Quick answer: Buying coffee every day costs more than it feels like. At $5 a cup, five workdays a week, that is about $100 a month or $1,200 a year. Invested instead at historical stock market returns, that money could grow into a large sum over decades. If cafe coffee genuinely makes you happy, keep it; otherwise, brew at home.
Most of us buy a coffee when we’re out and need a caffeine fix. That’s fine occasionally, but as a daily routine it quietly adds up. Here are both sides of the argument, and the math on what a daily coffee habit really costs.
In this guide 4 sections
Is buying coffee a waste of money?
Money intrinsically has no value and it is just a way to express value. We each give money a different weight depending on what we can purchase with it. The value is in the goods and services that we want to purchase with it.
In a book written by Ramit Sethi called, “I Will Teach You To Be Rich” one of the main points is living your rich life. This is when you consciously decide the two biggest areas of your life that you will spend your money on. If you are interested in learning more, see the book’s reviews on Amazon.
Personally, for me, this would be to grow my businesses and my crafting hobby.
The theory is that you will get much more enjoyment if you spend money in those categories that the “ROI on Happiness” is worth it. Everyone has at least one category that they can spend more money on and improve their overall happiness.
If buying Starbucks coffee is one of those categories then you should definitely be spending that money. For example, if you like studying in Starbucks and do not have a good atmosphere at home to work or study. Or if your friends require you to meet up at Starbucks to study or collaborate.
When should you cut your coffee spending?
If buying coffee is not an essential part of your life and does not improve your overall happiness then you should cut the spending out of your life.
This is the same for any other category that is not what provides you your happiness. This mentality will help you improve your happiness as well as help you manage your money.
I use a budgeting app to track all my income for the month and budget all my expenses. I prioritize the categories that need to be paid and the spending that truly matters.
You cannot nickel and dime your way out of poverty.
However, with good income financial planning is essential to keeping your money. Saving money where it counts ensures a happier and more financially stable future.
By saving and investing your money you can get the effects of compound interest. This is the most important wealth building tool for young adults and it is important to start early and invest for the long term.
How much does buying coffee every day cost?
With compound interest, the interest earned on your interest, the money you save by not buying coffee daily becomes exponential.
For the sake of simplicity let’s say that a cup of coffee costs $5 and you work 5 days a week over a 4 week span every month.
$5 dollars per cup of coffee x 5 days x 4 weeks = $100 a month
Here are the factors to consider when calculating compound interest.
- Initial Investment. This is the amount of money you start with.
- Monthly Contribution. The amount of money that you add to your investment account each month.
- Length of Savings. This is the amount of time you are planning on investing your money.
- Interest Rate. This is how much your money makes each period and this is depending on your investments.
- Compound Rate. This is how often your interest will compound.
To take advantage of compound interest you must reinvest your interest while investing for the long term.
With the compound interest formula:
A = P(1 + r/n)nt
- A = Accrued Amount
- P = Principal Amount or Initial Investment
- r = Annual Interest Rate as a decimal
- n = Number of periods per year
- t = Time
So if we start with nothing and we save $100 and invest the money at average market returns, 9.8% which is the average S&P 500 returns since 1926, for 60 years, you can see the results below. These are illustrative figures before inflation, fees and taxes; real returns vary year to year.
$27,298.60 = $100(1 + .098)^60
You will have $27,298.60 from just $100 saved 60 years ago. Now, if you save $100 a month this the calculation.
