Your $3 Latte Isn't the Problem

But it's also not NOT the problem

Photo by Fahmi Fakhrudin on Unsplash

Coffee— and, if you’re a millennial, avocado toast— has become such a scapegoat of the personal finance movement that it even has a name: “The Latte Factor.”

And while plenty of people are insisting that coffee is the reason that millions of people are living paycheck-to-paycheck (36% of the UK population and up to 60% of US adults), on the other side of the coin are personal finance experts who encourage you to forget about the coffee problem altogether. The encouragement from this camp is to indulge in the latte and instead focus on the $50,000 issues— like house size, car payments, or negotiating a raise—to put themselves on better financial footing.

To be clear: It’s not wrong to focus on the $50,000 wins. But I also think it’s a mistake to pretend that most of us can afford to repeatedly overlook the $3 issues. So in honor of National Coffee Day, let’s dive into the “Latte Factor”:

Let’s pretend for a minute that most take-out coffees are actually still $3 (although anecdotally, I haven’t found a $3 coffee in years). If you swing by the coffee shop every day, that’s $1,095+ a year spent on your caffeine habit. 

Then let’s say you have a partner, who also has a $3-but-actually-$5 a day coffee habit. Another $1,095+. In other words, your family would be spending more than $2000 a year on coffee— and that doesn’t include the pastries or extra cold foam. You can take a weeklong vacation or seriously bolster your emergency fund with that kind of extra cash. 

Of course, coffee isn’t really the problem. If your morning cup of joe brings you that much joy— keep doing it! But for many people, coffee isn’t the only daily treat or mindless pick me up: There’s buying lunches out or getting takeout after a long day, the books you’ll never get around to reading, the shopping sprees to handle boredom or disappointment. And that’s where the “latte factor”— the idea that these small expenses can make a big dent in your budget— gets really dangerous: When it’s not just coffee, but everything else too, amounting to thousands of dollars a year. (If that sounds dramatic, spending just $28 a day adds up to over $10,000 a year).

Skipping your daily latte isn’t going to make you a millionaire, and you’d be hard pressed to make a down payment on a home just by giving up your barista favorites. But it’s still a pretty significant lever you can push to make more intentional choices.

Skipping your daily latte isn’t going to make you a millionaire, and you’d be hard pressed to make a down payment on a home just by giving up your barista favorites. But it’s still a lever you can push to make more intentional choices.

If you’re looking to re-evaluate your relationship with money, my Guide to More Intentional Spending is a great place to start. I’ve also temporarily removed the paywall on Healing Your Money Story to help you dive deeper into your money mindsets and triggers.

Etc.

My post on a Curriculum for the Climate really resonated with some of you. As a result, I’ve updated my Bookshop (affiliate) profile to give you access to all these recommendations in one easy place— plus, some adult reading favorites and a book list. for encouraging minimalism and simplicity for children. Thank you for supporting local bookstores + Sustain Initiative.

And! To celebrate National Coffee Day— please tell me in the comments something you’d like to hear more about in my corner of the internet. I’ll pick one commenter early next week to receive a $10 Starbucks e-gift card. ☕