Americans really love coffee. We mean, really. They love it so much that they spend more on coffee than they do on securing their financial future. Think: $5 per day on this luxury of temporary happiness that no one is willing to sacrifice even for a debt-free life.
And there is an eternal debate over whether kicking this habit would represent significant savings.
Simple math shows that it would.
According to Suze Orman, personal finance expert and television host, brewing java at home instead of buying it every day could possibly make the difference between retiring comfortably and not retiring at all.
“You spend $1 to $3 on a cup of coffee, which is approximately $100 a month … $100 a month in a Roth IRA over 40 years is $1 million. So you need to think about it as you are peeing $1 million down the drain after you are drinking that coffee,” Orman said in a CNBC clip earlier this year.
Kevin O’Leary, one of the investors on the entrepreneurial reality show Shark Tank, holds a similar view about the American coffee habit.
“I never buy a frape-latte-blah-blah-blah-woof-woof-woof,” O'Leary told CNBC’s ‘Make It’. Instead, he brews at home. “It costs about 18 cents to make it, and I invest the rest.”
The United States is the leading consumer of coffee in the world, with approximately 150 million Americans drinking 400 million cups of coffee per day. That’s more than 140 billion cups every year.
According to an Amerisleep survey, the average 25- to 34-year-old reported spending $2,008 per year at coffee shops.
Likewise, people working in the finance and insurance industries are reportedly spending an average of $709 a year at coffee shops, while workers in transportation and warehousing are the most frugal, spending some $150 annually.
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While it’s bad news for the average American pocketbook and retirement fund, it’s great news for the coffee shop business.
The U.S. coffee shop market grew to a $45.4 billion valuation last year, according to Allegra World Coffee Portal’s 2019 Project Café USA report. When the survey was conducted, there were 35,616 stores nationwide, with that number expected to hit 40,800 outlets by 2023.
In this coffee environment where the social trend has shaped our way of life, it can be difficult to constantly say no. And we’re having to say ‘no’ a lot these days, whether it’s too processed food, sugar, gluten, dairy or GMO …
But those are all health-related, and this time it’s about savings.
According to the National Institute for Retirement Security, only about one-third of Millennials (34.3%) are saving anything at all for retirement, although two-thirds (66%) work for an employer that offers a retirement plan. And those Millennials who do save for retirement take an average of 7.5 percent of their salary, found Fidelity survey.
It’s hard, though, to blame it all on coffee when Americans are spending large amounts on non-essential items.
According to research commissioned by Ladder and conducted by OnePoll, the average adult in the U.S. spends $1,497 a month on nonessential items, which adds up to around $18,000 a year.
The results showed that the average American spent around $20 on coffee drinks a month, along with $209 on dinners at restaurants and $189 out drinking with friends.
Coffee may be one of the most consistent things, but if you can’t do without, find another non-essential to get rid of.
By Josh Owens for Oilprice.com
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