Posted by Lending Club :: May 24, 2008 @ 5:13 pm

I’ve dubbed eating lunch out “The Budget Killer”, but that title could easily be applied to a related activity: going out for a drink.

At least when you eat out, the cost of a meal is within range of what it would cost to make it yourself. The premium you pay on food can be justified by the skill it takes to cook most meals. Alcohol, despite the lack of skill generally required for its preparation, is usually priced at least 3 times higher when purchased at a bar or restaurant. Specialty drinks, which do require some skill to prepare, fetch even higher price multiples. In many states, alcohol is taxed at much higher rates than other consumables, meaning that actual prices are even higher than you might first suspect.

Critics would say that the prices at a bar are as much for the atmosphere as they are for the drinks themselves. The positive benefits on a person’s social life are used to justify the added cost. It’s true that you will have the opportunity to meet people at a bar, but a large number of low quality contacts are probably worth less than a few higher quality ones. There are surely cases where high quality contacts are established at bars, but that is likely the exception rather than the rule.

If you are not ready to give up the bar scene, try reducing the amount you spend by mixing in free or reduced price non-alcoholic drinks. You’ll save some money and probably feel better the next day. Even if you don’t regularly go to bars, cutting alcohol out of your other dining experiences can have a huge effect. Including taxes, alcohol can easily account for one-third of the cost of a meal, which means that cutting it out can either save you a lot of money or allow you to eat out more often at your current spending level.

From a purely financial perspective, few things are more overpriced in relative terms than drinking alcohol at a bar or restaurant. Even without getting into the health benefits of drinking less, cutting back on this alcohol consumption can dramatically reduce your spending.