Ah, the classic debate: Do you go ahead and buy that cup of coffee made by some exotic local brewer or do you put on your serious face and count each sen carefully like it’s some sort of adult game? Come on now, admit it, some of us have been inclined to go for those RM25 coffee cup that makes the tongue feels like it have landed in heaven only to find out we’ve been slowly boycotting our wallets. But imagine that I told you that this habit may be more of a problem in terms of money than you could have ever imagined.
Before you get annoyed and say, “Not this again,” let’s analyze it the FinGuide style.
The cost of Coffee Addiction in people who drink it on daily basis
You might not even blink an eye in spending RM25 on a cup of coffee. Well, at least it’s just one cup isn’t it? But let’s do some quick math: If one is being served one of these bad boys five days a week, then that is RM125 per week, RM500 per month! You can almost visualize what one could do with the RM6,000 per year. Yes, coffee, that morning perk-me-up that gets you ready for work but that could be your vacation, investment or rainy day money.
Opportunity Cost: The Latte Factor
The Latte Factor idea indicates that such expenditures are the real enemies of your future prosperity seen as they are unnoticed but cut a small amount of your wealth every day. It may not seem like a big deal as we may all take a cup of coffee, a cookie or candy bar once in a while, but when done consistently, may have the effect of keeping one in a debt cycle.
What if that RM25 that one spends on a daily cup of coffee is put in that venture? With an approximate interest rate of 7% per annum which is quite reasonable when an investment plan is well out laid, your cup of coffee is liable to be worth nearly one hundred and thirty thousand ringgit in ten years time. Indeed if one invests RM25 a day, it could even become something humongous in the process.
Mindful Spending: This new concept is averagely termed a ‘Happier Wallet’.
Here’s the kicker—it’s not about ‘giving up’ all the little-perceived luxuries that make living fun: It’s about exercising the rude practice of counting coins. Perhaps, cut back on the artisanal coffee to once or twice a week and use the rest of the money which you would have spent on coffee, toward saving or investment.
The secret is to be able to live for today and yet invest for the future. This way one is not only living for today but also preparing for a day when one will afford to have coffee and eat it too if desired!
The Bottom Line
So, the next time you’re eyeing that fancy coffee, ask yourself: Do you want to spend it just for that priced product or let that money grow and give you more profits? I am not saying that you should never spend this money but if you try to be conscious of where you are spending this money, you will be shocked at how fast you climb out of the debt hole.
Oh come on, you don’t have to eliminate coffee completely from your diet — perhaps you should just learn how to prepare your coffee at home. It is the message of your wallet and your future self.
