The $76,500 Coffee
The insane power of saving (or spending) compounded over time
Imagine you spend $5 per day on a latte.
These days, if you’re going out for coffee every day, $5 may even be a deal.
$5 per day adds up to $35 per week.
That coffee is $150 per month and $1825 per year.
That’s the equivalent of 14 days of Disney tickets per year…
28 meals eating out…
Netflix, Hulu, Disney, and Amazon Prime subscriptions… for 3 families!
All of this is just for a coffee per day that you could have made at home for a fraction of the cost.
It gets crazier from there
Over 20 years, that $5 per day on coffee adds up to $36,500 without accounting for the cost of the coffee going up with inflation.
Throw 2.5% average inflation and you’ve spent $76,500 on that morning latte.
Buy the coffee
I’m not some crazy penny-pinching finance guru who’s telling you not to buy the morning coffee if it makes you happy.
Life’s short, don’t waste your happiness pinching pennies.
The point that I’m trying to get across is just how far investing can get you when you’re diligent about investing consistently.
Turning $76,500 into $87,200
Let’s look at the same equation, but in addition to your $5 coffee, you’re also investing $5 per day in an index fund like VOO.
Instead of 2.5% inflation, we can calculate an average market return of 7%.
$5 per day invested each year:
$5 x $365 = $1825 x 1.07% = $1953
Over 20 years: $87,200
Just for the fun of it…
Over 40 years: $482,800
Do you think it’s worth putting away that extra $5 per day?
Please note: This article is for informational purposes only and should not be considered financial advice. Always consult with a financial professional before making any major investment decisions.
“The best time to plant a tree was 20 years ago. The second-best time is now.” — Chinese Proverb
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