How much does a $5 coffee a day cost? $1,820 a year, and what to do with that

A $5 coffee a day costs $1,820 a year, counting seven days a week for 52 weeks. On weekdays only it is $1,300. Over ten years that is $18,200 or $13,000, before prices rise and before you count what the money might have earned somewhere else. Those are the numbers. The more useful question is what to do once you have seen them, and the answer is not always to stop buying the coffee.

This is a post about one small purchase, but the method works for any habit you pay for by the unit.

How much does a $5 coffee a day cost, by the week, year and decade

The arithmetic is one line: price, times how many a week, times 52. Here it is for the two patterns most people actually have, the every-day coffee and the weekday coffee bought on the way to work.

Two things are left out on purpose. Prices are held flat, so the ten- and twenty-year figures are floors: if your coffee goes up, so does the total. And there is no interest yet. That comes next, because it changes the size of the number more than the price does.

The invested version, and the assumption inside it

The famous version of this argument is the latte factor, a phrase the personal finance writer David Bach made popular around the turn of the century. His point was not that coffee is bad. It was that small, repeated spending adds up, and that the same money put away each month grows.

To show that, you need a rate of return, and any rate is a guess about the future. With that warning attached, here is the $5 coffee if the money were saved monthly instead, at two assumed yearly returns.

Over twenty years at 7%, the every-day coffee becomes about $79,000, and that is the figure you will see quoted in the scarier articles. Treat it carefully. It assumes you would have invested every dollar, on schedule, for twenty years, in something that returned 7% a year after fees, and that you would not have spent the money on something else first. Most people would not have. The plain total is the honest one; the invested one is the ceiling.

Is a coffee a day worth it?

That depends on what the coffee is buying, and it is rarely only coffee. For a lot of people the 8:15 cup is the one moment between home and work that belongs to them. For others it is a meeting place, a walk, a reason to leave the desk. Those are worth paying for. Fourteen hundred dollars a year for the best ten minutes of most weekdays is a defensible price.

What is not defensible is the coffee you do not notice. The second cup bought because the cafe was there. The one on Saturday that you did not enjoy. That is where the number does its job: it turns a purchase too small to think about into one big enough to decide on.

• Would you pay the yearly figure, in one payment, for this habit as it is now? If yes, keep it and stop feeling bad about it.
• If you would pay for some of it, which days? Most people find two or three cups a week they would keep and two they would not.
• Is it the coffee or the break? If it is the break, a walk and a coffee from home buys most of it for a fraction of the price.
• Is there something you keep saying you cannot afford? Put the yearly figure next to that price. That comparison decides more than any spreadsheet.

Cutting back without giving it up

The all-or-nothing version fails for the same reason most habit changes do. You stop on a Monday, feel virtuous until Wednesday, and by the following week you are back to five a week with a little extra guilt on top. Cutting the number usually holds better than cutting the habit.

Three a week instead of five takes $520 a year off a $5 habit and keeps the part you like. Fix which days, say Monday, Wednesday and Friday, and make the other two days a coffee from home on purpose rather than a deprivation. Then track it. Not the money: the days. A row with three ticks a week is easy to keep, and it tells you in a month whether the new pattern stuck or quietly drifted back to five.

The point of the number is not to make you feel bad about a coffee. It is to make the coffee a choice.

What a month of tracking shows that the receipt does not

Your bank statement tells you what you spent. It does not tell you when you meant to. If you set a habit for three cafe coffees a week and log the days, the month grid shows you the shape: which days held, which ones turned into a second cup, and whether Friday is the one that always slips.

In BeHabitual that is a plain habit set for three days a week, Monday, Wednesday and Friday, so the other four days are never counted as misses. If you would rather count cups than days, a count habit with a target of one does the same job and shows a day with two cups for what it is.

An honest limit

None of this is a savings plan. Skipping coffee does not, on its own, put money anywhere. The money goes wherever your other spending goes unless you move it on the day you did not buy the cup, and very few people do that for long. If the goal is savings, an automatic transfer on payday does more than any number of skipped lattes. The coffee maths is for deciding about the coffee.

Questions people ask

The short version

• A $5 coffee every day is $1,820 a year. On weekdays only it is $1,300.
• Over ten years that is $18,200 or $13,000, before price rises and with no interest.
• The invested figures depend on an assumed return. Read them as a ceiling, not a promise.
• Decide by asking whether you would pay the yearly figure in one go for what the coffee gives you.
• Cutting from five a week to three keeps the habit and takes $520 a year off it.

Run your own price through the habit cost calculator, then decide on purpose. Keeping the coffee is a perfectly good answer once it is one.