Brown Bag it to a Cool Half Million!

Brown Bag it to a Cool Half Million!

One great way to save money is by bringing your lunch to work. Over the course of a career, you might be surprised how much this can help you save!

But it can’t really be that much, can it? After all, take-out lunches are pretty cheap. Well, that’s true, they are, but let’s just do the math for fun.

The price of a take-out lunch varies wildly depending on what city you’re in and what type of food you’re buying. But let’s say an average amount is $8. A brown-bag lunch of a sandwich, yogurt, and fruit (hey, this lunch-bringing has the side benefit of also being healthy!) can be assembled for $2 or $3. We’ll assume that bringing your lunch saves about $5 per day.

$5 per day is $25 per week. A little more than $100 per month. Not a bad start, but how do we get to half a million from there?

The Long Term Plan

Let’s take this to the next level. This is extra money, so we’re going to sock it away for the future, and do this regularly. Your $100 a month is now $1,200 per year.

Now, let’s assume a relatively young person has about 40 years to work before retirement. Let’s say you sock away that $1,200 in a jar underneath your bed. When you retire, that jar would have $48,000 in it. Not too shabby, but there’s a reason we don’t keep our money in jars under beds, and it’s not just to keep burglars from getting ideas.

The Miracle of Compound Interest

When you put your money in the bank, you’re actually loaning it to them, and they pay you for the privilege. That’s called interest. The interest gets added back into your account, which the bank is still borrowing, by the way, and so they pay interest on that. That’s called compound interest, and it makes your money grow impressively.

Learn more about compound interest:

What is Compound Interest?

Say you put that $1,200 a year into low risk, long term CDs and bonds that yield an average of 2.5% interest. These rates might be a little tough, thought not impossible, to find today, with interest rates at record lows. Over time, these yields will likely rise, but let’s work with this for now. After 40 years, that $48,000 has turned into $82,341! Not bad for packing a sandwich. But you can do better.

What if you assume a little more risk and invest in corporate bonds? Today, it’s not unreasonable to expect a yield of about 5%. Again, these might eventually rise, but let’s see what we can do today. Your $100 a month is now $152,602! You’ve more than tripled the amount saved in interest.

But you need to do still a little better if you want that half a million. 40 years is well into the “long-term investment category”, and if you’re patient enough to wait out the ups and downs of the stock market, you can expect much higher average returns. Over the past 20 years, the stock market has returned about 9.6%. Over long periods of time, this is reasonably consistent. Of course, there are no guarantees that stocks will go up, so you are assuming more risk this way. But you are compensated for this risk in the form of a higher return.

What is that average return of 9.6% going to do to your $1,200 a year? Your $25 a week? Your measly little $5 a day, four days a week? Well, you now have a grand total of $560,250. Well over a half million dollars! And hopefully all the fiber you’ve eaten from those whole wheat sandwiches will keep you healthy enough to enjoy it!


Use the Money Hacker Savings Calculator to adjust these numbers for your personal circumstances! For example, to account for future inflation, lower the interest rate in the calculator: for a 2% rate of inflation, lower the interest rate from 9.6% to 7.6%.

So if somebody offered you half a million dollars to pack your lunch, would you take it?

3 Responses to “Brown Bag it to a Cool Half Million!”

  1. Jonah says:

    I really think I’m going to show this article to my son. Maybe one day he can make 500,000 from this strategy!

  2. efpierce says:

    That really adds up! Most people don’t hardly think about $5 a day as being anything. I am going to sit down and see where my spending could use some cutting back and see how much I can save! So long Starbucks, hello sailboat when I retire!

  3. Chris Romans says:

    This is an excellent article, and really highlights the use in saving little amounts of money here and there. I personally never buy lunch at work. I’ve always found it to be overpriced, and the food isn’t the best either. While “brown bagging” it sort of reminds me of being in elementary school, it is certainly economical and can lead to large savings assuming I am not splurging in other aspects of my life. When it comes to saving money, I always have trouble seeing into the future as opposed to thinking about what I want right now. Not even just that, but also what I need at the moment as far as paying bills and what not are concerned. Still, I will keep this article in mind. I like the concepts presented and think it could be applied to my life at some point!


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