The Cost of Coffee: Is it Really Keeping You From Getting Ahead?

There are so many debates and opinions on the topic of coffee–how to get the best flavor, whether to start with ground or whole bean, how to afford organic/fair trade, whether to make it at home or frequent the local coffee shop…

Coffee has also become a hot topic in personal finance. Some people have come to think that Starbucks is the great stealer of wealth, $3 at a time. Other people argue that $3 a day might as well buy you a coffee because it won’t get you much else. The reality is that there is nothing inherently special about buying coffee or brewing your own. However, it is an indicator of your priorities and willingness to make changes.

Breaking Down the Cost of Coffee

First, we need to know how much you might actually be spending on coffee. Let’s say you spend $3 per day, 5 days per week, 52 weeks per year.

$3 x 5 x 52 = $780 per year

Next, we need to know what the cost of coffee would be if made at home instead. This will vary depending on if you already have a coffee maker, if are using k-cups or bags of coffee grounds, what you put in your coffee, etc.

For this example, we’ll say you already own a Keurig that you’ve just been using on the weekends. You will need to buy k-cups and coffee creamer.

Box of K-cups: $8 for a box of 12 = $0.67 per cup

Coffee Creamer: $4 for a 1 quart bottle of Creamer (63 servings at 1 Tbsp. each) = $0.06 per cup

So for $0.73, you can have a quick cup of coffee at home (or take it to-go). Over the course of a year, the cost of at-home coffee instead of coffee shop coffee would be $0.73 x 5 days per week x 52 weeks per year = $189.80 per year.

That’s a savings of $780 – $189.80 = $590.20 per year (or $3 – $0.73 = $2.27 per day).

Making a Difference

Now that we’ve done the math, what does it really mean for your wallet? It depends on what you do with what you saved! If you think to yourself, “Hey, I didn’t spend that $3 on coffee this morning, so now I have extra money to buy snacks on break,” you won’t end up any further along than if you had bought the coffee instead of the snacks.

In order for your cost of coffee savings to make a difference, you have to be intentional with the money you saved. In our example, the savings amounts to $2.27 per day. You could commit to putting $11.35 (that’s $2.27 x 5) in your savings account each Friday. By the end of the year you would have an extra $590.20 in the bank. That could add up to a really healthy rainy day fund or emergency fund, or you could save toward a specific goal.

Another option is to use the savings to pay down debt. I used this Paying Off A Credit Card calculator to show what a difference that coffee savings could make.

Hypothetically, on a $5000 credit card balance at 18% interest and a $50/month minimum payment, an extra $45 each month shaves 13.2 years and $6,767 interest off the payoff. That’s a humongous savings!

Be Intentional

So is the cost of coffee really keeping you from getting ahead? Maybe it is, but coffee itself is not the real culprit. We could insert Hulu, fast food lunches, gym memberships, trips to Target, or any other discretionary spending habit. (Click here to read about how to save on other Budget-Busting Foods.)

The real issue at hand is a mindset. The things that keep us from getting ahead in our finances are an unwillingness to change and not being intentional in our spending habits. Coffee is just one example of how willingness to make a small change and become intentional with money can lead to better finances all around.