@@shaunmoorefinance That isn't the point about the coffee. You are buying a cup of coffee that you could make at home for 10 cents that you could buy at a gas station for a buck at the price starbucks charges which is what 7 bucks. How many people get that cup every day. That adds up. Also where else are they spending money that they don't need to spend.
@@olstar18 Yeah I understand completely the maths of not buying coffee. Though, a cup of coffee or 2 cups of coffee at Starbucks does not break the bank. If it does break the bank, then the issue is with your wider lifestyle or lack of earnings. They would be the issues you have to start with. Your retirement shouldn’t be resting on your decision to get a macchiato before work.
@@mixmax6027You do realize that you can't disprove a study that has been replicated hundreds of times by failing to replicate it once? The supposed disproval of ego depletion has had more than a few fair criticisms levied at it.
I had a $2 Million net worth, made over $300K a year and drove a 458 Ferrari Italia. Sadly, I started drinking coffee. My life spiraled out of control and I lost everything. My wife left me because she couldn't stand me ordering $5.75 Lattes at Starbucks anymore and we couldn't agree on 1 extra pump of espresso. My kids despise me for smelling like coffee beans and said "Father, I no longer recognize you!" My Ferrari self transformed into a Pontiac Fiero. Coffee ruined my financial future!
My response to the latte argument: "I went to school, became an engineer, worked hard, and don't live beyond my means. If I can't enjoy an overpriced coffee once a week after all that then I might as well die pennyless" 😂
Now replace that "coffee" with "a boat/expensive car/flying lessons" because as your income grows, so does your ability to spend big on really insane indulgences. That's what EE means by "lifestyle creep".
@@gromm93 This is true. You also have to look at it as a proportion of your income, though. $500/year on coffee when making $80k is about half a percent of your income. The same proportion on a $300k income is $1800. That is very far from boat/sports car territory.
@@gromm93 You can easily avoid this by just not being an idiot. I used to be a student and I work now, so I have like 2k more monthly to spend, but I maybe spend like 300 more or something and I just invest the rest of it into stocks.
An overpriced coffee everyday, not once a week. This video is full of crap. All of the top investors in the world know that fast food and coffee are costing most of us to fall behind. Please stop making excuses for bad money behavior
When I was in grad school, I had a habit of reading books in an overpriced coffee shop, and for a while, I was stressed about it "being a waste of money". Then I compared it to rent & realized that even going there every single day was relatively insignificant, and in fact, that entire cost was eliminated by the rent change when I moved at the start of my third year. A modest fluctuation in the big-ticket items can completely dominate months of diligent frugality in the small things.
Can't remember who said it, but they had the same sentiment: if you save money on the big-ticket expenses - housing, transportation, etc. - no amount of happy hours is going to ruin you. Obviously, there is still a limit to where you can cut or how much you spend elsewhere, but the point still stands.
What if you compound both though? I like brewing coffee and can have a top tier speciality drip or aeropress for around 1/10 or less price and in 10 minutes including cleanup.
I think willpower fatigue is the strongest point in this video. I think there is a balance though, where you don't force yourself to completely cut out "Starbucks", but rather tell yourself sometimes it's fine and on other days you'll make your own coffee. It's the same reason a lot of diets don't work, because once you're done with the diet you tell yourself that you "owe" yourself or "deserve" to splurge, which is basically like opening the floodgates. So, I think having a balanced approach is important.
@@cottoncandiez8872 I'm not aware of that, but would be interested to hear a different perspective/study. All I know is that from my own experience and other's experience it seems like a real thing. IE. Keeping myself from some type of food, drink, or whatever for several weeks, months, etc and end up binging on it.
@@discerningfreedom4124willpower fatigue is definitely real, but there are ways to "manipulate" it so that it happens slower or in a more benign way. For instance, not having junk food easily accessible can drastically reduce junk food consumption.
I never took the "its the coffee" line literally. Its that plus the eating out, the impulse buys, the fancy gizmo you use once. Its what the coffee represents. People spend lots of money in tiny increments that they think doesn't matter, but when its all added up it does.
