Your Coffee Did Not Cost You Your Financial Future (Here’s What Did) #Finance

do you have twenty seven thousand dollars to spend on coffee because I don’t I mean I really I really don’t only McDonald’s is bigger than Starbucks when it comes to market caps so they are really uh a Powerhouse when it comes to really the whole restaurant industry if you

instead just put that three to five dollars you’re spending every day on coffee into a Roth IRA and let that compound over the next 40 years in an index fund you’d have over a million dollars now how does that make you feel that your daily cup of coffee is leaving a million dollars on

the table never never do I do that never that’s such a waste of money for something that costs 20 cents spending more money on coffee than you do on retirement is ridiculous a 2022 survey conducted by The Lending Club Bank found that more than a third of people earning over two hundred and

fifty thousand dollars a year were living paycheck to paycheck and if someone earning four to five times the national average can’t get ahead then what hope do the rest of us have a popular Trend amongst Financial influencers is to blame people’s poor personal money situations on small

but repetitive purchases with the number one target being coffees I mean seriously it feels like anybody that has ever posted a CashNews.co about how to make a hundred dollars a day in the current year with little to no experience or trade Stock Options for a

Profit seems to hate coffees as much as they hate the efficient market hypothesis I’m not saying you guys should go out and buy this fancy machine but I mean if you could stop drinking coffee or maybe invest in something like this you would save a lot of money down the line

but is that daily Starbucks actually making things like paying off Debt buying a house and saving for retirement impossible well anybody who watches my channel regularly will know that I don’t like dragging out the answers to simple questions and also you can read the title

of the CashNews.co so no that daily cup of Joe is not doing anybody any significant financial harm people like to say that it will for five honestly pretty terrible reasons and if you listen too closely to the people hating on your morning pickup it might end up hurting your personal

href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finances more than the Starbucks ever could the first reason that people like to say coffee is costing you your financial future is that it’s a widely applicable statement to to

the broadest possible audience moose market research reports suggest that roughly three-quarters of people drink coffee every day if you are writing a book on Personal Finance or trying to

build an audience by giving out broad General Financial advice it only makes sense to go after an obvious expense that for a lot of people is their one daily luxury to help them get through the working week it’s a really effective strategy because it immediately shifts the blame directly onto

the person seeking up Financial advice and it gives them an easily actionable strategy that can start the very next day something so simple and easy to start is a great marketing hook to capture people’s attention to either get watch time on a CashNews.co sell a book or promote an upcoming

seminar the attention-grabbing hook of a coffee a day is costing you your financial future Works especially well when it’s combined with a dubious calculation using compounded interest a five dollar coffee every day is costing you 35 dollars a week if you invested that for 40 years in a

Portfolio making 10 then in 40 years you would have almost a million dollars the math checks out you can do it yourself using any compounded interest calculator on the internet but it makes a lot of assumptions that are terrible and would never be made by a real Financial

professional 10 is the approximate rate of return for the S P 500 over the past 50 years but that has been an exceptionally good run it’s highly likely that those returns will be lower in the future a good Financial professional looking that far ahead should include that likelihood in their

projections even if returns do stay the same the average investor typically makes less than half of these returns a study conducted by the investment research firm dalbar Inc found that the average retail investor made a return of just 4.25 percent the reason that investors fall so far behind the

returns of a strategy which is as simple as buying stocks regularly and literally doing nothing else is because they move in and out of the market too often because they think that they can predict the future and Capitalize on Market movements which they can’t or because they

need money held up in an investment account to cover a shortfall in their everyday budget if someone is in a financial position where they’re five dollars for their everyday coffee is the only money they can save to make contributions towards their retirement Savings they are

likely not going to be able to grow their account before it becomes too tempting to access to cover an unexpected expense the daily coffee equation also doesn’t include Inflation or Taxes that will both eaten to this figure considerably using a more realistic

compounding factor of three percent giving up the daily coffee and putting it all into an Equity Portfolio would net you just under a hundred and forty thousand dollars after Taxes hidden or direct trading fees Inflation and

realistic Portfolio management 140 000 is still a lot of money but it’s not going to fund anybody’s retirement in 40 years time it might struggle to even make a down payment on a basic home so it’s time to learn how money Works to prove that your daily coffee did

not cost you your financial future and work out the things I actually did this week’s lesson was made possible by brilliant knowing that your five dollar coffee won’t make a dent in your text-decoration: none;">Finances might not be obvious but for those who have taken brilliant solving equations course it’s likely to be a no-brainer the course serves as a basic introduction to algebra and picking up a compounding interest formula after this course is easy

I’ve long been out of school but I’ve taken this course as a refresher and it’s been incredibly helpful for me in everyday life brilliant covers a lot of subjects including computer science and if you’ve seen what AI can do recently you should absolutely have a basic

understanding of what is happening there when you learn with brilliant you get to engage with the material and actually apply what you’re learning the result a much more effective way to retain knowledge brilliant has cracked the code on making learning something you actually look forward to

