When I started a small business, I considered walking over to the nearby coffee shop for a cup of java as a nice perk; something any business owner should enjoy. I’d pick up a cup of coffee on the way to work, along with a piece of fruit or a pastry, to start off my day. And I usually went back in the early afternoon for a cup of pick-me-up for the second half of the day.
Adding up the cost of my trips to the coffee shop
It seemed harmless enough. I was spending around $13 a day which didn’t feel like I was overindulging. But one day, for fun, I decided to add up how much my trips to the coffee shop cost over the long run. I was a bit taken aback at a monthly bill of $390; but I was downright shocked when I realized that meant I was spending nearly $4,700 a year for my indulgence. And that didn’t count driving through a fast food restaurant for a diet soda, salad, or light lunch fare. With those added in, I was easily spending $5,000 a year on coffee, snacks, and fast food.
My reaction to this financial realization was simple and emphatic: yikes! Why hadn’t I thought of this before? I could have saved so much money. I determined then and there to face the financial consequences of my seemingly innocent habit.
Years of Fast Food Added Up
to $248,000 in Retirement Savings
I thought to myself, “Okay, $5,000 a year. If I invest that money at five percent interest, compounded quarterly, how much would I save?” To find out, I went to the simple savings calculator at bankrate.com and typed in the numbers. In just two years I’d save $10,504. In five years, I’d save $28,360. And in ten, $64,755.
But that’s not the worst of it. If I added up how much I’d save over 25 years, the total came to a mouth-dropping $248,000! A quarter of a million dollars thrown away at the coffee shop.
Cured of my fast food coffee habit
Needless to say, those numbers quickly cured me of my daily coffee and a snack habit, big time! Granted, I still had to spend money on brewing coffee at home, but the cost was fractional compared to buying it at a fast food restaurant or coffee shop. Plus I made better and healthier choices by buying my own food and preparing it at home to take to the office.
Don’t get me wrong, I’ll still occasionally stop by a coffee shop for a super-brawny foam-fantastic no-caffeine delight, but the operative word is “occasionally.” Once or twice a month, it’s a nice treat; and I can enjoy it more knowing my retirement savings is busy earning interest instead throwing it away at the coffee shop.