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There's one constant habit I see all my friends and coworkers do every single day. It's what I like to call the Coffee Habit. And no, it's not the good one where everyone's reaping all the health benefits from drinking coffee or on some crazy coffee fad they read about what everyone's doing in San Francisco.
Quite the opposite. Everyone is spending way too much! The problem is this little purchase of coffee becomes routine and so ingrained in you, you aren't even aware of how detrimental it is to your net worth. You're probably thinking, “hey relax, it's just a couple of dollars.” Well actually, no.
The average Grande Pike Place coffee from Starbucks is around $1.95. No big deal right? Well, if you refer to my About page, you will see the long-term effects this little habit has on your bottom line. This isn't even considering the fancier cups of coffee with the caramel, whipped cream, the PSL (Pumpkin Spiced Latte; go ahead, make fun of me, they're so good I don't care) and all the other ridiculously expensive coffees on their menus. It's just not necessary.
Guys, I can't tell you how badly I want to help you out here. Please take my advice and find alternative ways to satisfy your cravings. Every day at work one of my friends buys an iced coffee downstairs from Gregory's in the city. One time I asked how much it was and he said $4.
I must have looked at him like he had five heads because he instantly started to get defensive about it saying it doesn't matter it's just a cup of coffee and how I need to actually get one every once in a while. But, it DOES matter. That's twice as much as what I took into account in my about page. If you were to calculate the savings based off a $4 iced coffee twice a day with the total savings invested each year for 40 years at a rate of 7% it would turn into $438,881!!
Drink.The.Free.Coffee. If there's no free coffee, then at the very least by beans or grounds in bulk and make your own. It's just not worth it.
And also, you know, if your job has an ice dispenser or a freezer, use that to make an iced coffee. I said that to my friend and he got so mad it was hilarious. He knew he was throwing away money and didn't even care! And you end up paying more, probably even twice as much if it's iced since only half the cup is actually coffee. I don't know why people don't see it that way.
But this isn't just limited to coffee. It can be anything you find yourself spending a little bit here and there every week. Here is a short list of things I have found since I started working where people end up spending small amounts of money on a consistent basis:
Coffee Habit Worksheet Tracker
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1. Happy Hour – $6-$8 for cocktails, $4-$5 for beer
According to The Chicago Tribune, this is how much drinks cost in the New York City area during happy hour. And it's sneaky too because you think you're saving money, but actually, end up drinking more and most likely spending more even though the drinks are cheaper than usual.
2. Eating out for lunch
It might not seem like the $8 you're spending on lunch is hurting you, but it is. To be spending $8 a day or about $1,920 a year is nothing to sneeze at. You could be saving $219,441 in your life based on a $4 lunch and investing the remainder every year for 40 years at an average performance of 7%.
3. Vending Machine Snacks
Again, spending $1-$2.50 every now and then might not seem like it matters much, but it can. Try to bring snacks from home.
There are plenty of free activities to do on the weekends if you look hard enough. Activities ranging from museums, to botanical gardens or even joining a sports league for cheap are great ways to spend your time without breaking the bank. Here is a list of free activities to do in New York City alone, the most freakin expensive city ever, or at least what feels like it.
Pay close attention to your own coffee habits. They tend to creep up on you out of nowhere if you don't keep track of them. These are often the most dangerous ones because we don't realize how harmful spending $2 here and $4 there really is. Save your money and find alternatives to your coffee habits. I promise you, it might not look like you're making a difference, but cumulatively these small habits snowball into a much greater expense. Eliminate them as best you can to get back on track with your journey to financial independence. Download the worksheet on the right to see for yourself.
How else are you saving money, and what coffee habits have you caught yourself doing?
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