On the day before Thanksgiving (a day before Costco is closed for the Thanksgiving holiday), I noticed that my gas tank was half full, so I came up with the brilliant idea to stop by Costco for gas while I was running errands. It was 8 am, and given that quite a few people would take the day off, I figured that there shouldn’t be too many people in line to get gas. Turns out that I was wrong because quite a few people had the same idea! As I sat in the gas line, three cars deep from the next available gas pump, I wondered, “are the cheaper gas prices at Costco really worth the wait?”
That day, the price for regular gas at Costco was $2.49 a gallon. While running errands, I passed by a Shell station and a Chevron station, and they both sold regular gas for $2.89 a gallon. It’s also important to note that both gas stations had an available gas pump, which meant that I wouldn’t have had to wait to fill my tank. Quick math brought me to the conclusion that I could have spent an additional $4 for 10 gallons of gas. More importantly, I could have saved myself from the inconvenience of having to wait in the Costco line. Was my time waiting in line really worth $4? In this case, probably not. However, let’s examine the trade off at a much larger scale.
Both my wife and I drive to work each day and our family normally goes somewhere on the weekends rather than just stay at home. Because of this, we usually fill our gas tanks at least once a week. Assuming we both fill up with 10 gallons a week and assuming that the price differential between Costco and other gas stations is constant at 40 cents, we collectively save $8 a week for our efforts. Multiply that by 52 weeks, and by the end of the year, we’ve saved $416! In reality, there are times where we fill up more than once a week, so the $416 we save is more of a low number rather than a high one. Does that mean we should endure the waiting every single time? Probably not because we have other important things to do, but if we were to get our Costco gas during non-peak hours (ie early in the morning or later in the evening), we have a better chance of minimizing the wait time in addition to increasing the amount of money we save.
In the big picture, while $8 a week may not seem like much, its annual total of $416 does. What can a savings of $416 a year mean? In the short run, it could mean a day trip to Disneyland or perhaps a few nice dinners throughout the year. If saved up for a few years, maybe it’s used to pay for home improvement projects. In the long run, if saved for 30 years at 8% to your retirement account, it means an additional $50,000 in your golden years. In the end, there are trade-offs for every decision that we make. However, it’s important to note that the small changes we make today can have large, meaningful impacts in the future.
About Mike Loo
Mike Loo is an independent financial advisor with more than 20 years of experience in the financial services industry. His mission is to provide a meaningful impact on the lives of clients and the people they care most about, help them make educated decisions with their money, and build a strong financial foundation for both themselves and their next generation. Mike is committed to meeting a high standard of excellence, taking the time to listen to clients’ needs, and designing strategies that aim to help clients save money and reduce debt. He seeks to fit a client’s investments into their life and educate them so they’ll understand their investments. To learn more about how Mike may be able to help, connect with him on LinkedIn, call his office at (949) 221-8105 x 2128, or email him at michael.loo@lpl.com.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Trilogy Capital, a registered investment advisor. Trilogy Capital and Trilogy Financial are separate entities from LPL Financial.