Dr Malkiel is quoted in a recent article in The Wall Street Journal’s online financial MarketWatch about how money saved by not spending $3000 a year or so on simple lunches and coffees can really add up over your working life.

“Don’t think of it as $3000 but rather what $3000 per year would be in 20 or 30 years if invested at even low interest rates,” he emphasises.

Personal finance journalist Ruth Mantell opens her article with the intriguing line: “Don’t wait for your boss to come to his [or her] senses, give yourself a raise this year”.

In other words, keep more money in your pocket by cutting back on your daily rounds of bought sandwiches and coffees from your favourite barista.

As Mantell writes, a saving of $3000 a year or $250 a month adds up to $90,000 over three decades in today’s money – and that doesn’t take into account any earnings on the money or savings from, say, reducing your credit card debt.

The broad message arising from Malkiel’s comments, of course, is not so much about workers’ spending money on lunch and coffee but about the rewards of serious budgeting.Without doubt, careful budgeting is a fundamental part of sound financial planning. 

By Robin BowermanSmart Investing
Principal & Head of Retail,
Vanguard Investments Australia
16th February 2012