My Coffee Addiction: How to Fix Bad Spending Habits
I’ll admit it. I have an addiction.
No, it isn’t life threatening. No, I don’t expect to end up on the next episode of Intervention. But yes, this addiction is hurting my wallet; it’s my spending vice.
My addiction is coffee, and I’m not alone. This once-considered sacred elixir is consumed more commonly than juice, pop, and tap water in Canada. (Yes, even tap water.) But my problem isn’t in the consumption of this warm, delicious, energizing drink—my mouth is watering just thinking about it—it’s the spending habit I’ve formed around it. In the following post, I’ll take a close look at one of my personal spending vices. In doing so, I’ll show you how you can take action on your own bad habits and get closer to your savings goals.
My coffee addiction by the numbers
I’m a daily user. What I mean by that is I spend money at a coffee shop every single day. To make matters worse, I’ve gotten used to going to one of Toronto’s quintessential pretentious coffee shops and I pay a premium for that. (But their beans are organic!)
Let’s do the math:
30 days x $3 = $90 per month on coffee
Damn! Nearly $100 a month on a mindless habit that has become part of my daily routine. This isn’t totally fair; I don’t ever plan to give up this indulgence completely. (And why should I? #YOLO.)
Now let’s see how much I could save if I brewed my coffee at home:
Nabob ground coffee—nothing luxurious but I dig it = $8.97 for a 375g bag
Fairly generous serving of coffee = 2 cups = 2 tbsps of coffee = 30g of coffee
Servings per bag = 375g/30 = 12
Price per serving = $8.97/12 = $0.75
Monthly spend = 30 days x $0.75 = $22.50
Savings = $90 – $22.50 – $67.50
Nearly $70 in monthly savings if I just make a simple change to my daily routine. That’s over $800 a year! And with the wonders of modern technology, I can even set my coffee maker to have it brewed for me when I wake up! Sounds like a positive change that I should definitely consider.
Turning Bad Habits Into Good Ones
Kicking a poor spending habit doesn’t have to end there. While some extra cash in the bank and a delicious home brew sound like worthy enough results to me, how can I do more? How can I turn this bad habit into a good one?
Let’s see what would happen if I invested my new coffee savings into a simple High Interest Savings Account where I could collect some interest:
- Current competitive HISA rate: 1.85%
- Starting account balance: $0
- Monthly contribution: $70
Using Tangerine’s Savings Calculator, I get the following results if I save for a solid 3 years:
- Total saved in my account: $2,593.18
- Interest earned: $73.18
- Tax on savings: $0 (if I put this investment into a TFSA)
That’s pretty amazing. By changing this bad spending habit into a savings habit, I’ll have $3,000 waiting for me in a few years. (Hawaii here I come!)
It Starts with Awareness
Would you like to save up that kind of money? The dream is attainable, my friends, and it all starts with a little awareness.
It’s a pretty simple concept and it will go a long way in keeping you out of financial trouble. My vice may be buying coffee, but yours could be something else. Is it eating lunch out multiple times per week? Parking downtown? Whatever it is, pay attention to your spending, identify your vices, and see if you can do better.
Let us know in the comments or send us a tweet @RateHub about what your spending vices are and how much you could save!
Flickr: Craig Cloutier