Every single one of us tends to judge our friends’ spending habits. “They spent $3,000 on their weekend vacation? That’s crazy!” But, all the while, you may be spending $5 each day on our fancy Starbucks lattes, which probably isn’t the wisest way to spend your money either. No matter how irresponsible our friends are with their money, I am sure that there is something I can find in your bank transactions that is pretty stupid too. It is just human nature, and quite frankly, we all need to have some hobbies and they will ultimately cost us money.
Some Money Wasting Hobbies
- Softball league
- High-tech gadgets
- Stamp collecting
- Sports card collecting
- Fashion (designer clothes, purses, accessories)
- Home decor
- Attending sporting events/plays/musicals
Did I mention a hobby that you can relate to yet? I hope so. Each one of us has something that we like to spend money on, and it gives us a little happiness when we do it. So it must be worth it, right? Well, maybe. For me, my favorite hobbies are golfing and bicycling/running, and I’m about to find out if the costs are worth it to me with a fairly simple calculation.
The Life-Long Costs of Your Hobby
What if I asked you if your latte was worth $5 to you? Some of you might say absolutely not, but most of you coffee lovers out there would say, “Absolutely!” After all, it wakes you up in the morning, that warm soothing feeling in your throat is to die for, and that smell just makes you smile every time! For a measly 5 bucks, you just can’t wait to buy the next cup tomorrow!
But, what if I asked you if that latte was worth $217,000 over the course of your life? Some of you die hard latte lovers might begin to reconsider your opinion. When you think of a latte as just $5 here and there, it’s easy to say that it’s totally worth it, but when you realize that if you would have invested that money instead that you could have had almost a quarter-of-a-million dollars…. now that is a little harder to swallow!
Now, don’t start to think that I’m looking down on your coffee drinkers. You might be stashing away $1,000 a month into investments and plan to retire on $5 million. For you, that latte still goes down smooth and you can’t wait to buy that next cup. I’m definitely okay with that. If, however, your retirement savings is only going to be $250,000 when you’re 65, you might want to make yourself a cup of coffee at home before driving off to work (instead of stopping for the premium blend on the way).
Like I said earlier, my weakness if golfing. For many, this is an expensive hobby, but for me, I am able to play for free (or actually, for the cost of gas, which equates to about $2 a week). So, if I spend $2 per week on golf for 30 years, how much money am I foregoing in my future? Put it in the calculator…. Looks like I am losing out on $17,000 over the course of my life. Based on the enjoyment I get from golfing and spending time with my friends and family, I’d say yeah, my golfing is definitely worth $17,000. If, however, this number came to $100,000 or more, then I may have pondered this whole golfing thing a little harder.
Your Hobby Costs Calculated
What is it that you like to spend your money on? How much does it cost per month to participate in this hobby? Once you figure out your costs per month, open this investment calculator and put in the following values:
- Your starting balance: $0
- Annual Rate of Return: 10%
- Monthly contribution: (enter your monthly cost here)
- How many years do you plan to contribute: 30 years
- How much will your investment be worth in: 30 years
Click on “Show Results” and you should see your number in big bold letters. Share your hobby and your number in the comments below! Do you think your hobby/habit is worth it? Why or why not?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.