This is one of my favorite things to talk about as coffee is my biggest vice. I barely drink, barely gamble, and don’t do any drugs but I love a coffee (or 3 a day). And if you’re reading between the lines, yes I am incredibly boring.
Now that they have gone up, with inflation, you’d be looking at $6 for each coffee.
Let’s say you like to enjoy one in the morning and one in the afternoon, that is $12 a day. Or $4,380 per year!
Then to keep going down this hole, the $4,380 a year sounds like a lot but then you use a compounding calculator to show the “real cost.”
Now take the sweet coffee money and invest that money into a high-growth investment, with an expected return of 8% on average over 10 years.
10 years from now you have $66,775. $43,800 of real savings and $22,975 of investment earnings.
20 years from now you have $214,992. $87,600 of real savings and $127,392 of investment earnings.
30 years from now you have $543,981. $131,400 of real savings and $412,581 of investment earnings.
40 years from now you have $1,274,218. $175,200 of real savings and $1,099,018 of investment earnings.
Long story short, your coffee habit is why you’re not a millionaire!
Let’s not talk about the tax you’d pay on those earnings though… (Could always talk to an adviser about ways to reduce that tax issue).
I’m not saying to give up everything and save all your money, I just like to illustrate forward planning and small sacrifices can make HUGE differences when you retire.
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