Sunday, February 3, 2008
When Paxton Styles goes clubbing with friends, his drink of choice is Crown Royal whiskey. That, he says, is not good for his finances. In two weeks, he spent $680.43 on his social life. Much of that -- $296.16 -- went towards bar and nightclub tabs. Happy hours cost him $133. Dinners and late-night munching were another $94.92.
Styles can easily go out four or five times a week. He is 31, unmarried, and childless. He also lives in the 11th-most expensive urban area in the country, according to the Arlington-based Council for Community and Economic Research, which means that a good chunk of the $47,000 a year he earns as a meetings planner goes towards having fun.
"I spend too much money on the partying," he acknowledged after tallying his expenses.
It's a familiar refrain among young residents in the Washington region: In such a career-obsessed town, what's wrong with partying hard after working so hard? But financial planners say it's the main way young professionals in their 20s and 30s get into financial trouble in urban areas like Washington. Many have good incomes but not as good as they will be someday. Retirement seems far off, so they don't save enough. They put everything on credit or debit cards and don't keep track of their spending. All that makes it easy for them to give into the many temptations of a place like Washington and its affluent suburbs.
"We work so hard in building our careers," said Keva Sturdevant, a financial adviser for Merrill Lynch in the District. "The younger generation wants to see that immediate reward for their hard work, so they spend and hang out with friends and shop. I'm not saying you shouldn't do that, but there should be limits based on your particular financial situation."
How much you should spend on your social life depends on how much you make, how much debt you have and how high the fixed costs are that you have each month, financial advisers say. If you don't have many expenses, you can spend more on fun. If you are living paycheck to paycheck, it's the first thing you should cut out. It's that simple -- or not, said William Murray, a 31-year-old graphic designer who lives in the West End. "On any given night, someone's out," he said.
What are you to do if you're young, want to pay your bills on time and save for retirement but still have a social life?
The first thing is to keep track of how much your social life is costing you, advisers said. Save your receipts, and tally your expenses with an online program such as Quicken. Pay attention to your ATM receipts. Advisers said they have many clients who frequently take out cash and don't pay attention to what happens to it. "They don't know what they spend," said Rolf M. Winch, a financial planner with Lifetime Financial Partners in Rockville. "If you don't know, how do you get your arms around it if you're in financial trouble?"
Young people in the District are vulnerable to overspending on activities such as dinners, drinks and movies, advisers said.
For one thing, entertainment options have expanded with the region's economic revitalization over the past decade. For another, the District is a pricey town -- the sixth-most expensive U.S. city for dining out, according to Zagat's customer-ranked 2008 restaurant guide. The average cost of a meal for one person in the District is $34.69, above the national average of $33.42, according to Zagat. One adult ticket for a Friday night movie at AMC Loews Georgetown 14 is $10.50. An orchestra seat for a Saturday night play at the Studio Theatre in Logan Circle is $53. A glass of Pouilly-Fuisse at Ozio Restaurant and Lounge in Dupont Circle is $12.
D.C. is also a town where networking is part necessity, part hobby. It's a town of lawyers, lobbyists and consultants, a town of power lunches, happy hours and party-hopping. There are people who make tons of money and people who make so-so money, and you don't want to be shut out of the social scene even if your salary is not up to par.
"It's a town where people want to fit in, so I think sometimes people will spend in order to fit in, and that might mean dining out a little too much or buying clothes that are a little too expensive," said Kim Reed, a financial planner with Garrett Planning Network in Chevy Chase. "It's a very prestigious town. . . . If you live here, you kind of get sucked into that."