Recently did the math a few days ago and found out that my food expense was by far my 2nd highest expense just below rent. $12 fast food + $6 coffee + $5 mid day snack comes out to $690 per month. Even if I just went with the coffee and went without the fast food and snack that's still equals out to my car insurance $180 and one month's rent after a year. Like you said it all adds up.
Yea this video felt more like him trying to take down Finance Bros than anything of actual substance. Lots of conflating and cherry picked stats it seemed.
@@alexbernard6220one of the videos he showed, the influencer was literally recommending getting an espresso machine. Clearly he isnt using it as a a short hand for small expenses.
Yep. I've done the math. 50% percent of income going to rent. Another rough 20% going to transport and utilities. Another 25% going towards food, and that eating homemade beans and such in order to scrap every penny. Didn't ate a steak for years. And after bringing in my own food and tea or coffee for work in order to save 20 dollars a month I am supossed to feel guilty for having a nice cup of coffee, a burguer, or a beer every once in a while when planets align? F*ck off. Your problem is that you are labelling human necessities such as housing, food and company as a luxury. All of this while placing money, work, hustling and productivity as the utmost priority. And you are supossed to just keep up with that withouth a healthy dose of drinkable stimulants? Don't make me laugh. Think instead of how much you could save if you had an actual reasonable living wage and expenses, in which housing and utilities does not add up to more than 20% of your income. Then start demanding that CEOS give away their own coffee and fancy food budget in favor of offering you reasonable prices and wages.
@@hannesRSA Oh yeah, how dare we apply the 48 hours rules before buying stuid things, ending in spending 600 euros on useless thing that doesn't make us happy ! /S
Andrei Jikh and Graham Stephen are partially responsible for people losing millions to FTX and BlockFi. The sheer audacity of them talking about how your coffee habit is costing you your financial future is beyond my capacity to understand.
Not to excuse them for that, because frankly, there is no excuse, but to grahams credit is the reason I have a retirement account and care about my financial future in the first place. I no longer am subscribed to him, but I am subscribed to How Money Works so you win some you lose some.🤷🏼♂️
I don’t know how but you’ve managed to package an unbiased analysis that is more entertaining than the sensationalized segment of economic and financial news. Thank you for your efforts to be the signal and not the noise. I understand that the economy is currently in a downturn and that we must wait for things to get better.
As hard as it may sound you can plan for the recession. If you are working, find extra work and get an Investment advisor. Protect your deposits by having enough cash in short term fixed income. Then cut your expenses, minimal insurance, cut utilities.
@@IrenaDolinsek I think the current market might give opportunities to maximize profit within a short term, but in order to execute such strategy , you must be a skilled practitioner and that's exactly why i enjoy my day to day market decisions being guided by a portfolio-coach and for over 2years+ and I've netted over $800k.
@@AstaKristjan Even if you have a humongous income you still need to draw up futuristic plans because anything can happen. One could lose one's job or whatever. Investment cannot be overemphasized. About your advisor, how does one reach pls?
@@Erinmills98 Jennifer Puckett Hunter. She's a reputable tutor who showed me that profits can be produced in both bull and downturn markets. She talks about investing, insurance, making sure your retirement is well-funded, and searching for methods to create a volatility buffer for investment risk, among other topics.
10:35, "Most crucial jobs fall below (Being financially comfortable)" is the part of the video that I think is very concerning about our generation. The cost of living has far outpaced wage growth in many important jobs that we rely on as a society. If something does not change, there are going to be irreversible consequences as Gen Z enters the workforce.
If you consider what "crucial" *really* means, you quickly see that these are literally the lowest paid jobs in our economy, and the bottom has already fallen out of it. Someone working a minimum wage job stocking a grocery store can't live anywhere near that store if they rent. I live in a very unique space where I have already qualified for a mortgage in a place where I can live right next door to my job. Anyone starting out in the job I have now couldn't do that no matter what, and most of my coworkers have to spend an hour or two riding the bus to work. They can't afford to buy a car, and even if they could it would be an impossible drain on their finances or a maintenance nightmare or both. And even then, they'd still have to spend at least half an hour commuting each way. Next door? Impossible. But once you're finally in that place where you can own instead of renting, your mortgage often doesn't grow with inflation, and you can't be evicted because your landlord wants an extra $800 a month out of the next person. Good luck getting there with that low paying job though.
