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As I write this I am in Beaumont Texas sitting in a small booth at one of my favorite restaurants of all time, Pappadeaux’s. I had recently done a review of my finances and noticed that once again my wife and I seemed to be eating out a little more than what I would consider to be prudent. We financial planners tend to look at such things from time to time….. This got me thinking about sometimes it’s the little thing that can make or break us when compounded and when we apply present and future values to money. So here we go, here is how you and I are blowing almost a cool thousand on a glass of iced tea!

At many restaurants today, the cost of a soda or iced tea is 2.95. I have seen soda’s as high as 4.95 and as low as 1.00 but 2.95 is quite common. Does it really cost 2.95? Well, no, because when I pay I must consider the cost of tax and tip. In Texas our sales tax is 8.25% and I usually tip 20% so now to pay my tea bill in full I need 3.78. But do I really need just 3.78? No, because I had to earn more than 3.78 to have 3.78 in my pocket. If I had to earn 30% more due to income taxes than I needed to earn 5.40 so I could first pay my tax of 30% which would leave me with 3.78 which I need all to pay my tea bill.

Now consider that I am dining with my wife and kids so that 5.40 is multiplied by 4 and now I need to earn 21.60 for us to have tea and soda. Suppose we had opted for water instead…. Suppose our 21.60 was invested instead over an average working career and earned and average S&P stock return. During this time my 21.60 would have expanded to 977.60, almost a THOUSAND DOLLARS!

And this is just tea…. To be successful in retirement we need to be smart with how we spend, save and invest, and to be honest, most of us have some work to do to be “on track” for a secure retirement. Think about how we approach spending with cars, food, clothes, vacations and other things we spend our money on. There is almost always a more frugal and smarter approach that can save you more in the long run than what you ever imagined.

Financial success is about mastering the basics in life and not about exotic IPO’s, speculation on gold or bitcoin now. Before gold and bitcoin, it was tech stocks and before that it was something else. Even Sir Isaac Newton the father of modern mathematics lost his fortune speculating with his money during the south sea bubble, so don’t tell yourself that you are too smart to be imprudent with money. You’re not any more than I am not. No, financial success is more about mastery of how you spend, how you save, and how you invest; compounded by time. Living here in The Woodlands I see people who do fairly well with how they approach personal finance and of course I see train wrecks. Sometimes they live on the same street and in a beautiful neighborhood. No one from the outside would ever know the difference.

Give your spending some thought and while you are at it I would take a close look at how you save and invest. We have a great suite of tools and learning material from our Fiscal Literacy Academy. We believe in open sharing of our resources, many of which you can find at our website


This material is for general information and education purposes only.  Information is based on data gathered from what we believe are reliable sources.  It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.  It should also not be construed as advice meeting the particular investment needs of nay investor.

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