the cart's small salad. As for something to drink, this time of year I always seem to come across a plucky entrepreneur on the sidewalk selling ice-cold water in pint (500 mL) bottles for $1.00. To sum up: Wawa Junior hoagie plus small fruit salad from a lunch cart plus water: $2.99 + $2.00 + $1.00, or $5.99.

My home-made bread as prepared in that photo cost about $0.10/slice (I have a do-the-math post in the works about how to compare bread prices). I used 2 slices, plus about $0.75 worth of cheese, mayo, and Old Bay, seasoning of kings. On the right is about 3/4 lb. of fruit that we found at $1.75/lb. at the farmers market this past weekend, for a total of $1.31. Water is free at my office. So my total cost for lunch today was $2.26.

(a) Total Wawa + cart lunch: $5.99
(b) Wawa + cart lunch taking $2.00 off Wawa's price: $3.99
(c) Total Rowhouse Livin' lunch price: $2.26
Maximum savings, lunch (a) minus lunch (c): $3.73
Minimum savings, lunch (b) minus lunch (c): $1.73

But we're not going to stop there. This was only the quantitative reasoning. The next step is to use the results to make better decisions. If you work 50 weeks per year, 5 days per week, and can save even just $1.73/day by bringing a sack lunch, you can put aside $432.50, and not have to walk to Wawa and a fruit cart at noon on one of the hottest days of summer. If you instead save that $3.73/day and put it aside, you'd have $932.50. That right there is round-trip airfare for two to the west coast, or a month's rent or mortgage, or property taxes, or perhaps four months' groceries, or 266 gallons of gas at $3.50/gal. (think 70 fill-ups), or very nice extra payment into the 401(k) or your credit card balance. That could even be a full one year's electric or gas for a smaller household.

When Amy Dacyczyn explained, in The Complete Tightwad Gazette, that pennies add up, this is what she meant. And I think it's what Ben Bernanke means, too.

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