@@gromm93 and a huge part of the problem is how wages are already sky high in the US, compared to our first world peers like Germany, NL, UK, etc. The crux of the issue is that the cost of living has been allowed to grow too high. Wages can only go so high in the US before America becomes simply unable to compete globally.
@@gromm93 "Allowed to", as in failed take action to prevent it from happening. Preventive measures such as: - Cracked down on increasingly complex & expensive building codes/permits/inspections - Forced re-zoning to allow medium and high density housing (you currently can only build big single family homes in many housing-stressed areas) - Constructing public housing - Strategic subsidies to small/medium farms to prevent market consolidation Most of the increase in the cost of living has come from a shortage of housing in the areas that have lots of jobs.
@@thelight3112 a lot of communities infrastructure can barely support single family home neighborhoods. I don’t think you realize the infrastructure necessary to support urban high density buildings…
I never heard that term “ willpower fatigue “ before but it resonates with me immediately. I grew up in Los Angeles in the 1960s . My father would often take our family of four to a donut shop on Sunday. We were a one income family and it was usually the only thing we had to look forward to. My Dad bought a paperback book that said we could be rich in the future if we gave up the weekly trips to the donut shop. It also explained how he could pay his mortgage off faster and the importance of investing in retirement. He managed to have an excellent retirement by most people’s standards even though my mother left him after 24 years. There’s another term called “ mind numbing frugality “ and I did not have an enjoyable childhood. Wearing tattered clothes, no vacations and nothing to look forward to other than a retirement that you aren’t guaranteed anyway is a regretful way to exist.
A LOT of people close to retirement now, or retired, are very surprised when they're made to realize what life in 'the big city' is like compared to when they did it. A buddy kept hearing 'Why don't you have a car? I don't understand...' from his father who did a stint in the same large city decades ago. Well, it's harder and very expensive to park it, costs more to insure it and fuel it, cost of living in general is higher, young people sign leases and take jobs that check their credit history, etc. His father used to just resort to leaving an apartment or room if he didn't have the rent, sleeping in his car, and finding another one the next day. People today, including young people trying their stint in 'the big city' are locked into high costs in renting and everything else, and can't just run away from bills as everyone has their info everywhere they turn. In the end, it is much more expensive for average salary and especially normal starting salaries in most places in the western world today than some just retiring/retired generations had it.
To summarize this video in 1 sentences: "Don't be penny wise and dollar dumb." I learned this lesson from my previous employer. I did the bookkeeping so I saw her and everyone else's salary. She made a lot. Yet, without a hint of irony, she always complained about never having enough money. Yet, she drove a Mercedes, had her dream house built from scratch, and was paying for her daughter's college and housing expenses in the downtown of a major city. Then she complained how she didn't know how she could possibly ever afford to save for retirement. Some people are just idiots with money. Generally speaking, the more expensive the car, the stupider the owner. With dealing with anyone who isn't super mega rich, this is a statement that basically always holds true.
The car stupidity measure only works up to a certain level of wealth. If you have 100m in the bank and are buying a $300k car, it’s not the same as buying that same car on a 200k annual income.
Ever see the government (and probably a lot of corporations, too) try to "prevent waste"? Tons of wasteful paperwork to make sure that poor people are not lying about how poor they are to get food stamps they don't "deserve", yet basically no effort put into preventing obvious tax fraud. Spending millions on wages instead of thousands on the tools to make the employees more productive, because the tools aren't "in the budget". Spending more money to make sure you're getting the best price on something than the actual price of the thing itself. And still managing to get ripped off anyway.
@@nyob4938 99.9% of Mercedes are bought by people who are not rich. I can guarantee you that. The amount of people with 100 million or more is very small and wouldn't be able to be the base for the business. The people who buy them are people who want to feel rich.
I've tried to explain this concept to folks and they just double down. They expect you to have absolutely zero joy until you are independently wealthy or can afford a home. Yes, excersise some caution, but a $6 cup of coffee or eating out once in awhile will not make you rich by any means especially if you are in the rat race, your income is controlled by someone else and most of us make due with that by switching jobs every 2 years.
