The Real Reason Finance Experts Are So Obsessed with How Much We Spend on Coffee

updated Nov 11, 2020
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Why finance experts are obsessed with coffee
Credit: Photo: Shutterstock, Graphic: Apartment Therapy

Why are personal finance experts so fixated on how much we spend on coffee, anyway? Sure, you could brew you own cuppa at home that costs less than the one your local barista serves up, but let’s get real: Not buying a cup of coffee each morning won’t make you rich, despite all the headlines you may have read. The internet practically imploded last March when financial expert Suze Orman announced that if you purchase coffee every day “you are peeing $1 million down the drain as you are drinking that coffee.”

Translation: Cutting out that simple pleasure could make you a millionaire down the road. Except … it doesn’t. Some folks have taken to social media to prove that even though they’ve brewed-in-place while sheltering-in-place during the pandemic, they’re not swimming in buckets of cash.

Of course, when financial gurus talk about avoiding pricey hot beverages, they’re really trying to show us that everything we spend our money on should be examined when pursuing financial freedom. So we asked two experts how to focus on the big picture instead.

Why did coffee, of all things, get a bad rap?

It’s because many personal finance experts adhere to a pretty conservative economic ideology about how our individual choices affect our financial health. Coffee — and the people who splurge on it — are easy targets, says New York-based finance writer Chelsea Fagan, founder and CEO of The Financial Diet.

“I think coffee also represents a very specific kind of young adult — urban, coastal, liberal, frivolity — that’s easy to make fun of and feels good to call out,” she says. “It’s the perfect combination of denigrating the kinds of purchases and spending that they don’t like, while also implying that if you’re not wealthy, it’s because you’re just making the wrong personal choices, which is usually not the case.”

What Should We Do, If We’re Not Focusing on Coffee?

1. Examine your spending habits.

If you want to get out of debt, save up for a major purchase, or build a nest egg for retirement, you have to separate your ‘needs’ from your ‘wants’, adds Fagan. Focus on purchases that bring you real value by writing down what you buy or choose to stop buying, and seeing how that affects you.

“Determine whether you’re spending out of boredom, impulse, or habit versus buying something because it really adds to your life,” she suggests. “There are no inherently good or bad ways to spend money. The most important thing is making sure that the purchases you’re making are truly valuable to you.”

And if your morning coffee run puts a smile on your face, don’t give it up, Fagan says, just weigh that cappuccino against other purchases.

“Think in terms of cost per use: If you buy a high-quality clothing item that’s rather expensive and you wear it many times, when you break it down into cost per use, it can be justified,” she explains.

2. Curb your impulses.

Having money that’s immediately accessible encourages overspending, adds Fagan, so if you’re too easily tempted by online shopping, don’t store your credit card information in your web browser.

“Even that extra step of having to physically get up, get your wallet and type in the numbers is often enough to stop people,” she explains.

3. Set far-reaching goals.

Kara Stevens agrees that pushing people to forgo a hot beverage to build wealth is short-sighted. She paid off $40,000 of debt in two years — without cutting out coffee.

“There are bragging rights that come with how much sacrifice and willpower people attach to getting out of debt or becoming wealthy, but there are lots of ways people become wealthy that have nothing to do with personal sacrifice,” says Stevens, founder of The Frugal Feminista.

In other words, stop judging and start looking into your own wallet instead. That’s what Stevens did.

“I eliminated purchases that didn’t matter to me by doing a cost-benefit analysis: Am I willing to pay off my debt by depriving myself of little pleasures along the way, or could I use small pleasures to motivate me so I’ll stick to my goal?”

Stevens allowed herself visits to thrift stores to buy bangles, but she cut out taxis. She also found ways to make more money. While still in grad school and working as a teacher, she took College Level Examination Programs (CLEP) Exams to get a pay differential that increased her salary quickly. She then applied for an education administrator job that boosted her pay by 40 percent. She also took advantage of her employee benefits package, which offered discounts for her cell phone bill and at Barnes & Noble. And even though she was earning more money, she continued “living” on her old salary, applying the extra income to pay down her student loans.

And guess what? She never gave up her little luxuries.

“I love my Earl Grey — both the smell and when someone else makes it for me. It’s just something that makes me feel alive,” Stevens says.

This post originally appeared on Apartment Therapy. See it there: The Real Reason Finance Experts Are So Obsessed With Coffee