So for the past 6 months, I have been toiling back and forth between purchasing my coffee every day from our local cafes at work (which sets me back somewhere between $3.00 to $3.80) or just use the coffee machine at work with capsules or instant coffee which on average will cost me 30 cents each.
The reason why I’ve had to think so much about such a small decision is because it’s an insignificant amount. A few dollars here and there, adds up to maybe 20 bucks at the end of the week, no biggie right? Even assuming I bought coffee every single day, that only costs me about a week or two’s salary, so it’s not too bad is it?
Then I decided to sit down and do some quick maths – it’s always good to get an idea of the bigger picture. Let’s say I work 250 days a year, and every day I drink 1 coffee. This is a reasonable assumption for people who work a full time job.
Buy it from the cafe: $3.00 x 250 = $750. Not too bad, and over the course of a year that’s not TOO much money.
Make it at work (using pods or instant coffee): $0.30 x 250 = $75. Okay, that’s a much smaller amount of money.
Now if I compound this of a 20 year working life, the habit starts to add up.
Buy it from the cafe: $750 x 20 years = $15,000
Make it at work (using pods or instant coffee): $75 x 20 years = $1,500
HOLY SHIT – that is a lot of money.
If you assume that stocks pay 4% dividend, your coffee habit is costing you $540 a year (calculated as $13,500 x 4%) in passive income. Furthermore, if you are like me and not yet at FIRE, you miss out on $15,000 worth of shares during the accumulation phase which work in your favour when you consider the impact of compounding. I’m sure there is some maths to be done where which will show you how much your coffee habit is setting you back, but the fact that it will be $13,500 difference alone to me is more than enough to make me reconsider my coffee habits.
I mean there’s nothing wrong with going out with your work mates for a coffee once or twice a week to catch up or muck about outside of work, however the cost I am targeting is the daily coffee that you get before you do anything else during your working day. The ‘wake-me-up-I-don’t-want-to-be-here’ coffee that people have before they step into the office because they can’t seem to do anything else until they have got their daily dose of coffee. Changing this one daily habit might just get you to FIRE a little sooner, so it’s something worth considering!
It’s something that I have taken on board recently in hopes that it will just put me that little bit closer towards my goals. It’s actually kind of therapeutic sometimes when I can relax in the kitchen and make my own coffee, avoiding all the hustle and bustle of the lines at the cafe as everyone rushes in during the morning.