Avoiding pointless expenses is a key to building wealth, in my experience. You get JOY from buying coffee at Starbucks? I certainly do NOT. If you really get JOY from Starbucks, I think you need to check to see if you have some screws loose somewhere. And if you DON'T and spend $6 a day on such an expense, I think you have a wasteful habit or another screw that is loose someplace. However, if you have your house paid off, your retirement funded, the car paid off and ample money for expenses in the bank, and you still want to spend money at Starbucks ---go for it. I have nothing against spending for luxuries that someone really enjoys if actual needs and necessities are paid for first.
I do the same because it's also better. I have no idea what the person behind the counter will interpret if I say "flat white". Some people seem to think the "flat" refers to the taste of the coffee.
When I was in college, I saved practically every penny I got. I knew I would need it for tuition and was afraid of letting my loans get too high. It was the right decision then, but now I don't need to do that and it's a tough habit to break. I have to continually remind myself that I've already put aside the money I wanted to save and can spend the rest guilt free on whatever I want to keep me happy in the moment.
I also had the same. If I still had money leftover at the end of the month (after already saving and investing) I would save/invest it and even though that’s probably a good habit, I found that if I wanted to buy myself something a bit more expensive that it would be quite painful because I’d have to take it from my savings which are meant towards a down payment on a house. What works for me is that I created a separate savings account/bucket (I think most banks enable this nowadays free of cost), where I would deposit the money leftover at the end of the month that I had actually reserved for spending. It’s literally called ‘guilt free spending’. In this way if something more expensive comes up, I don’t feel bad for spending the money, as it was always meant to be spent. It’s just a way to trick myself mentally as all money is the same in the end, but for me it works. I also don’t consider it part of my assets. It’s like a reservation; mentally its spent, I just haven’t found a purpose yet. Maybe something like that would help for you too
I used to be like this too..in a way I still am where I constantly ask myself if I really need to buy that item? Is it something i really need? Can it wait? Those sorts of questions. Its still good to practice financial restraint but if you do it to the point you are saving a dollar only to spend a hundred bucks later. Its is a problem. Case and point some people wash zip loc bags so they can save money but when they get sick due to food contamination, when they go to the doctor the few dollars they tried to save just went down the drain. There are things in life you have to spend on if you want to live a qualitiy and happy life. Money is a tool so use it so you can live properly
So basically "Don't be penny wise and dollar foolish". Personally I think it's a good idea to occasionally revisit what things are being bought on autopilot. The idea being that sure you don't want discipline fatigue, but if you can set up a cheaper option that happens automatically it can save you a lot without the mental fatigue. Some personal examples: switching to a cheaper cell provider, stop rental modem and router from cable provider.
@@sourdoughsavant22 In the US, cable companies like Comcast will install their own hardware by default and then charge monthly rental fees along the lines of $5-$10 per month. So an easy way to save money is to buy a compatible modem and router. Often the purchase will pay for itself within a year on saved rental fees.
I appreciate how this is one of the only financial advice/info channels that doesn’t have a condescending tone or makes me feel (even if unintentionally) looked down upon for not earning as much as finance bros
The so-called "latte effect" was a good shorthand for the little, almost unconscious expenses that we pay no attention to, but do add up over time. And there is something to be said about being more mindful in all areas of expenses. But the biggest expense anyone will make is housing, transportation and other use debt, like student loans or credit card debt. What little is saved in coffee is not going to make up for that house or car that you really cannot afford. But rather than being miserly about expenses, the best tool for wealth building is still to increase your income. You can only save so much, but earning potential is limitless.
Yes, I think it's well known that it's a metaphor for all the consistent small pointless purchases we make rather than financial advice, it goes without saying that buying too much house or car is a bad idea.
I mostly agree, but there is a certain degree of relativity involved too. If your earning 30k, and you want to upskill to earn more, but you need 3k to pay for whatever, then every dollar you spend counts. Buying things you cant afford is the obvious thing, and most people are broke cus of that, but after you cut out the Rolls Royce payments and mcMansion mortage whats left that you can cut out.
