Has not buying your daily latte made you wealthy?
Updated: Jul 26, 2020
Is wealth achieved by cutting back on frequent smaller purchases, single larger purchases or are we barking up the wrong tree altogether? Hello fellow Protagonists,
On a typical weekend I would be ordering my gingerbread latte with cinnamon sprinkles and a couple of Welsh cakes on the side. This is only isolated to weekends as I live in a town with very few coffee shops and I do not pass any on my commute to work and also work in the middle of nowhere. If I did live and work in a city, I would have this a hell of a lot more, that I can guarantee!
Pretty much all of us are now drinking our beloved coffee from home as coffee shops are closed. So my question to you is this: Are we noticeably wealthier than we were before they closed? Or do we in fact just miss our coffee whatever it does to our wallets?
The reason I ask this is because a classic frugal tip found along my journey suggests that the regular money spent on something like a daily coffee can instead be used to invest and create wealth. Coffee has also been used as a dig to us Millennials and why we cannot afford our own houses... That and avocadoes anyway. So with this tip in mind, over a period of time we then become minted. I cannot dispute that there is financial logic to this.
You can indeed get a fat wallet by not buying small things frequently. £3 every working day x 30 years (at an 8% annual interest rate) will eventually see you with £90,000 plus change to your name. It is worth adding that £90,000 will buy you a lot less in 30 years compared to now; remember when you granddad bought his first house for £25 and half a curly wurly to seal the deal?
Now here is the million dollar (or £90K) question... Knowing this, would I cut back on my coffee?
Not a chance!
Because we are focusing on the wrong currency.
By wrong currency we are not talking about the Euro or the Vietnamese dong, though it would change the name of the famous 1964 Spaghetti Western with Clint Eastwood to something far better in my opinion. Instead we should be looking at the amount of enjoyment that purchase brings us to determine if it makes sense cutting back on it.
“Wealth is not his that has it, but his that enjoys it” – Benjamin Franklin
In other words, what's the point in money if you are getting rid of the things you enjoy most.
For the epic price of £3 I can get a huge amount of joy from a gingerbread latte with cinnamon sprinkles; it perks me up, tantalises my taste buds and if shared with other people, gives an experience that is very hard to replicate for the same amount of cash.
If I drank these a few times a week and equally enjoyed the experience on each occasion, denying this would be a hefty and frequent amount of apologising and reasoning that I need to give my primitive brain. Each time using up valuable stores of mental energy (willpower). So would focusing on cutting larger, less frequent expenses be the key? The big 3 areas of expenses for adventurers like us tend to be our houses, transport and food.
For the cost of my mortgage a month I could have given a gingerbread latte to every person who read my posts in April.
I have discussed my car recently but don't be fooled, cars really do not interest me. As we know cars can be seriously expensive, but as I realise that I am unlikely to see much enjoyment out of it, what would be the point of sending my Vietnamese dong in that direction?
If I wanted to save an additional £100 a month and the choice was between coffee/pints or my car, that car would be up for sale faster than you could say "Can you put cinnamon sprinkles on that?" It might be a long process to sell the car and buy a cheaper one but once it's done, it's done. We will return to our usual level of happiness soon after anyway.
£100 gets me 15 gingerbread lattes and 10-15 pints every month. Every month!
So allow yourself to take pleasure in the little things in life and maybe shift your focus to cutting the larger, less enjoyable stuff.