Is That Daily Latte Really a Big Deal? The Answer May Surprise You.
By Tracy L. Hirsch
The price we pay to stay caffeinated can put us in the red without even realizing it.
In the daily hustle and bustle of life, it’s amazing how a hot cup of coffee can get us through the day. Having that ‘pick-me-up’ not only increases our productivity, but also gives us that added warmth on these cold fall mornings.
What’s more is how convenient it is to zip through the drive-through on the way to work. There’s nothing like a vanilla latte and a warm, buttery croissant to get you going in the morning.
If this is an occasional treat on the mornings when you’re running behind, it won’t break the bank. However, if this is an everyday event, your wallet is significantly lighter than you think.
Let’s use the most popular coffee shop as an example. If you go to Starbucks in Louisville, a grande (medium) vanilla latte is $4.15, and a croissant is $2.45. If you add 6% sales tax, that’s approximately $6.80.
While a little less than seven dollars doesn’t sound like a big deal, if this is your go-to breakfast every day, you’re spending about $207.00 a month, which is $2,482.00 a year at Starbucks alone.
Say what? Yes, you read that correctly. Your yearly Starbucks fix costs the same as your total annual car insurance premium. So if you look at it that way, it’s like paying your car insurance premium twice (but for one car).
Even though making your own breakfast and coffee at home is more time-consuming and way less exciting, it could literally help you afford a monthly car or health insurance premium (or other bills such as utilities).
Your favorite latte could be putting your financial stability at risk.
Prioritizing your purchases plays a key role in avoiding massive amounts of debt. Sometimes we need to give ourselves a little bit of tough love when our income is not more than (or at least equal to) what we’re spending. If you’re struggling to pay your bills, look at what you’re spending money on, and determine if it’s a ‘need’ or a ‘want.’
Whether it’s a daily latte, a pair of designer boots, custom rims for your car, or multiple monthly subscriptions to Netflix, Apple Music, Hulu, etc., ask yourself, “Do I really need this?” When it comes to the things I just listed, the honest (and sometimes painful) answer is “no.”
There is always a way to cut back on spending, and while there’s nothing wrong with a small treat here or there, making a habit of buying things that aren’t necessities (i.e. things that fall into the ‘wants’ category) can only lead to trouble… And that includes buying a freshly-brewed cup of coffee every single day.
You don’t have to take my word for it though. Businessman and ‘Shark Tank’ financial investor Kevin O’Leary (whose net worth is approximately $400 million) has the same outlook on that expensive daily cup of joe.
“Do I pay $2.50 for a coffee? Never, never, never do I do that. That is such a waste of money for something that costs 20 cents… I drink coffee, one cup every morning. It costs about 18 cents to make it [at home], and I invest the rest.”
He believes that saving small amounts of money along the way (and also investing) is the key to financial stability:
“The truth is, there is a lot of crap you don’t need. What I’ve learned to do, and what has really helped me in maintaining growth in my own personal investing is, anytime I pick up something I’m going to buy, I say to myself, ‘Do I really need this?’
In the age of consumerism, where there is now a blurred line between needs and wants, it’s important to stay grounded in reality. There are a few ways to do that, including opening a savings account and creating a budget. Additionally, you should invest in a retirement fund to ensure that you’ll have a financially stable future.
I know it’s hard to give up that daily freshly-brewed cup of coffee and croissant. However, a 12-pack of croissants at Costco is $5.99. That’s only 50 cents per croissant! Compared to the $2.45 you’d be spending on a croissant at Starbucks each day, that saves you $712 a year.
Buying a bag of coffee at Costco also saves quite a bit of money. Spending 20 cents per day on ground coffee (as opposed to the $4.15 latte) saves you $1,442 a year.
The bottom line is that buying those things at Costco comes to about $256 a year (instead of $2,400 a year at Starbucks). The amount saved is astounding! When you think of the other “small” purchases that you make throughout the week, such as eating out, think of how much money you’ll save annually by cutting back on that too.
While cutting out the “extras” can be painful at first, we miss those things less and less once we see more money in our bank account throughout the year. Additionally, it helps us change our spending habits to do more saving and less spending.
When that happens, you’re less likely to get in over your head in terms of debt, which leads to less stress (and we could all use less of that in our lives).
What else do you do in order to save money every day? Are there any local stores in Louisville (in addition to Costco) where you consistently find bargains? Share your thoughts with us in the comments below!
All the best,
Tracy L. Hirsch
Need a free consultation? Text or call me at (502) 435-2593!