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Will Drinking Fewer Lattes Really Improve Your Finances?

Will Drinking Fewer Lattes Really Improve Your Finances?

For many working folk, that $4 morning latte is more than just a pre-work caffeine fix—it is a sort of reward to oneself, either for making it out the door in time to stop at the coffee shop, as a treat after an early morning workout, or maybe for simply getting out of bed at all. Whatever the excuse we make to splurge on expensive coffee, that little cup acts as a symbol of our working selves, in a way, and of the sacrifice of eight or more hours of our lives each day to our jobs. Unfortunately, it is also symbolic of the many unnecessary ways we find to waste money and stunt financial growth in our daily lives.

A common bit of financial advice over the past few years has been to reduce the number of trips to the coffee shop, but people often wonder if cutting out the grande vanilla lattes can really help get their finances on track. Aside from looking at the amount of money saved by not going to Starbucks or your local café on a daily basis, how can cutting one everyday expense change the way we think about our budgets?

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Cutting Out Needless Expenses

First, let’s look at the obvious: fancy coffees such as flavored lattes and cappuccinos can cost upwards of $4 a pop at many chain coffee shops, and if you add in those tempting pastries, you could be dropping $7 before you even get to the office. For those who make this a daily habit, that’s anywhere from $20 to $37 a week! Squirreling that money into a savings account instead could get you an extra $960 a year (and that’s on the low end) to put toward a mortgage, new car or a vacation. In his Lifehack guest post, Charles LaReaux explains how you can save $18,000 over the lifespan of your mortgage by cutting out a $3 cup of coffee each day. If your caffeine habit calls for pricier drinks, imagine how much more you can save by quitting!

Aside from the savings on the coffee itself, however, cutting out one needless expense may just change the way you look at your spending as a whole. Realizing that survival is possible without a daily mocha, many come to see the other non-essentials eating up their paychecks: trivial everyday expenses like eating out, paying for cable television and buying only name-brands waste hundreds of dollars a month. Becoming frugal in one aspect of life may inspire a re-examination of your spending as a whole.

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Find Cost-Effective Alternatives

Discovering cheaper alternatives to getting a caffeine fix can lead to finding cheaper ways to provide many daily rituals: making coffee or tea at home saves a bundle, with a pound of whole or ground beans costing as little as $10 and a box of 25 black or green tea bags running as low as $5. That’s nearly a month’s supply of caffeine for what you would spend in a day or two at a coffee shop.

The same savings apply to entertainment and groceries. Monthly movie streaming services like Netflix cost under $10 a month, which is less than the price of one movie theater ticket, and far less than a monthly cable bill. Buying non-perishable groceries like rice and paper goods in bulk is often much cheaper than paying for smaller packages each time you hit the store. When at the grocery store, look at what items you are spending the most on: buying fewer pre-made, name-brand items and meat can reduce your bill significantly, and you’ll find that fresh produce and other whole foods are much cheaper, not to mention much better for our bodies.

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There Are Long-Term Holistic Benefits As Well:

Speaking of the health and budget connection, cutting out fancy coffee drinks may also improve your health, thereby reducing costly medical bills in the future. Not only are caffeinated beverages contributors to increased heart rate, insomnia and heartburn, expensive designer coffees like lattes and mochas are packed with extra fat and sugar, adding unnecessary pounds and increasing risk of diabetes. As Lifehack writer William Masters points out, cutting out certain dietary and habitual vices does not just save money on the items themselves, but also reduces the associated health risks and costs that come with them—things like cholesterol medication, insulin and surgeries. Remember that the more health conditions you have, the higher your insurance premiums will be.

Having said all of that though, think of ways to make the real behavioral changes automatic. Contribute to your company’s 401K straight from your paycheck so you don’t have to exercise the willpower to save each month, and set aside automatic savings in a separate account which you don’t have easy access to. Willpower is finite, and while resisting the daily latte helps, don’t waste your willpower on small tasks if you can put it to better use to effect meaningful change.

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Featured photo credit:  latte on a wood table via Shutterstock

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Will Drinking Fewer Lattes Really Improve Your Finances?

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Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

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4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

More About Thinking Smart

Featured photo credit: Austin Distel via unsplash.com

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