Saving money is my favorite part of meal prepping. The financial benefit you get from cooking for yourself instead of going out isn’t hard to see. Here in Austin it is nearly impossible to get a meal out for less than $15 and those are from the fast casual places. If you try any of the local hot spots you’re looking at $20 plus. Even with the rise in grocery prices from inflation it is still quite easy to keep meal prep costs to under $5 a meal. The majority of the meals that I make fall somewhere between $3-$4.
I have been obsessed with this YouTube channel I found a few months ago where people get their finances audited. Almost all of them spend an ungodly amount on eating out. According to google the average person aged 25-34 spends $95 a week on dining out. If we assume an average meal costs about $20, let’s call that 5 meals a week. If you were to meal prep each of those instead at an average cost of $4, that would be $20 total or a $75 dollar difference. Multiply that by 52 weeks in a year and that totals $3900. Nice.
If for 10 years you took that $3900 you saved from meal prepping and put it into a Roth IRA in a fund that mimics the S&P 500 (not official financial advice), you would be looking at roughly $72,000 at the end of that 10 year period. This is assuming that the S&P returned an average of 10% during that period. I know some of you are going to say “Yeah right, you’ll never get a 10% return.” Well, maybe you’re right and there is no way to say for certain. However, since the S&P 500’s inception in 1957 it has returned an annualized average of 11.88%. That’s why you don’t try to time the market and if you just trust the process and consistently contribute, history says you will likely come out a winner. No promises of course, it’s all a gamble. A calculated one at that though.
If you’re fresh out of college you are in your greatest years to take advantage of compounding growth. If you aren’t in your early twenties, congratulations, every single day moving forward is still the best day for you to also take advantage of compounding growth. Let’s pretend that you decide to meal prep instead of eating out those 5 meals a week when you get your first job at 22 and continue for a decade. If you contribute that $3900 to an investment account year after year you will have about $72,000 after year 10. Now let’s assume once you reach 32 years old, you’ve decided you’re done meal prepping. You’re a bit more established in your career, have more money, maybe even a family now and meal prepping isn’t worth it to you any longer. If you never contributed another dime to that investment account it would continue to compound and grow as long as the money stays in the account. When you turn 59.5, that money can be taken from the account with no penalties. That is another ~28 years of compounding growth which will bring your new total account value to over $1,000,000 dollars. If that money was put into a Roth IRA during the years you contributed, you will get to pull that money out completely tax free. HIGH SCORE HIGH SCORE HIGH SCORE. A million bucks all because you decided to meal prep your lunches instead of eating out for the first 10 years of your career.
Meal prep isn’t magic. It’s not specifically meal prep that is allowing you to build wealth. It is merely a tool you use to save money. There are so many other areas of your life that you can optimize to pinch pennies and give you more money available to invest. That is what it’s really about. Here is the deal though. Many Americans are financially illiterate and the percentage of illiterates between the ages of 20 and 30 is absurd. I see people I went to high school and college with spending like jackasses, piling up credit card debt and destroying their future because they refuse to make the smallest sacrifices. This behavior is often accompanied by a “you only live once” and “you have to enjoy your 20’s”. Sure, I can’t disagree with either of those to an extent. But do you really need to borrow money and cripple your future for years because you needed to have a new 2023 car? Is “enjoying your 20s” worth being forced to work a shitty job when you are 80 because you spent all of your extra cash partying every weekend instead of saving some for retirement? It blows my mind that anyone that plans to live past 30 could say the answer is yes. It all comes back to financial literacy.
If someone doesn’t have parents or friends who understand some foundational principles of personal finance then there is a decent chance they won’t either. It isn’t one of those topics you just stumble into learning by happenstance, especially the investing portion. If you aren’t having these conversations with your peers and mentors, you may never have any exposure to the topic. One of the beautiful things about living in 2023 is that it has never been easier to find those conversations on your own IF you are willing to seek them out. All the major social platforms (especially YouTube) have thousands of hours of content available from the smartest people in the world, all available for free. Nearly every adult should be investing a portion of their money. If they are unable to currently, they should have a plan to get to a place where they can. Building wealth for your future is cool.
To me wealth is measured by observing the ratio between how much you earn and how much you spend. The greater the spread between those two numbers, the more wealthy a person is. Person A who makes $1,000,000 a month and spends $1,000,000 a month may live rich but they are not wealthy. They are living paycheck to paycheck. If something catastrophic happened to their earning potential next month they would be broke in an instant. Compare that to Person B who makes $5,000 a month and spends $2,000. Every month they save and invest $3,000 which will continue to compound and grow as time progresses, making them more and more wealthy. Person B is wealthier than Person A. Living below their means affords them one and a half months of financial freedom for every month they are earning. If you dilate that out to a long enough time horizon you can estimate the target point where the cost of freedom becomes affordable enough that you no longer need to work. Taking advantage of compound growth can expedite that process.
Becoming the millionaire next door is likely easier to achieve than you may think. With a bit of planning and discipline it is obtainable by nearly everyone. While meal prep alone could make you a millionaire as described in the specific scenario above, it is realistically just one of many tools you can use to help save money and pave your path towards millionaire status. Many of you reading this have probably already taken the necessary steps to planning for your future. Some of you may have never heard any of this and my hope is that this can be the impetus to get you thinking about the process. Find a book. Check out some YouTube channels. Reddit has some awesome subs dedicated to these ideas. Whatever it may be, just create some momentum and get the ball rolling. Time is powerful.