Paying $5.00 for a coffee every here and there isn’t all that bad. Yes, paying for coffee is really a scam when it comes down to how much it costs to make it yourself, but sometimes coffee shops have those drinks that we really like that we can’t make on our own. However, there are a number of people who purchase coffee from shops like Starbucks nearly every day of the year who don’t understand the cost of coffee! But, how much does coffee cost?
Let’s take a look at the real cost of purchasing a coffee drink every day of the year:
This math seems really simple, but we’ll touch on something a bit more advanced later on. First we have to decide how much the average coffee drink is. I went in to a Starbucks in San Diego yesterday and purchased a caramel macchiato that cost me $5.00 and some change, so for this example we’ll use an even $5.00 as the cost of the average drink. Next we have to take 365 days in a year and multiply it by $5.00 per coffee. That comes out to about $1,825.00. You can decide whether $1,825.00 is a lot to you or not… But don’t decide until I explain this next concept.
But here’s where things get really dicey:
Let’s assume that because you’re spending $1,825.00 on coffee each year, you’re unable to utilize that money in different ways such as investing. This is the opportunity cost of your purchase. If you were going to put that money into an investment account for your retirement for 40 years that averaged a 7% return, by the end of those 40 years you would have just over $364,000 dollars! Keep in mind, this doesn’t take into account a lot of factors such as the price of coffee increasing each year, and many more variables. However, you can see the big impact of purchasing a coffee a day!
So how much does coffee cost?
Well, it depends on your situation, but it could cost you hundreds of thousands of dollars!