The Latte Effect

First, let's start with actual Latte's. Let's say you hit Starbucks every morning before work. Let's say you're a frugal man, so you don't get the latte, you just get a medium coffee. Let's say that coffee is $2.50 with tax. I'm being extremely generous here because a large peppermint mocha will run you nearly $4.00 in the city. At $2.50 a day drinking coffee from Starbucks, you're going to be spending $12.50 per week assuming you don't spend anything on Starbucks on Saturday or Sunday.

Given 52 weeks a year, you'll lose an average of $650 per year drinking Starbucks. Given how much we all complain about the price of gas, consumer electronics, toys, clothing - its staggering when you look at how much money per year you could lose drinking a Starbucks every morning. $650 is enough for a pretty nice piece of electronics, a new monitor, a new video card, or barely enough to get a PS3 :) If you happen to be paying $3.50 a day for your coffees, you're looking at $910. If you buy a muffin every morning with your 2.50 coffee and run your morning bill up to $5, you're looking at $1300 per year taken away from you slowly in small increments.

There are millions of other places that will try and nickel-and-dime you out of your hard earned money. The problem occurs when we don't keep track of our small-ticket-item spending. We spend so much time worrying about how much the big screen TV costs that we don't notice that in the last couple of months we might have made a couple dozen relatively small purchases that could come close to rivaling the price of the big screen TV.

I'm not writing this to preach. I'm writing it because I'm frequently a victim. I am constantly telling msyelf that such-and-such purchase is only a couple of bucks and it won't mean anything in the long run. The problem is that a couple hundred small purchases pulled out of me over the course of a few months can really hurt my bottom line. Given how bloody low my bottom line already is, I've got a few New Years resolutions I'm planning:

• I will not buy any more drinks from Starbucks
• If I go to make a small purchase, I will ask myself: "If I did this small purchase 20 more times in a row, would I be pissed off at having no money left?". If the answer is yes, its time to reconsider that small purchase.
• Cut out impulse purchases. I know its ridiculously difficult, especially in places like Best Buy that are chemically and physically engineered to trigger your "Buy it NOWNOWNOWNOW!" reflex - but I'm going to try. Every purchase I make from now on I will have to physically leave the store and come back another day. If the desire to buy it wears off before I go back, then I've won.

Anyway, only time will tell if my plan to save money in the new year will work. You'll know for sure if I start posting pictures of my new computer that I impulse-bought at an Apple store while drinking Starbucks and eating a muffin :D

tags: starbucks  money  financial  latte  

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