The $305,829 cup of coffee

How little things add up

Life is full of little choices that make huge differences over time. Lets take coffee. I drank instant coffee for 40 years because its what my grandparents who lived thru the depression did but most people go to Starbucks daily. A small decision in the scheme of life but one that over time, adds up to a very big difference.

This instant coffee is from Costco, it goes on sale for $10 and it makes 210 cups of coffee. 5 cents a cup but lets say I like it strong and round up to 10 cents a cup.

Starbucks on the other hand is about $3.00 for a brewed coffee, more for the fancy ones.

10 cents vs $3, so Starbucks costs 2.90 more a day or $87 a month. Yes, the Starbucks probably tastes a bit better but lets look at how much more you will pay for coffee over 40 years.

Below is an investment calculator, lets see how much $87/mo adds up to after 40 years when its invested at 8% in the stock market (8% average return last 50 years).

Let me ask you this, what would you rather have, a cup of Starbucks every day or a cup on instant daily plus 300k in 40 years?

Instant coffee or a Starbucks? A small decision with big consequences. Lets look at two other little decisions that really add up over time.

A million dollars or the latest iPhone and Netflix?

You can get a pay as you go cellphone for $40/mo but the average American spends $120/mo on their cellphone so they get the latest iPhone "free" every 3 years - that’s $80/mo more a month.

The average American spends $60/mo on streaming services when a HDTV antenna attached to their TV can give them entertainment for free.

Lets add up the savings of those three little monthly decisions: $87 coffee, $80 cellphone, $61 streaming = $228/mo

Those three little sacrifices will leave you with $801,484.12 in 40 years which is a great start for retirement or maybe after 10 years use it on a down payment for a house.

Its all the little decisions that are important in life!

People often think its the big decisions that are the most important when it comes to fitness or finance, but that’s not true, its the dozens of little decisions you make every day that are more important. A Big Mac from Mc Donalds or grill chicken at home? Pizza from UberEats for dinner or spaghetti made at home? Watch a movie or go for a 2hr walk with your best friend? Instant coffee or Starbucks? Do tutorials for Fusion 360 or go out drinking with your buddies? Its all these daily choices that add up and are far more important in the long run that whether you decided to become a fireman or a pilot.

Notes

The average stock market return over last 50 years is about 10% but it depends on how you calculate it. Here I have been very conservative and chosen a 8% return.

How much a cup of starbucks costs depends upon location and whether its simple brewed coffee or a specialty drink. Also, most people tip rather generously since the people working at Starbucks only make minimum wage. I based the price on a mid-sized brewed coffee which is $3. Note that marketing studies have shown that the average starbucks customers spends $6 per visit which is twice what I have assumed.

Inflation. Yes, one needs to take inflation into account when deciding how much $305,829 will be worth in 40 years. In the last century, inflation has averaged out to about 2%. That means our 8% return in the stock market is really only 6% and if we redo the $87/mo coffee savings calculation, that means that $2.90/day saved means 174k in todays dollars in your pocket in 40 years.

The average American spends $61/mo on streaming services.

The average American spends $112 and $157/mo on their cellphone plan

This is the investment calculator I used.