My Fancy Coffee And Bad Money Spending Habit

Every day, we make choices that shape our financial future, often without even realising it. 

Some of these choices involve seemingly small expenses that, over time, can add up to significant sums

Exploring Bad Spending Habits and Their Impact

In this post, we’ll explore the impact of bad spending habits on our financial well-being and share tips on how to overcome them for long-term financial success. 

While my personal story revolves around coffee indulgence, the principles can be applied to any area of spending where we tend to go overboard.

So, you know those “fancy” brews from Starbucks or Costa? 

When I landed my first 9-5 job after college, I couldn’t resist grabbing a cup on my way to work. 

Sure, I had coffee at home, and the office break room had an endless supply, but I still craved that fancy coffee.

The Hidden Costs of Daily Indulgences

It seemed harmless, right? 

A $3.95 coffee frappuccino wouldn’t break the bank or cause financial stress. At least, not immediately. 

But that daily indulgence started shaping my spending habits and applied to everything else, eventually leading to an inflated lifestyle.

Earning that first paycheck is a pivotal moment. The financial habits we form early on can impact the quality of our lives for decades. 

Yet somehow, I thought it was a brilliant idea to waltz into Starbucks every day for my beloved coffee frappuccino.

Recognising and Breaking Bad Spending Habits

The problem was, I didn’t think

What started as a little thing soon morphed into a daily ritual that lasted five years. One coffee a day added up to over $1,000 per year. 

When I finally realised the extent of my bad spending habits, I was shocked. And even more stunned by how much I could have saved and invested instead.

So, how can we control our spending habits and foster good money habits? 

First, recognise the areas where you might be overspending

Whether it’s luxury purchases or habits like grabbing coffee every morning, these seemingly small choices can have a significant impact on your finances.

Building Better Money Habits for a Secure Financial Future

Remember, it’s not just about Starbucks coffee. It’s about breaking bad financial habits, building better money habits, and making conscious choices that benefit you in the long run. 

Next time you’re tempted to splurge on that daily treat, think about the potential consequences and choose wisely. 

With intentionality and discipline, you can transform your financial future.

From Spending $86 a Month on Coffee Frappuccinos to Gaining $7,023.59

Imagine going from spending $86 a month on coffee frappuccinos to having a growing investment account.

Back in the day, those delicious icy drinks were slightly cheaper, and sometimes I couldn’t help but have more than two.

Spending $3.95 each workday added up to $1,027 per year, or $86 per month. Over five years, this would add up to $5,160.

Now, let’s see what would happen if you had invested that same amount every month for five years at a 7% return or a 12% return, using monthly compounding interest.

? Note: These rates are based on the S&P 500’s historical performance. The 7% rate is adjusted for inflation and accounts for dividends from 1950 to 2009. The 12% rate is based on data from 1987 to 2016.

Compound interest is the concept where interest earned on an investment is added back to the principal amount, and the interest then earns interest on itself. This can result in exponential growth over time.

Comparing 7% and 12% Interest Rates

To demonstrate the power of compound interest, let’s compare two scenarios: investing $86 per month for five years at a 7% return and at a 12% return, using monthly compounding interest.

Investing $86 per Month for 5 Years at 7% Interest

Here are the calculations for investing $86 per month for 5 years at 7% interest with monthly compounding:

Table 1: Yearly Deposits and Interest

YearYear DepositsYear Interest (7%)

Table 2: Total Deposits, Interest, and Balance

YearTotal DepositsTotal InterestBalance
1 1,03238.501,070.50

Investing $86 per Month for 5 Years at 12% Interest

Now let’s look at the calculations for investing $86 per month for 5 years at 12% interest with monthly compounding:

Table 1: Yearly Deposits and Interest

YearYear DepositsYear Interest (12%)

Table 2: Total Deposits, Interest, and Balance

YearTotal DepositsTotal InterestBalance
1 1,03268.741,100.74

The Impact of Long-Term Investment

If you had invested that daily coffee money, you would’ve had an extra $6,156.99 (7% scenario) or $7,023.59 (12% scenario) by the time you left the company after five years.

