How One less coffee a day can save you over $1,000 a Year

Posted: February 26th, 2009 | Author: Mo2 | Filed under: Budgeting, Finance, Planning | Tags: Budgeting, compounding, Finance, financial plan, Investing, piggy bank, portfolio number, save money on coffee |

Stick Only to Your Morning Coffee
A lot of us can’t start off the day without a coffee. I’m guilty of this, before going to work I have to have my cup of Java before I can start the day on the right foot. There’s just something about the wonderful smell and taste that helps me get my day under way. Caffeine is bad for you as many studies show, but some of it can also be good for you, other studies say. Well, to be honest, as with everything, most things can be good for you if you keep it in moderation.

I’m often also guilty of drinking a second or third cup of coffee during the day I know many other people who are. When they have a “coffee break” they actually get another coffee. And the problem is, most of these people that get the second or third coffee aren’t really thinking what that second and third cup is doing to both your physical and financial health. As for our coffee problem, the best alternative would be: Drink Water. =)

Keep Track of Your Savings!
Every cup of coffee you don’t drink saves you money, so keep track of how much you don’t drink! Make an Excel spreadsheet, write it on a notepad, do anything that will help you keep track of how much you’ve saved!

Feed Your Piggy Bank!
For every coffee you don’t drink, help your piggy bank savor some extra coin! Well you don’t have to take that literally; you can tally up how much you saved in a week or a month and move that extra money somewhere such as a savings account or buy some mutual funds. Do something with that money so you can differentiate it from everything else you spend the money for, that way you’re actually putting the money you saved into good use, saving for your future!

What that $1.75 could translate to over the long term…
$1.75 or $1.50 whatever you save doesn’t seem like much but let’s do some math.

$1.75 x 365 days a year is $638.75. If you get a return of 6% then that would be $638.75 x $677.08. Now that’s some decent cash.

If you drink something a little more expensive (a lot more actually) like a latte then you’d be saving a lot more! Say the average latte is $3 and you refrain from drinking that extra latte a day, that would be $3 x 365 = $1,095. At 6% return that would $1160.70 a year!

Now to use the latte example, if you were to save that money for 20 years and keep it all saved at a 6% return, then it would turn into $36,557.70! That’s not too shabby is it now? Now obviously, not everyone will be drinking 2 lattes a day but you get my point hopefully.

Mo2 Thinks
This coffee example should show you how much saving a few dollars a day could leave to your financial freedom. There are several ways to save money everyday and you should make an effort to figure out how to pinch pennies without hurting your lifestyle or seeming to be cheap. You don’t want to be thought of as cheap, but there are ways of being conservative with your spending.

The next and probably more important step is to make sure you separate your savings from the money you use to pay for your other stuff. By differentiating what you are saving and putting it somewhere you can invest it, you’ve taken a massive step into helping yourself become that much more financially responsible!

Take Action!
Get a pen and paper out and write down the daily expenses that you have and write out how much you spend on them. See if there are ways to reduce your spending on these expenses and work on reducing them day by day. If you don’t have one already, open up a free high interest savings account at your bank. Every bank should have a free account with unlimited transactions to save your money.

Transferring money into this account from your chequing account could cost you money so you could keep track and put money in this account once a week or even month. I would do it once a week so that it makes it easier to keep track and you can feel the difference your savings are making to you mentally. In addition, by putting money away weekly it’ll keep you disciplined in continually saving money.

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