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interactive approach to learning you can stay curious and informed with ease to get brilliant for free for 30 days go to brilliant.org forward slash how money works or click the link in the description and the first 200 of you will get 20 off Brilliance annual premium subscription the second reason

that people like to blame coffee and other minor expenses on people’s financial troubles is because it’s relatable and oh so easy to pick on we see people with the Starbucks cup in their hand complaining about how poor they are and we get angry without realizing that it’s not

going to make any difference and that’s because of Reason three reason three is that cutting minor expenses to achieve major financial goals Used to Be Good Financial advice but it’s become much less relevant today the price of a house a car an education and a retirement have all

outpaced the cost of regular expenses like a cup of coffee considerably people on low Incomes used to be able to make small sacrifices to make major purchases but now those same goals are simply Out Of Reach no matter how many coffees they make at home someone working a full-time

minimum wage job can no longer afford to rent a two-bedroom apartment in any County in the entire country and they can only afford a one-bedroom apartment and seven percent of the counties with the lowest job opportunities and lowest access to community services and we’re heading straight to

another housing crash worse than 2008 buying a house can sometimes be cheaper than renting it but saving the deposit or building up Credit worthiness is next to impossible for people that can’t even afford to live the news isn’t much better for high

Income earners either even if it is a lot harder to feel sorry for them the reason that one-third of people earning over two hundred and fifty thousand dollars a year and 65 percent of Millennials earning that much or living paycheck to paycheck is because they are paying off the

student Debt that they needed to take on to access their high-paying careers and they are forced to live in High Cost of Living cities like New York Seattle or San Francisco where they have access to the highest paying jobs people earning 250 000 a year at a young age are also

going to succumb to Lifestyle Inflation which is what happens when their Income grows and they increase their living expenses right along with it most of the time this is caused by high Income earners running on the hedonic treadmill which is the

observed tendency of humans to quickly return to a relatively stable level of Happiness despite major positive or negative events or Life Changes in non-forthy and speak when you are making thirty thousand dollars a year a fifty thousand dollar car would be a dreamy luxury if you are earning 250

000 a year in an office where everybody else is earning the same or more a fifty thousand dollar car is nothing special it’s hard to feel bad about this but sometimes lifestyle Inflation is purely involuntary and is the result of trying to maintain appearances with their

colleagues who are also earning a lot of money and sometimes it’s just the result of the costs involved with maintaining these high-end careers I know I don’t mention it very often on this channel but I used to work in Investment Banking and even at a small boutique

firm it was expected that you would have a wardrobe of nice suits living close proximity to the office and be able to pay for child care or live in nanny so that looking after your children was never an excuse to miss a client deadline it was not mandatory but it was also heavily encouraged that

employees invest heavily into networking opportunities by paying for membership at expensive clubs for people like this that coffee is not going to change their Finances at

all reason number four that influencers like to pick on coffee is that it’s a really effective sales tool to pitch whatever they are selling some of these programs can be genuinely fantastic and some can be outright scams I would need a whole separate CashNews.co to go over everything that

finfluencers pitched to to their audiences but the point here is that they know that telling people to cut out a coffee a day is not going to change their personal Finances

but it might change their decision to sign up for their course the fifth reason that every personal Finance personality picks on The Daily cup of Starbucks is because every

other personal Finance personality does the same most of the biggest names in the text-decoration: none;">Finance space have no professional training in the topics they are talking about which is fine talking about Personal Finance on the internet

shouldn’t be off limits to anybody without a certification but without that practical experience these people struggle to challenge the traditional hive mind of how personal none;">Finance really works but even if it’s not the best advice and even if it’s not made with the best intentions you might think that telling people to cut down on discretionary expenses like a coffee from Starbucks isn’t going to do them any harm but it could

actually if someone sets out to improve their financial situation by focusing on minor luxuries first they might be setting themselves up for failure not only are these changes not going to be big enough to really help anybody but they can lead to something called willpower fatigue this is what

happens when people are forced to exercise their willpower consistently on small things which wears it out and makes them less likely to make good decisions on big things someone that is proud of themselves for making coffee at home all week will have less power left to say no going out for an

expensive dinner on a Friday night it’s also a Band-Aid solution that can distract people from making changes that are harder but are so much more rewarding the Inconvenient Truth that nobody on the internet wants to tell people is that if you are earning less than fifty thousand dollars a

year in almost any part of the country the only way that you are ever going to be financially successful is by earning more money going back to school changing careers or moving to a place with more opportunity is much harder to do than buying an espresso machine but it really is the only way you

simply cannot build wealth on fifty thousand dollars a year anymore unless you are lottery winner level lucky if that wasn’t controversial enough I personally think that this number could be as high as a hundred thousand dollars a year depending on what city you live in and what you define as

financial success the fact that people doing some of our most crucial jobs fall below this level is really a problem and there really should be something done about that but until some something changes that’s just the reality people need to work with some jobs will just not fund a

comfortable life anymore you won’t hear many finfluencers say this because it immediately turns off most people who just want a simple solution to a very difficult problem and while I’m telling you things that you don’t want to hear 250 000 a year does not make you rich anymore

there is an Income level where people have so much money coming in that they can brute force their way through bad financial decisions a quarter of a million dollars a year used to be comfortably in that range but it’s just not anymore if you are living in a high cost of

living area a quarter of a million dollars a year can give you a comfortable life but not a luxurious one and not one free of financial stress if you are lucky enough to find yourself in this sort of position the first thing you have to realize is that you are not rich and you can’t keep up

with everybody around you because more than a third of them are financially struggling too but at least you can enjoy your coffee guilt-free the last thing you have to realize is that you will be working forever no matter how much you get your

style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finances on track so if I don’t make you angry enough with this CashNews.co go and watch my other CashNews.co on why you will never higher a special thanks again to brilliant for making it possible for everybody to

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