How much money should I spend on my lunch?

While some of us get lunch from our home, many of us are unable to or don't want to.  If you find yourself in the latter group, a decision you need to make every day is, where to eat or how much to spend on the lunch. For many of the adults, this might be a trivial question but for others, including kids, young adults, this might be something to think about. Well the answer to this, like many others is, it depends! It depends upon the value of the lunch to you. Here are some points to think about as you make the decision. For this discussion, we will assume a teenager with $200 in monthly pocket-money or "chores allowance". 

1. How much disposable money do you have: Start by looking at your total cash available to you. In this situation, it will be $200 every month or $200*3 = $600 over a 3-month period.

2. Think of other expenses you may have coming up or you already owe: You might be wanting to buy a new pair of jeans or spend on Roblox or anything else in the near future. Add those expenses up. Say, you need $75 for a pair of new jeans and $50 on Roblox over the next 3 months. That is $125 in planned expenses coming up.

3. Think of your contingency fund balance: Everyone should think of a contingency fund. What if you have an unplanned expense? As an example, you did not know that your friend was planning a birthday party and you need to buy a birthday gift. What if your AirPods stop working? Or..... you get the idea! Have a budget for unplanned expenses in mind. For adults, we will say 6-12 months of expenses as contingency fund. In this example, we can take 2 weeks of contingency fund. Let's say $100 in unplanned expenses over the next 3 months in this case.

4. Are you a saver or investor? If you are one, you might want to think of how much money do you want to save for something big in the distant future or you like to save, invest, and see your money grow. Could you take out some money and put it in a stock or a bank savings account? Could you ask your parents to do it for you? If yes, what do you aim for? Let's say you want to invest  a small amount in stocks every month. Could you plan to save 5% or $10 in this situation every month? Yes, you can now buy stocks with as little as $5.

5. Now we are ready to think about how much money can we spend over lunch . Start with a 3-month horizon and calculate total money that you will earn. In this case, it will be $200*3 or $600. Now calculate the total expenses or cash outflow that you will have over the next 3 months. Looking at the next 3 months, the total expenses are listed in items 2, 3, and 4 above. $125 in planned expenses, $100 in contingency fund, and $10*3 or $30 for extra savings. This is a total of $255 in expected cash outflow over the next 3 months. Your net cash available is $600 - $255 or $245. Assuming you go to school 5 days a week and 12 weeks over the next 3 months, you need to plan for 60 lunches. Well, then your daily lunch spend should be around $245/60 or around $4. That is about right for lunch at a public school. 

The above example was simple with made up numbers but the process and thinking is applicable to real life and grown ups as well.

Spend Responsibly!