I want to show you how much money you can save by simply preparing your own espresso. You don’t have to spend thousands of dollars on equipment to get a comparable if not better quality coffee than you would get at your local coffee shop.
If that latte or a cappuccino is what you need to get through the work day or perhaps even just through the morning it may be difficult to imagine changing your routine. “I like to treat myself” – you say, you are working hard every day and this has become a cost of doing business. What difference can a few dollars on good espresso make anyway?
What if I told you that you could buy a good quality, brand new espresso maker that retails for around $299, buy good quality organic milk (if dairy is your thing), good organic coffee and still save about $800 every year.
That’s a brand new machine sitting on your kitchen counter ready to serve coffee in under 3 minutes, any time the mood strikes, no traffic and no lines.
You may say that $800 a year I claim you could save is not enough to bother. You may say that you don’t have time. But do read on, you’ll see that you can save both money and time.
Save time by making your own espresso
That’s right you spend an extra full-time workweek every year just getting your coffee
I own an espresso maker and once you get comfortable with it (it can take a few times to get acquainted with the process) you’ll be making your favorite drink in under 3 minutes. Yes, that is likely less than the amount of time it takes you to park your car by the coffee shop and that’s if you’re lucky. Add to that another 5 minutes to wait in line and order then another 5 to get the coffee.
Time spent, let’s even round it up:
5 minutes at home vs 15 minutes at a coffee shop
Let’s see how much time you waste going to a coffee shop every workday:
10 minutes x 5 days x 4 weeks = 200 minutes
200 minutes x 12 months = 2400 min/year or 40 hours. That’s right you could be spending an extra full-time workweek every year just getting your coffee.
This last bit may have seemed a bit petty but it should help you see that even small changes can add up to a LOT if you look at a larger timeframe.
Save money by making your own espresso
$553 savings the first year and $852 each subsequent year
This is where things get interesting. You would need to buy an espresso machine, buy your own coffee, and milk so how could that possibly save any money? Well let’s break it down:
You buy your $5 latte once a day every workday making it 5 x $5 = $25/week
and $100/month. At the end of the year that is $1200 you spent on just coffee.
Now let’s figure out what it will cost you to run your own:
- Espresso machine: $299 (one-time investment) *factor in tax based on your location
- Coffee: Organic coffee at Sprouts $9/month or $108/year
- Milk: One carton of organic milk per week at $5 or $240/year (and I can promise you this is a much better quality milk than you will find at your coffee shop)
That adds up to the following:
Cost in first year: $299 machine + $108 coffee + $240 milk = $647
Cost in following years: $108 coffee + $240 milk = $348
That is $553 savings the first year and $852 each subsequent year you do this.
That’s right, you’re not only not spending money (don’t mind the double-negative here) but you are actually SAVING MONEY on your coffee habit.
And the savings get even larger if you drink coffee on the weekends also or more than once a day.
Money savings in the bigger picture
Now that you know you could have the extra $852 every year, let’s see how much money you can save over a few years.
Let’s assume you put that extra cash into your regular savings account, typically averaging about 0.02% annual interest, not great but readily available should you need the cash, you will end up with something like this:
That’s not bad for a minor lifestyle adjustment? You are saving money, drinking great espresso, but what if you could do even better?
Investing your hard-earned coffee money
Instead of letting all that extra savings sit in a regular savings you could invest it in a low cost investment fund or index that can on average (using approximate historical performance here) earn you 9% a year.
If you look at the history of the US stock market, the S&P500 (one of the so called index funds) got an average annual return of 8%-10% and that includes all of the past downturns and recessions going back all the way to 1926!
“The Stock Market is designed to transfer money from the Active to the Patient.” -Warren Buffett
The key here is long-term investing, you are not trying to predict the markets. Here is an approximation on how well your “Coffee money”, I know it sounds like you inherited a family coffee fortune, can do over the years using the average return that stock market index funds can provide:
That is nothing to sneeze at, $13k in 10 years or $45k in 20 years if you are patient and disciplined to wait that long. That is almost $30k more in your pocket.
What you do with the money you save is up to you but regardless of what you choose these are funds you did not have at your disposal before.
But I think I do know what you might be thinking:
I don’t know anything about investing and I don’t want the hassle.
Fortunately we are living in an age where there are apps that can help you with exactly that:
Market investment on auto-pilot
At the time of this writing, Acorns allows you to put your investment on auto-pilot for just $1/month (or for free if you’re a student). They are a SEC registered broker and your investments are insured for up to $500k.
Keep in mind if you decide to cash out at an inopportune time you are responsible for your losses but you are not in this to cash out quick, and you do need to have a long term mindset. Remember historically US markets grew at approximately 9% a year on average and you can make a solid profit. Just don’t try to time the markets to make a quick profit it rarely works out. Instead save your money and invest, and good things will likely happen.
I hope all of this will get you inspired to get your own espresso machine and start making your own coffee, faster and arguably better tasting. You have time and money to gain at the cost of only a minor adjustment to your routine.