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No, your coffee habit is not what keeps you from retiring – the colorful fool

Recently, personal finance expert and TV personality Suze Orman was criticized for berating Millennials over their coffee habits. In particular, she likened the habit of buying coffee to throwing away $ 1 million – money that could otherwise be used to fund a retirement.

Well, the underlying idea that Orman may have tried to convey is not terrible: spend less now and you'll be able to save more money for the future. This concept is not only logical but also reasonable. However, if you have the habit of eating a latte every day, you should rest assured that you will not ruin your finances.

  Group of people with coffee cups


Small Pleasure Makes Life Livable

The money you spend on coffee today could otherwise be saved for the future and maybe even expanded to a sizeable sum. Imagine you are currently spending $ 5 per day on a caffeine-based beverage of your choice purchased in the store. Yearly coffee expenses of $ 1,825 are expected 365 days a year. And that's probably a lot of money. If you instead put this money into an IRA or 401 (k) and invest it with an average annual return of 7%, which is slightly below the average of the stock market, you would end up with about $ 364,000 over $ 40-year period.

That's exactly where a decent nest egg for retirement. But there are a lot of other things you can do to build a similar total over time, without giving up the morning drink you look forward to every day. They are cheaper than a house on top Your budget stands. You can easily reduce your monthly housing costs by $ 152, which adds up to the same $ 1,825 your coffee costs annually. Similarly, you can lease a cheaper car and save an additional $ 150.

Or you can play around with a few smaller issues if you plan to release money for your retirement. For example, if you downgrade your cable bundle (or cut the cable off in favor of streaming services), you may save $ 60 or $ 70 per month while canceling your gym membership. You can not retire as long as you try to save money in some other way. But actually it does not matter where this money comes from. So, if you are happy with your morning latte and recharge your batteries throughout the day, continue to drink it, even if it is possible to make much cheaper coffee at home.

For many people, it is the little indulgences of life that make more difference than the big ones. So, if you are willing to rent a smaller apartment or buy a less spacious house, to be able to order something once a week, take part in concerts, and yes, buy coffee, then go for it , As long as you do not neglect your savings, you should not feel bad.

Incidentally, this advice also applies to non-Millennials. Younger workers tend to be treated badly, but buying coffee and similarly modest luxuries is a habit people of all ages hold on to. And again, it's alright – as long as a fair amount of money is saved along the way.

It's easy to buy coffee as a lavish edition, considering how cheap it can be to brew it at home. But if you love your caffeine-bought caffeine and it's one of the highlights of your day, do not stop buying it. Just try to save in other ways, and do not blame yourself.

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