My wife woke up me this morning to remind me that we were out of coffee and to go buy some for her.  My wife is one of those people that require their morning caffeine fix, so I forced myself up and out the door.  My first initial thought was to go to the corner store gas station and just buy a couple coffees.  Then I woke up a little more and realized the grocery store wasn’t much further, so I just drove over to buy a couple bags of ground coffee.  While I was there, I saw a HUGE line at the Starbucks coffee counter.  It got me thinking, “All these people not only wasting time waiting for coffee, but also wasting money.”  I bought two bags of ground coffee that would last for a month for $15 and here were all these people paying anywhere from a $1.50 to $7.00 for a single cup.  Not to mention I was out the door in five minutes total by using the self checkout.  While driving home, I started doing some math in my head about how much Starbucks is costing those people.  Here is what I was thinking:

If you buy a Starbucks coffee each working day, and let’s say you work 48 weeks a year, then you are buying 240 coffees each year (48 weeks x 5 working days).  Starbucks coffee can get quite expensive, so let’s say the person spends an average of $4 on a cup.  240 coffees multiplied by $4 is $960 per year or $80 per month.  I am going to exclude the cost of gas used to drive to Starbucks.  I am also going to exclude the wasted time spent waiting for coffee and that opportunity cost as everyone values their time differently.  However, if you add those in, the cost gets way more dramatic.

Now let’s say these people stop buying their daily Starbucks and buy a coffee maker and ground coffee instead.  The cost drops from $80 a month to $15.  That is a monthly savings is $65.  If you took that $65 and invested that into the stock market and earned a hypothetical 8% return, then that $65 per month turns into $11,891 in 10 years.  Then $38,286 in 20 years.  And a whopping $96,873.36 in 30 years!!

This math could also be applied to going out to lunch every day and many other small luxuries that really add up over time.  So my two cents of financial advice for this month is to think about the little expenses in your life and what they are really costing you down the road.