Taking It One Step Further

But here’s where it gets interesting.

Suppose you decided that $86 a month wasn’t a big deal and continued saving and investing it for another 20 years.

In 25 years, you’d have approximately $69,666.17 (7% scenario) or a whopping $161,580.81 (12% scenario)!

Changing Habits and Mindset

It’s astonishing how such a small monthly amount can compound over time and provide us with a financial safety net later in life.

This realisation made me reevaluate my bad spending habits and think about how to control them.

I became conscious of my spending choices and intentional with my decisions.

I also learned that saving and investing wisely, even in small amounts, could create a more secure financial future.

With intention and discipline, you can transform your financial future and enjoy the benefits of intentional spending.

Embracing the Power of Compound Interest

I hope that the calculations and explanations above help you see how investing even small amounts can lead to significant growth over time

The tables provide a visual representation of the potential returns based on two different interest rates. 

This information should help you understand the power of compound interest and the importance of living intentionally when it comes to your financial decisions.

Reflect on Your Spending Habits and Potential Savings

Are you mindful of your spending habits? 

Take a moment to consider the small expenses you know you can do without today.

Plug those numbers into a compound interest calculator and see how much you could have in x years by saving and investing instead of indulging in short-lived pleasures.

Compound Interest Calculator

This simple exercise can help you cultivate a conscious mindset when it comes to your financial decisions. 

And as we all know, breaking bad spending habits and embracing better money habits is crucial for long-term financial well-being.

The Thrifty Colleague with an Impressive Property Portfolio

I used to buy and treat my department colleagues with, you guessed it, Starbucks’ delights. 

My colleagues loved them, and I revelled in their happiness.

Being generous has always been part of who I am, but I suspect I also sought others’ approval with these goodies, almost bribing them for their support. 

At the time, I struggled with low self-esteem, which I’ve since overcome thanks to this book.

I had a Brazilian colleague at work who was more of a receiver than a giver, to the point that he earned a reputation for being stingy. 

I later learned that he had been sending all his money to Brazil, where he first bought a house and then expanded it into multiple investment portfolios.

I don’t regret treating my colleagues, but I do regret the frequency. I wish I had been wiser with my spending habits.

Are Expensive Coffee Drinks Truly Worth It?

Let’s face it—when we consume it, fancy coffee is processed in the same way (and with the same effect) as any other coffee we can grab from our kitchen or break room at work. 

By all means, enjoy your favourite drink at Starbucks or Costa, but do so occasionally, turning it into a treat rather than a mindless habit like mine.

But remember, this isn’t just about fancy coffee. It’s about building good money habits through conscious decision-making. 

I hope you can see the magnitude of the compound effect a small amount has over a long period of time and why it’s so important to live intentionally in everything you do, especially when it comes to spending money.

Final Thoughts on Overcoming Bad Spending Habits

Breaking bad spending habits and adopting healthier ones is a journey that starts with intention and self-awareness. 

Whether it’s enjoying that fancy coffee as a rare treat or finding other ways to save and invest, every small step counts. 

Remember, it’s not just about cutting back; it’s about making deliberate, well-considered choices that lead to a more secure financial future.

So, next time you’re faced with a spending decision, pause for a moment and consider the long-term effects. 

With focus, discipline, and a commitment to living intentionally, you can transform your relationship with money and pave the way for a brighter financial future.

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  1. Thank you so much for this article! The thought of going through all of my receipts, and trying to determine how much I have spent on Starbucks in the last year makes me cringe. I just ordered my last Starbucks via Uber eats. I’m going to enjoy it because starting tomorrow, I’m making a very big change!

    1. Thanks for dropping by, Asha. I wish you all the best with positive changes you’re making. It’s onwards and upwards from here! 🙂

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