Recent, Personal Finance Expert and TV Personality Suze Orman drew criticism for separating the millennia over their coffee habits. In particular, she liked the habit of buying coffee to waste $ 1 million – money that could otherwise be used to fund a pension.
Now, the underlying idea Orman might be trying to convey not a terrible one: spend less now and you'll be able to save more money for the future. That concept is not just logical but affordable. But if you are used to indulging in a daily latte, you should rest easy and know that you are not ruining your finances in the process.
Little indulgence makes life worth living
It is true that the money you currently spend on coffee could otherwise be saved for the future, and perhaps even grown to a considerable sum. Imagine that you currently spend $ 5 a day on your purchased caffeinated beverage choices. In 365 days a year you see $ 1,825 in annual coffee expenses. And it is without a doubt quite a lot of money. If you were to cash in an IRA or 401 (k) and invest it with an average 7% return, slightly below the stock market average, you would come up with around $ 364,000 over a 40-year.
There is a decent pension there. But there are many other things you can do to accumulate a similar total over time which does not mean giving up the morning drink you are looking forward to every day.
For example, if you are willing to live a little cheaper home than one that is at the top of your budget, you can easily shave $ 152 off your monthly housing costs, thus accumulating the same $ 1,825 your coffee costs you annually. Likewise, you can rent a cheaper car and save yourself an extra $ 150 and change every month that way.
Or you can play with a bunch of minor expenses if you want to free up cash for your pension plan. For example, if you downgrade your cable package (or cut the lead in favor of streaming services), saving $ 60 or $ 70 a month while canceling your training membership can do the same.
The point is that your coffee habit alone won & # 39; Don't keep going as long as you make an effort to save money in other ways. But it doesn't matter where the money comes from, so if tomorrow's latte makes you happy and helps you out through the day, keep drinking them, even though it is possible to make significantly cheaper coffee at home.
For many people, it is the small indulgences of life that make more of a difference than big, so if you are willing to rent a smaller apartment or buy a less spacious house to give yourself the opportunity to do things like orders in dinner once a week, attend concerts, and yes, buy coffee and go for it. As long as you do not overlook your savings, you should not feel bad about indulging.
Otherwise, this council also applies to non-millennia. Younger workers tend to get a bad rap, but buying coffee and indulging in similar modest comforts is a habit of all ages upholding. And again it is OK – as long as a reasonable amount of money is saved along the way.
It's easy to choose coffee as a waste of how cheap it can be to brew it at home. But if you love your purchased caffeine and that is one of the highlights of your day, don't stop buying it. Just make an effort to save in other ways, and don't buy into the blame.