It's Not About the Coffee

You’ve read the articles. I am guilty of writing a similar one. Countless other financial professionals have used the same example. Stop buying expensive coffee, save the amount you would have spent. Then, your savings compounds its investment returns.

I think people spend too much time thinking about that. It’s not the coffee holding your savings back.

You just have a bad plan. Make a better one.

• Take some time to focus on what you spend. Decide if the happiness it brings you is enough to justify the costs. Do you really watch that video service? Even at $10 a month if you don’t, cancel it!
• Get a grasp of your total spending. What is fixed every month and what varies? What is a choice and what isn’t?
• Find a realistic amount that you can routinely save towards your goals. Set an amount to save automatically on your account, then revisit the amount at least annually.
• If you get a raise or bonus save a portion while increasing your lifestyle.

Consistently monitoring what you spend, save, and invest sets the foundation for a successful financial life plan.

I’d like to add something here though. There is a deeper point to the coffee analogy. You make deliberate choices each day. Whether it is buying coffee or investing in your IRA, do it on purpose. Mindlessly spending any amount undermines present and future financial stability. Thinking and planning throughout your financial life drives success.

-Clay Wood-