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  • Financial pundits are always quick to point out the easiest way to save lots of money.

  • If you stop buying a five dollar latte every day and invested that money, you would have a million dollars when you retire.

  • That doesn't sound quite right.

  • How much coffee are these people drinking?

  • And more importantly, how much would you actually save if you cut out expensive caffeinated drinks?

  • Let's say you buy a five dollar espresso drink every day.

  • You probably don't, but the gurus think you do.

  • That's $35 a week, $140 a month, $1,825 a year.

  • They say to invest your money, but financial personalities sometimes grossly overestimate the stock market's annual rate of return.

  • So let's bring it back to Earth by assuming a more conservative six percent return.

  • Even with this math, it would take 14 years to have enough money to pay off the average American student loan debt.

  • And that is assuming you're someone who buys a coffee every day of the year, even those days when the coffee shop is closed.

  • So, even if you never drank coffee again, and invested all your coffee money in the stock market for 40 years, you would have about $280,000, which is nowhere near enough to retire.

  • So how much coffee would you need to cut out to save tons of money?

  • It would take the money from four lattes a day, every day for 40 years with a generous rate of return to end up with over a million dollars.

  • And since that is an unhealthy amount of caffeine, it's best to think of your coffee in terms of priorities.

  • Do you want a latte today?

  • Or do you wanna save that money and buy an iPhone in 6 months?

  • Or a cruise next year?

  • Or a college fund for your kid in 18 years?

  • So, don't feel bad about splurging on your next venti, unless you're buying four at a time.

  • And then, you should still be more worried about the caffeine.

Financial pundits are always quick to point out the easiest way to save lots of money.

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B1 US save latte caffeine return stock market retire

How Much Money Would You Save by Cutting Out Starbucks?

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    Courtney Shih posted on 2020/01/31
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