Why Buying Coffee Makes You Poor
Coffee. The one thing that keeps students studious and working people working. It’s the fuel that keeps you running that daily grind. But can that 1 cup of dark chocolate goodness really be the reason you find yourself still living pay-check to pay-check at your entry level/adult job? Maybe a little dramatic but there is merit to this claim.
This is a highly argued topic between two opposite ends of the financial spectrum. On one side we have a wealth of financial gurus blaming millennials poor financial decisions on the purchase of frivolous items such as coffee. And on the other side gurus urge to spend on whatever makes you happy and not waste your time crunching your pennies because it’s the big ticket items that count.
Both valid arguments but which side of the argument is truly right and is buying a cup of coffee upwards of 3$ (plus tax!) really that detrimental to your financial future?
Let’s discuss.
It’s time for a bit of math. (I know, not my favourite subject either but stick with me). An average work week is 5 days over a 4 week span so…
$3 x 5 days x 4 weeks = $180 a month
In a year, you would have spent around $2160 on coffee alone. And that’s not even including Starbucks coffee which is often around $5 (plus tax!) or even the added doughnut or bagel you may purchase to go along with it.
On the other hand, if you took that same $180 and invested it on a monthly basis into a Tax Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP) in Canada or a Roth IRA in America over the next 40 years would snowball into $1 million dollars. Perfect for retiring.
Start investing your money today with Wealthsimple and turn that $180 coffee dollars into $1M
“You need to think about it as you are peeing $1 million dollars down the drain after you’re drinking that coffee ”
Now I’m not saying you need to stop buying coffee altogether, I still buy coffee every now and then to keep me sane. But what I am saying is that the habit of not paying attention to where you’re money is going, is going to cost you millions in the long run. Most people put it aside saying “its just one cup of coffee, what can that really do to your finances?” If you’re already on the right trajectory of financial automation (pre-authorizing your savings, bills, investments…) then its totally fine to spend that budgeted amount of money on coffee or other mundane purchases you make on a whim. But if you don’t have a financial plan delegating how much money you need for day-to-day expenses, a savings plan for emergencies, a budget for larger expenses like vacations or splurges at Sephora, or even an investment or retirement plan … then maybe steer clear of that coffee.
Learn how to make your own cold brew coffee at home!
See 11 Money Milestones To Achieve In Your 20s
Buying a large tin of coffee from the grocery store, your favourite creamer and a coffee mug will last you much longer and run you $0.20 a cup. Everything I’ve mentioned above may seem like a lot of financial mumbo jumbo at first and it may seem like a daunting task to grasp at first. Trust me, three years ago I was totally lost when it came to finances and had no idea what all these sophisticated abbreviations meant. And it wasn’t until a year ago when I got a budgeting system down packed that worked for my lifestyle. The point is, you’re reading this right now, and right now is the best time to start learning about these things. It’s never too late or too early.
See Graham Stephan’s video on the same topic.
Getting back to our initial question. Is that $3 coffee detrimental to your financial future? No, it’s not the coffee. It’s the mindset behind why you’re buying the coffee.
Photo from thewoodenskillet.com