| Year | Deposit | Interest | Balance |
| 1 | $1,200.00 | $62.79 | $1,262.79 |
| 2 | $1,200.00 | $186.54 | $2,649.33 |
| 3 | $1,200.00 | $322.43 | $4,171.76 |
| 4 | $1,200.00 | $471.62 | $5,843.38 |
| 5 | $1,200.00 | $635.44 | $7,678.82 |
| 6 | $1,200.00 | $815.31 | $9,694.14 |
| 7 | $1,200.00 | $1,012.82 | $11,906.95 |
| 8 | $1,200.00 | $1,229.67 | $14,336.63 |
| 9 | $1,200.00 | $1,467.78 | $17,004.41 |
| 10 | $1,200.00 | $1,729.22 | $19,933.63 |
| 11 | $1,200.00 | $2,016.29 | $23,149.91 |
| 12 | $1,200.00 | $2,331.48 | $26,681.40 |
| 13 | $1,200.00 | $2,677.57 | $30,558.96 |
| 14 | $1,200.00 | $3,057.57 | $34,816.53 |
| 15 | $1,200.00 | $3,474.81 | $39,491.34 |
| 16 | $1,200.00 | $3,932.94 | $44,624.28 |
| 17 | $1,200.00 | $4,435.97 | $50,260.25 |
| 18 | $1,200.00 | $4,988.30 | $56,448.55 |
| 19 | $1,200.00 | $5,594.75 | $63,243.30 |
| 20 | $1,200.00 | $6,260.63 | $70,703.93 |
| 21 | $1,200.00 | $6,991.78 | $78,895.71 |
| 22 | $1,200.00 | $7,794.57 | $87,890.27 |
| 23 | $1,200.00 | $8,676.04 | $97,766.31 |
| 24 | $1,200.00 | $9,643.89 | $108,610.20 |
| 25 | $1,200.00 | $10,706.59 | $120,516.79 |
| 26 | $1,200.00 | $11,873.44 | $133,590.23 |
| 27 | $1,200.00 | $13,154.63 | $147,944.86 |
| 28 | $1,200.00 | $14,561.39 | $163,706.25 |
| 29 | $1,200.00 | $16,106.00 | $181,012.25 |
| 30 | $1,200.00 | $17,801.99 | $200,014.24 |
| 31 | $1,200.00 | $19,664.19 | $220,878.42 |
| 32 | $1,200.00 | $21,708.88 | $243,787.30 |
| 33 | $1,200.00 | $23,953.95 | $268,941.24 |
| 34 | $1,200.00 | $26,419.03 | $296,560.28 |
| 35 | $1,200.00 | $29,125.70 | $326,885.97 |
| 36 | $1,200.00 | $32,097.62 | $360,183.59 |
| 37 | $1,200.00 | $35,360.78 | $396,744.37 |
| 38 | $1,200.00 | $38,943.74 | $436,888.11 |
| 39 | $1,200.00 | $42,877.83 | $480,965.94 |
| 40 | $1,200.00 | $47,197.45 | $529,363.39 |
| 41 | $1,200.00 | $51,940.40 | $582,503.79 |
| 42 | $1,200.00 | $57,148.16 | $640,851.95 |
| 43 | $1,200.00 | $62,866.28 | $704,918.23 |
| 44 | $1,200.00 | $69,144.78 | $775,263.01 |
| 45 | $1,200.00 | $76,038.57 | $852,501.58 |
| 46 | $1,200.00 | $83,607.94 | $937,309.52 |
| 47 | $1,200.00 | $91,919.12 | $1,030,428.65 |
| 48 | $1,200.00 | $101,044.80 | $1,132,673.44 |
| 49 | $1,200.00 | $111,064.79 | $1,244,938.23 |
| 50 | $1,200.00 | $122,066.74 | $1,368,204.97 |
| 51 | $1,200.00 | $134,146.88 | $1,503,551.84 |
| 52 | $1,200.00 | $147,410.87 | $1,652,162.72 |
| 53 | $1,200.00 | $161,974.74 | $1,815,337.45 |
| 54 | $1,200.00 | $177,965.86 | $1,994,503.31 |
| 55 | $1,200.00 | $195,524.11 | $2,191,227.43 |
| 56 | $1,200.00 | $214,803.08 | $2,407,230.51 |
| 57 | $1,200.00 | $235,971.38 | $2,644,401.89 |
| 58 | $1,200.00 | $259,214.18 | $2,904,816.06 |
| 59 | $1,200.00 | $284,734.76 | $3,190,750.83 |
| 60 | $1,200.00 | $312,756.37 | $3,504,707.20 |
I’m not saying quit drinking coffee. I wrote an article about how I make 20-cent iced coffee with a recipe from YouTuber Graham Stephan.
Your everyday habits have the biggest impact on your long-term finances. This is why in the long run buying coffee every day will make you poor.
In this example, investing $100 a month instead grows to about $3.5 million after 60 years (before inflation).
Some tips that you can take so you can enjoy your coffee without feeling guilty.
- Actively budget and track your money
- Buy your coffee locally and freshly roasted
- Brew your coffee at home; our guide to coffee makers for college students covers cheap setups
- Learn to make cafe drinks yourself, like dalgona coffee or frothed milk for lattes
Frequently asked questions
How much do you spend buying coffee every day?
At $5 a cup on five workdays a week, you spend about $100 a month, or roughly $1,200 a year. Adjust the numbers for your own price and habits.
Is it cheaper to make coffee at home?
Yes, usually by a wide margin. Brewing at home costs a fraction of a cafe drink per cup, even with good beans; our 20-cent iced coffee is one example.
Should I stop buying coffee to save money?
Only if it doesn’t add much to your life. If a cafe coffee is something you truly value, budget for it and cut spending elsewhere. If it’s just a habit, brewing at home and investing the difference adds up over time.
Recently I have started investing the money I save in a dividend growth portfolio. This article shares my own approach and isn’t financial advice.
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