Let’s talk coffee… One of the most simple, convenient and enjoyable pleasures in life. One that is also potentially keeping you for becoming a millionaire.
If you buy a simple cup of java from Starbucks every day at an average cost of $2.70 per cup, here’s what it looks like over time:
- You’ll spend $81.00 per month
- You’ll spend $985.50 per year
- You’ll spend $4,927.50 over the course of 5 years
We are talking the cheapest form of coffee and only assuming 1 cup per day without an increase in cost for all 5 years. We aren’t even talking lattes, Frappuccinos, or double-pump whatever’s. Think about what you could do with an extra $985.50 this year:
- You could buy a round-trip plane ticket to almost anywhere in the US (we suggest you use credit card points)
- You could pay off your student loan earlier
- You could invest it and earn $5,000 or more in interest after 25 years
If you stopped purchasing coffee every day and saved that money in a simple investment tool that earns compound interest instead, you would have a savings of nearly $70,000 after 25 years. If you’re spending closer to $4 per day, you’d be saving more than $100k!
We are not saying to give up your daily coffee but rather suggesting that you be smart about where you’re spending your money. Ask yourself, does your employer have coffee available? If so, is the savings worth the tradeoff of a Starbucks cup?
If giving up your daily Starbucks is not achievable, maybe you should think about using ACORNS. You can read more about it here, but it’s a very easy way to save (and take advantage of compound interest) while making those “butter” purchases.
There are countless examples similar to this one that you should consider in your daily life when attempting to allocate your spending between the Guns (the “stuff” that appreciates in value) and the Butter (the things that lose value over time).
Do you buy designer water bottles often? Do you purchase your lunch every day and eat out often? Do you have more than enough clothes but continue to purchase?
Think about ways you can form million-dollar habits by making simple changes to your daily routine and don’t be shy about thinking outside of the box. For example, I have a friend that saves every $5 bill that he gets and believe it or not, it adds up.