There seems to be some weird fetish with coffee in the ‘personal finance’ scene. Tonnes of articles or YouTube videos are filled with advice on how to become wealthy and the first port of call is usually telling you to stop buying coffees. Sure, going to Starbucks and buying a fancy $4 coffee daily is not a good financial habit but neither is leasing a depreciating asset, becoming house poor or not trying to improve your earnings over time which are arguably much more important. There’s even a certain, very popular (probably very wealthy) YouTuber who promotes ‘20 cent coffee’. 

I recently came across an article that stated spending money on coffee is similar to throwing $1 million away and of course it went into the usual argument of if you invested the price of a cup of coffee everyday for 40 years at a 12% annual return (which is unusually high and most people won’t achieve anywhere near that long term) one can achieve $1 million. Once again why don’t we replace talking about the cup of coffee for a leased car, a house with 2 extra bedrooms you don’t need or food expenses. 

Don’t get me wrong, saving money in any way possible is a good thing and if you’re buying expensive coffees especially several times a day it’s worth cutting back (although I’m not sure many people would spend that much on coffee). Coffee can be made in your house for a fraction of the price and if you want a coffee machine and use it long term it’s probably still saving you a fair bit of money. I also agree that investing money for the long term is a good thing. There just seems to be a fascination with coffee like it’s the key to your financial independence. During the gold rush the people making all the money were the people selling the shovels, not the people digging for gold and I feel like you can replace the gold analogy with a Starbucks coffee these days. 

There’s a limit to how much you can save but many of the ‘financial gurus’ online are pushing towards the save as much as you can mentality with coffee being an easy target. Increasing earnings is rarely discussed in the coffee bashing conversations, you know what would be more beneficial than telling people to not drink $3 coffee? Giving them tips to earn more money with a side hustle, tips to ask their boss for a raise or tips to learn new skills or retrain to earn more. 

You shouldn’t feel guilty about going for a coffee now and again if you enjoy it, if you’re catching up with friends it’s still cheaper than going for a meal. If you’re trying to achieve financial independence and retire early (like the rest of us) then being frugal with your money is key but balance is important and you can’t forgo all enjoyment now for years down the line. Don’t become house poor, buy a reasonable cheap car in cash and try and reduce your expenses across the board within reason then you can enjoy that cappuccino now and again. What the coffee haters say is true, it is a want and not a need but sometimes we need what we want. 

The views expressed in this post are the authors and should not be construed as financial advice

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David is an Engineer and Finance Writer educated to masters degree level with sound knowledge in investing, the stock market and personal finance. We hope the information provided on this site can help you achieve your financial goals.

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