If you are looking to save money, cutting down on coffee might not necessarily be the way forward
Every January, the humble cup of take-out coffee comes in for yet another drubbing. At this time of year, many of us are looking for ways to cut back our spending.
New Year’s resolutions give us determination to maintain this frugality.
To meet this seasonal interest, articles on budgeting tips abound with experts sharing ideas on how we can do it.
And so once again coffee comes under siege.
Rare is the article on budgeting that doesn’t mention cutting back on cups of coffee-shop coffee. Many come with magnificent calculations pointing out that if we just gave up our daily habit, we would transform our retirement outlook from one of penny counting to one of grocery shopping at M&S.
Perhaps that’s an exaggeration, but I did see one that claimed you could boost your pension pot by £131,000 if instead of spending £10 a week on coffee you invested it.
It is true that making small changes can make a big difference. We get into habits which, if you add up the cost over many years, can make for uncomfortable reading.
But I don’t think laying into shop-bought coffee is the answer – not least because it doesn’t address what those of us who don’t buy it are supposed to do.
If you want to cut your spending, the easiest way is to look for things you can give up that you won’t miss.
Go through your direct debits and check for subscriptions you are not getting good use of. Cut interest and overcharge fees by switching banks and credit cards. Shop around to cut your energy bills, phone providers and mortgage costs.
You can do all that in an afternoon, and none of it requires self-restraint or picking up your pace every time you pass your favourite coffee shop.
Then once you have cut back things that you won’t even notice, scrutinise those you will.
However, in many cases just cutting something out and relying on self-restraint to do so is not sustainable.
Behavioural economist Sarah Newcomb points out that people’s daily coffee-shop habit is often rarely about the coffee – if it was just that, you would be just as content with a cup drunk at home or work for a fraction of the price.
For some people, the allure may be the excuse to break up your day and get outside for a bit. For others, it’s maybe just habit. Some may like the coffee-shop ritual, in which case perhaps a cheaper coffee might do just as well.
The key, believes Sarah, is to identify what need it is filling and find a cheaper alternative, such as going for a walk or bringing a flask of coffee from home to drink on the go.
Some people may just really like having a cup of take-out coffee – it’s one of the highlights of their day. In which case – is this really the spending habit they should sacrifice?
Kristy Shen, co-author of this issue’s book of the month Quit Like A Millionaire, would argue that it isn’t.
Kristy retired with a million dollars at the age of 31, through cutting back her spending and being savvy with money. I think her views deserve some attention.
She writes: “While I don’t doubt the math [of boosting your retirement by giving up daily coffees], universal advice like that is idiotic. Some people don’t care about coffee (like me) But other people love it – it truly makes their day better. I am from Sichuan Province, in China, where all our food is covered in chili oil. If someone told me that not eating spicy foods would extend my life expectancy, I’d respond:‘Why would I want to live a longer life without my favourite food?’
“The secret to budgeting is not to imitate some template but to find the budget that works for you.”
I’ve been thinking about how I can use this advice to help cut my own costs.
While I don’t buy coffee, more often than not I (shock, horror!) buy lunch out. However, giving up this habit would take some serious self-discipline because I so enjoy the ritual.
When I bring in a packed lunch, I find I absent-mindedly eat it at around 11am and then it gets to the end of the day and I find I haven’t left my desk. Hunger at lunch time is what forces me out to get some fresh air and clear my head.
So using Sarah and Kristy’s advice, perhaps I’m better targeting a different costly habit, or make targeting this one more realistic. Perhaps, for example, I could at least bring fruit from home, so I am not spending an extravagant 50p on an apple from the place where I buy my sandwich, just out of convenience. I could try to seek out cheaper lunch options.
Will that make me a millionaire by retirement? I think I’ve more work to do. I’d love to hear your budgeting tips and changes you plan to make to your spending this year.
Email editor@moneywise.co.uk
Twitter @rachel_spike
Post The editor, Moneywise, 8 Devonshire Square, Office 03W112, London EC2M 4PL
Source Moneywise - 29 years of helping you with your finances https://ift.tt/2tecLzj
ليست هناك تعليقات:
إرسال تعليق