I love coffee! Our culture loves coffee so much we have coffee shops that have erected to give us what feels like endless choices of coffees. They have inviting atmospheres and even give us a sense of community and connectedness as it’s common to meet up for coffee. From expressos to frozen sweet dessert like drinks, we love them all!
However, if you’re trying to stick to a financial plan, planning your coffee treats carefully might be a good idea. I have a coworker who goes to a coffee shop daily! One special coffee probably costs her at least $7-10, and I bet she doesn’t just buy coffee when she goes. If you add up a coffee for every workday, it comes to $35-50 per week and that’s $140-200 per month! If she invested that money and let it sit for 30 years she’d have $94,676.77-$135,252.53 if the interest rate was a low 4 percent. If the average percentage rate was higher at the standard 6 percent, she’d have a whopping $133,621.84-$190,888.35! Does that latte really taste that good now?
You’re probably thinking compound interest is just for retirement, but it can work it’s magic for us in mutual funds, CDs and dividends as well. Would that amount of money be worth sacrificing our expensive coffee fetishes? Of course! I’m not saying buying coffee at a fancy shop is wrong. A splurge is ok sometimes. When we buy coffees several times per week we’re giving a lot of our money away and that is essentially giving that company a significant part of your finances. Small choices can make a BIG difference in whether we build wealth or blow our money away.
If my coworker would choose to only enjoy 2 coffees per week and invest that $21-$30 per week she’d be making better decisions financially. In 30 years, if she invested the $10 she spends three times a week she’d have $81,151.52 at 4% interest. If she averaged 6% interest, it would be $114,533.01. Amazing! She’d still be enjoying her lattes twice a week as she invests what she would have spent on the 3 days she gave up and she has a simple plan to build wealth that will work. Little financial matters can add up to big rewards!
Automated savings can help us be intentional to save and win with money. That money will go where we want it to without us having to think about it. This is a great tool if you have something in your life you need to scale down and invest what you were spending on that guilty pleasure. Pleasures can be a range of things like paying for fancy nails, eating out, gaming, and the list can go on and on! The choice is YOURS! Only YOU tell your money where to go! Yes, money problems can be more about managing our behavior than it is about math. The math is simple. Make a few changes, commit to them, and have less financial stress in your life. You’re in charge!
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