America loves coffee. I enjoy coffee so much I even like decaf. According to E-Imports (aka – the first link to pop up when I asked google this question, so it must be right) Americans drink 400 million cups of coffee every day! Yet despite our attraction to the java, the daily cup of coffee has become one of the targets for why Americans are not saving enough. There is no shortage of advice which recommends eliminating the daily cup of coffee as it relates to tightening up the financial belt. I don’t stop for coffee every day, but it is a good two to three times a week. It usually starts with me debating as I leave day care and by the time I am two traffic lights away my inner voice says, “You’re so worth it” and in I turn.
Today, I would like to propose keeping your hands off my coffee and letting that belt remain one notch looser. I get a large coffee which costs $2.65 and if I were going 5 days a week my total weekly cost is $13.25. Over the course of a year, that is $689 spent on coffee and I am not disagreeing that it is a sizeable amount to spend in a year. In the same breath though, how is it impacting my retirement? If I saved that $689 each year, and it grew for 25 years at 8% interest that would grow to be $54,400. That is a good chunk of change, but it is not nearly enough to dramatically impact how early I am able to retire. If you take into consideration inflation, that $54,400 is really on worth about $27,200 in today’s dollars. Also, I had to forgo something I enjoy, which makes the case that maybe I am a happier person and would work harder or better to easily have earned more than $27,700 over those 25 years as a result.
If you do decide to brew a batch at home, the critical step many people forget is ACTUALLY SAVING the money. If you don’t move or invest that $2.65 into another account it wasn’t really saved, just deferred to be spent on something else.
As you look at where you money is flowing to, maybe the coffee doesn’t have to be eliminated, but it might tell you something about your habits. What if you spend $9.25 in the morning cause you threw in some food and then go out for lunch and also grab a beer after work routinely? Those are the real dollars that may need adjusting.
My last call to action for those who are looking to be more diligent with their spending is to focus less on the cup of coffee and more on the big three. This includes food/drink, housing and cars. These three areas often comprise the largest pieces of your spending pie and therefore deserve more attention and energy if you are looking to make sizeable changes. Not necessarily fun changes, but the changes you need to stay/get on track.
I’m off to BJs to buy wholesale priced beer, so please keep your hands off that too. 🙂
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