Starbucks Costs Me $2,300 Per Year – Why I Won’t Stop BUT How To Save Money

Like a lot of people around my age, I do not have $17,000 inside my savings account and I am eager to learn how to save money while not cutting back on my daily expenditures. I am still paying off student loans, the balance on my credit-card isn’t exactly zero, and other necessary expenses take away from my income. If I had the chance to earn that much money, would I take it? Definitely. As far as it doesn’t demand something as ridiculous as totally abandoning my daily Starbucks.

I traced my expenditure in 2018 to find out how much money I could save by cutting back on this daily habit, and also how much money I could be earning if I invest this money instead. This is what gathered.

In figures

My usual, very specific order costs me $6.04, including tax. That is $6.04 everyday, Monday to Friday, which is $30.20 each week. And $30.20 multiplied by 52 weeks is $1,570.40.

However, that’s not totally everything. I’ll also order a croissant, which costs $2.75, no less than three days in a week. Also, another “grande chai tea …” once during the weekend before I run errands. In total, the croissants will cost me about $429 each year. And the extra weekend coffee sums up to $314.08.

The grand total is $2,313.48 in 1 year.

Experts may say I have an issue.

While this number could differ slightly after you’ve subtracted the free items that you get every now and again with the rewards from the Starbucks mobile-app , it is still a lot more than what  over half the population of American had saved through the year.

If I decided to skip Starbucks for a year, save money, and invest it instead, with compound interest, in 10 years, it could amount to $4,551 at 7% per year. It could hit $8,952 in 20 years and, in 30 years, it could get up to a massive $17,611.

The background:

From all the way back to when I was in college, caffeine has been one of the things I’ve needed to get my day started right. So, each morning when I’m heading to work, when I get off the subway, I head straight to Starbucks for this reason.

It isn’t just about the taste or even the variety of blends, though, it’s the overall experience that keeps me coming back. The warm coffee-shop feeling, the rapport you have with the staff, the aura in general. In my opinion, Starbucks is the place where, whether or not you go in alone, you will feel as though everyone already knows what your name is.

But buying a Starbucks everyday can be quite expensive, especially if you live in New York City, which has a sales tax rate of 8.88% – one of the highest rates in the entire country. Compare this to a place like Wisconsin, or Milwaukee, with a sales tax of just 5.6 percent. There are places that don’t even have sales tax, like Portland, Oregon, for instance.

Why one of the business guru in “Shark Tank” not buy fancy coffees with his money?

‘Is this something I really need?’

“Shark Tank” investor and Business guru Kevin O’Leary never buys coffee for over $2.50. “It is a huge waste of money considering that it only costs 20 cents. I’d never order a frape-latte-blah-blah-woof- woof-woof”said O’Leary on one of the shows he was on.  

He decided to make his own coffee instead. “One cup each morning, which costs 18 cents and I invest the rest.” In fact, before he buys anything, he asks himself, “Do I really need this?” “Because if I don’t spend this money on it, I can invest the money and it’ll make me more money every year while I’m sleeping.”

A wealth manager calls it “the latte factor.” “We throw away way too much of our hard-earned cash on needless ‘little’ expenses without even realizing that they add up,” he writes in “The Automatic Millionaire.”

If you let go of small luxury like your $5 latte, or soft drinks or fast food, you would be left with a substantial amount of money to work with. Eventually, he says, “you’ve got to find something you can give up to get up.”

But I don’t see myself giving up my Starbucks in the near future. And other experts on money say that I don’t need to.

Self-made millionaire: Cutting out avocado toast and lattes won’t make you rich—here’s what will  

To start with, the same unique, high quality drink can’t be made at home, and I can’t get it from work for free either, so I take Starbucks to be a fixed cost. When I’m paying my bills like the phone bill, rent and other necessary costs, and allocate some money to savings, I make sure to budget enough money to get my coffee at least until at least the next time I get paid.

That’s the first step. Be responsible with your money. If you’re able to cover the cost of your necessities and still have some money left over, the experts say that you are free to do with your loose income whatever you please.

Besides, as Ramit Sethi, a self-made millionaire on how to save money, “you can’t cut your way to growth.”

He refers to the much-slandered habit that millennials allegedly have of spending too much money on avocado toast: “You might have read an article or some random money saving tips that tells you that the only way to become a millionaire is to cut back on avocado toast. Now, all of a sudden, a million millennials in New York start crying because they can’t go out to brunch six days a week.”

But he says that this idea of buying less in order to get rich is “horrible” advice.

After all, “have you any idea how many avocado toasts you would have to give up in order to get as little as a 20 percent down payment” on a median-priced home? “Is it 100? Is it 1,000? No, it’s over 2,500 avocado toasts.”

Tracking your annual Starbucks spending.

Eliminating your small, regular expenditures is not likely to save you enough money to make you wealthy. Save your time and energy so you can focus on more important things.

“There’s a limit to how much you can cut,” said Sethi, “but there’s no limit to how much you can earn. You have your salary. Negotiate it. Focus on how much money you can grow instead of how much you can cut and protect, this is how you start crafting your own rich life.”

That is my philosophy as well.

It’s simple: Drink responsibly

Wherever you stand on the latte factor, the experts agree that it’s important to keep track of your expenditure, so that you’re aware of where all your money goes. It could be an eye-opener: One of my colleagues found out that she had spent $700 on ride-sharing apps like Uber in just a month. She used this knowledge to alter not only her thinking, but also her spending.

The self-made millionaire: Giving coffee up can make you rich

So record all your expenses using a mobile-app like Personal Capital or Mint or a good old planner. You might be shocked at what you’ll find out. You will probably decide to change a few things.

But I can assure you that as long as you are financially responsible, making sure that you learn how to save money in other ways, then there is no need to feel bad if you would rather not give up your coffee.

Coffee may actually be the secret to having healthier relationships at work and is probably good for your health, too.

According to a survey done by the National Coffee Association, the daily intake of caffeine for Americans is at its highest point in 6 years.

Right now, I’m glad that I’m one of them.