• Marcus P. Miller, CFP®

Time and money: A complex view of going out to eat.

What is the cost of going out to eat? $20 for a steak and 2 hours at a dinner table? What

about the opportunity cost? What could you have done with those 2 hours? What is that $20 worth? Perhaps we can apply the financial concept of "time value of money" to the

cost of our meal.

I suggest that a younger person should opt to not go to dinner where an older person would. Let me explain.

$20 to someone 25 years old is worth $1,033.61 in today's dollars if they had put it into an investment account until age 85.

The same $20 to someone 75 years old is worth $38.60. These two are in different places in their lives, but the value of that meal is drastically different for each. The 25 year old is sacrificing the future value of nearly $1,000 compared to the older person, yet they are experiencing the same meal. This concept could be applied to any expense in life; movies, dinner, a martini.


25 Year Old

$20 invested at 10% (equities return) over 60 years : $6,089.63

$6,089.63 discounted back to today at 3% (inflation): $1,033.61


75 Year Old

$20 invested at 10% (equities return) over 10 years: $51.88

$51.88 discounted back to today at 3% (inflation): $38.60


Now let's consider those two hours spent at dinner. Imagine a retiree, again 75 years old. Perhaps they don't have a day job or any significant projects to work on. What would they accomplish if they had not spent those two hours at the restaurant? Would they have used it watching television? Or perhaps the other end of the spectrum, mentoring the next Alexander the great or Jeff Bezos? Imagine the 25-year-old who is working on building the infrastructure for Bitcoin. What could they accomplish in 2 hours? Alternatively, perhaps that 25-year-old does nothing but watch Netflix. Time is valuable or disposable depending on how it's spent.

The reality is that both time and money are valued differently depending on the individual. Age and jobs are not the only factor for these individuals. Perhaps we should consider the impact they are having on someone else. Any person of any age may have very valuable time. My mind comes to Greta Thunberg, the young Swedish girl who rose to fame for her ideas on climate change at just the age of 15. Meanwhile, money tends to have a fixed value based on the amount of time it can be put to work in someone's lifetime.

Next time you go out to eat or to the movies, take a look at the people around you. Imagine the values of their time and money. Imagine what they're giving up to be at that table. Imagine what might be accomplished if the two hour dinner were instead dedicated to productive thought. Imagine if the expensive steak were instead invested into productive assets.