This is an article delves into a few financial planning questions I’ve meant to answer for quite some time. Is Equinox worth the astronomical monthly dues? Would the gay community be better off saving that money for retirement? Will everyone get fat if they go to a cheaper gym?
Now that Equinox and Soul Cycle are facing protests and boycotts from the LGBTQ+ community based on Stephen Ross holding a fundraiser for Donald J Trump, this seems like a good time to share this story. For those who don’t know, Stephen Ross owns the parent company of both Equinox and SoulCylce.
The Queer community has come to expect donations to anti-gay groups from the likes of Chic-fil-a owner Dan Cathy, but the recent support of Trump by the owner of Equinox seems like a slap in the face to a large contingent of expensive gyms customers base. Both Equinox and Soulcycle have branded themselves as LGBTQ-friendly. One of their group fitness instructors, Paul Katami, was a plaintiff in the Prop 8 case that went to the Supreme Court and helped bring marriage equality to California and the rest of the US.
Beyond politics, keeping that Equinox membership could cost you over a million dollars over your lifetime. Don’t even get me started on paying $42 for a spin class at SoulCycle. I prefer to ride my road bike through the Hollywood Hills and Malibu, but I know this isn’t for everyone, but at least it is free.
Is Equinox Worth $240 Per Month?
At a Christmas party, two friends were having a heated argument about the perceived value of paying the sky-high membership fees at Equinox. One of the two (let’s call him Andre) was a member at Equinox, paying about $240 per month for the privilege, the other was a member of a gym (let’s call him Frugal Frank) that costs about 1/3 of Equinox.
My recollection of the conversation about quitting Equinox went something like this:
Andre: Who cares? How much are you really saving? After ten years you could buy a Toyota Corolla.
Frugal Frank: Why pay so much for Equinox, my gym is just a good and way cheaper.
While I would have loved to chime in, I just sat back and watched them go back and forth for quite some time. As a Certified Financial Planner™, I have no problem with people spending money on a gym, assuming they actually go and get value from their membership. Even spending just $10 per month on Planet Fitness is a waste if you never go.
Full disclosure, at the time of this conversation, my husband was a member of Equinox (he has since canceled his membership. I was and still am a member of the cheaper gym (Crunch, West Hollywood). I also belong to a great Yoga studio (Hyperslow, Los Angeles), which still puts my combined monthly gym membership costs at less than the cost of just going to Equinox, let alone taking any SoulCycle classes.
As a member of the queer community, I love to see us vote with our dollars. As a financial planner, I want my clients to live their happiest, healthiest, and wealthiest lives. For some of you reading this, an Equinox membership is totally affordable. For others, it is likely pushing you further into credit card debt. Either way, staying fit and healthy is imperative, if you ask me.
Will Cancelling Equinox Help You Achieve Financial Freedom Faster?
Back to the fun argument at the Christmas party about the value of an Equinox Membership, does going to a cheaper gym really help your finances in the long run? How much faster could your reach financial freedom if you didn’t have to spend all this money on at SoulCycle or Equinox?
Andre: Big Deal you save $160 per month for ten years you can buy a Toyota Corolla.
To be clear Andres didn’t mean this as a big windfall, let’s just say he won’t be shopping for a Toyota Corolla anytime soon. BTW, I just looked it up, MSRP for a 2019 Toyota Corolla is around $19,600.
Is Andre, right? If you saved $160 per month without interest for ten years, you would have $19,200. However, if you invested the money and earned just 6% per year, you would have over $26,000. This should be enough to, in fact, buy a Toyota Corolla.
Frugal Frank Wants to Retire Early:
If you were to look into the garage of Frugal Frank, you would find a luxury convertible. He is also not looking to drive a Corolla. All the same, he is looking to retire early, so he is striving to stash away as much money as possible. While he may spend lavishly is a certain part of his budget, he is frugal in others, so he can stay on track to retire fabulously by the age of 50. Sounds good to me.
With his goal of early retirement in mind, the savings from going to a non-Equinox gym are even larger. If he can save that $160 per month for 20 years, earning 8% per year, he would have around $94,000 more at retirement.
However, it gets better. If he puts that money into a retirement account, he gets a nice tax deduction. Frugal Frank is in the 35% federal tax bracket, plus 11.30% for California state taxes. If he uses a pre-tax retirement account, he could put in around $292 per month into his 401(k) profit-sharing plan with the money he is saving by going to a cheaper gym. These monthly savings would grow to about $172,000 more at retirement. Probably not life-changing, but still a pretty nice number.
I do not know if Andre is working towards early retirement. I do know he doesn’t want to have to work forever, cutting out Equinox could mean even more money for his retirement. He is about 35 years away from full retirement age. If you saved $292 per month into a 401(k) and earned 8%, you would have around $670,000 at retirement. This shows the magic of compounding interest.
To push the value of canceling your Equinox membership a bit further, this $670,000 could translate into around $2790 per month more in retirement income before taxes. This is assuming a 5% withdrawal rate. Which begs the question, would you give up your Equinox membership for $2790 per month more income in your retirement? By the way, we are talking about a million dollars in retirement income, assuming you lived 30 years or more after retiring.
Who Should Keep Their Equinox Gym Memberships?
I’m not crazy; I don’t want to see a bunch of couch potatoes skipping the gym completely. If you are saving enough for retirement, go for it, join whichever luxury gym you want. I always tell my clients that once they are on track for their various financial goals, the rest of their money is theirs, so enjoy it. You may even want to take the money you saved by canceling your Equinox membership, to fund a luxury vacation.
Beyond money, I would never stay at a Trump property, and I hope none of you will either. Dropping your gym is a bigger ask and a bigger sacrifice, but it will be interesting to see how this all plays out. Equinox has been supportive of the LGBT community for some time, and we are hoping that this isn’t just a way from to profiteer off the backs of hard-working(out) gays.
The LGBT community has a reported trillion dollars of spending power each year. When working together, we have the power to effect real change. Will pissing off the gay community force change on the board of Equinox? Only time will tell. I will spend my fitness dollars elsewhere.