March 13, 2012

One Expensive Cup of Coffee

Credit: Paul
I’ve never been that big of a fan of coffee. Don’t get me wrong, I’m not saying it’s bad. I mean it’s warming and it can smell quite delicious, especially if you put some fancy French vanilla or hazelnut creamer in it. I just happen to be more of a hot tea/hot chocolate kind of guy myself. Whenever I do drink coffee, it’s always for one of two reasons: I can’t stay awake or I’m really cold. Why do you drink coffee?

My last few posts have been pretty intense, so I thought I’d offer up a “decaffeinated” post today about coffee, well sort of. You see, it’s been a long-standing piece of financial advice to tell people an easy way to cut spending is to quit buying that morning cup of coffee. Most people ignore that advice and continue down their daily caramel macchiato path, but the person offering that piece of financial advice was actually not kidding. Check out the facts…
  • In a March 10, 2011 interview conducted by USA Today, Starbucks CEO Howard Schultz stated that their most popular beverage was the tall latte. 
  • Starbucks has slightly different prices in various locations, but for argument’s sake, I’m going to assume that the Starbucks on 14th Street in Midtown Atlanta is about average. At that location, a tall latte costs $2.97 (I called them).
  • There are 52 weeks in a year. There are 5 standard workdays in a week, and let’s assume you only drink coffee on workdays. That’s 260 cups of coffee in a year (52 x 5). Wait, you have a pretty sweet job and have 20 days of paid time off a year, so let’s still assume you only drink coffee on workdays. That’s 240 cups of coffee per year (260-20).
  • Finally, let’s assume you work for 30 years. That would be 7,200 cups of coffee (240 x 30). Well 7,200 cups of coffee at $2.97/cup totals in at $21,384. For a career of “better” mornings, we both might be willing to pay that, but I’m not done yet. If you had refrained from that coffee, you could have saved $713/year ($2.97 x 240). Had you saved $713/year and invested it in a prudently diversified portfolio with an average historical return of around 8% since your first year of work, you would have earned a little more than $80,000 by your last year of work! Suddenly that 2012 Porsche 911 seems a little more doable, doesn’t it?

Well if I’ve made you spill your coffee or pour out your coffee as you are reading this, please accept my apologies. As you might expect though, this doesn’t just apply to coffee. I know plenty of people who have to have a daily diet beverage. I know plenty of people who have to have that daily beer. Heaven forbid if you are accustomed to having a daily glass of fine wine!

It’s your life and you should do whatever you want within your means. I just ask that you take a moment and consider your seemingly innocent daily or at least frequent splurges. I’m a financial planner - not a magician, but I bet I can show you how you could potentially turn a cup of Joe into a luxury sports car!



  1. Maybe we should read today's blog every morning before we stop for that cup of coffee! What an eye-opener--in more ways than one! Thanks, Tom!

  2. Excellent advice, Tom, as usual. I'm quite a lover of coffee myself, but I mostly brew my own at home. In fact, with the exception of espresso drinks, I find that the home brew tends to taste better than the one at Starbucks, especially if you grind your own beans (but their espresso is truly superior to the homemade variety, due to equipment). So for those who just want a regular cup of joe, the home brew is often better both financially and gastronomically.