@@orionh5535 "upskilling" for money is a scam all in itself, people don't go to work and ask to become the nominated Health and Safety Rep, Fire Marshall, IT trainer or First Aid rep to give them a good bargaining position, they go online and try and get gurus to teach them to "upskill" instead.
fantastic comment. You can't win a game by just by playing defense... at some point you need to put points up on the board. In reality, you need both a strong offense (creating income growth via a biz) AND defense (disipline to keep and invest what you've made).
I love this logic. I grew up watching my parents saving costs on groceries. But when it comes to buying a car, they pay more for a better looking car because they "saved enough" and "deserve to have a better looking car". So buying something tastier in a day is bad. But paying extra for several months for a new car that does the exact same thing as the previous is ok. edit: So many replies. I don't feel I'm on the right for commenting what others do with their money. But since the discussion is about saving money, I think it is important for us to talk about it.
In addition to wanting a nice car did they put money away for a rainy day fund like roof replacement, hot water tank replacement, furnace replacement etc ? If they did, I don't personally see an issue with saving for a want.
@@tomlxyz Exactly..IMO as long as the rationality of purchasing a luxury big ticket item or let's say vacationing first class doesn't impact a families basic needs, I say scrimp and save in every way possible.
TBH, buying a series of funds to cover stocks and bonds for both foreign and domestic markets will get you most of the way there in terms of that aspect of your financial life. The problem is that a lot of the advice doesn't work very well for people who are living on the brink of disaster. For individuals that are truly living paycheck to paycheck that coffee is roughly 1/150 of the way to a decent starter emergency fund. I'm definitely not saying that people can't have their coffees, I just think that they should be aware of the fact that the money could be saved and provide a level of comfort that greatly exceeds the cups of coffee. Or, just spend some money on an aeropress for about $20 and a frother for between $20 and $80 and buy the milk and coffee yourself. It's nearly the same experience in terms of the coffee, but it comes with a financial hug as you get closer to a more sustainable financial life.
@@marcfelix1006 or better yet, saying buying that coffee every week doesn't create a dent in peoples finances like this video literally said, so encouraging people to not worry about it and continue.... this guy should be sued for his name "how money works" because its literal fraud based on what he said in this video lol
@@James_36 If that's what you got from the video then you obviously need to go back and rewatch. He literally says that yes, cutting out these purchases will save you money, but it's not going to lead to the rich and famous lifestyle that is sold to you.
I feel you SO MUCH on the willpower fatigue. As a teacher, it's something I've thought about a lot. Children literally borrow the emotional regulation and willpower abilities of their teachers because they don't yet have brains that can do that on their own. This means I wind up making absolute shit tons of choices for others during the day, and lend out my ability to focus to people who can't. It really doesn't leave me with much in the tank after work for doing the work and making the choices I need to properly take care of my personal life. Fortunately I recently got a new higher paying job that isn't teaching and I'll be switching out soon, but that's just one of many reasons why we need to prioritize paying teachers more highly. It's a job that takes an extreme toll, and it just isn't properly compensated.
I don't really do small repetitive purchases, but you know what end up happening? My sink broke, my frigerator broke, my car needs maintenance, family needs help, medical issues, at the point of it all at the end of the day a little coffee doesn't really make a difference it's all about making as much money as you can and keeping as much money as you can. And everything is infected by inflation except our pay check
Long time watcher, first time commenter. This video was super refreshing to see. How Money Works (in my opinion) is always down to earth and level headed. It’s the only finance channel that I really watch anymore. Andre and Steven (in my opinion) are more the product of luck than “smart” investing. Your perspective about things always include more angles, and is always more insightful. Thanks for all the good work :)
The best lesson from this video: don't focus so much on your daily expenses but rather focus more on how you could increase your future income streams and net worth to fund your daily expenses without worries (and that does not mean don't borrow money at all).
One of the things that accountants learn is that you don't have to worry about things that aren't large enough to be material and aren't going to have an impact on the decisions that you make. If it's only a couple bucks you probably don't need to worry about it unless you're in an extremely tight financial situation or those charges add up to something significant.
@@SmallSpoonBrigade So true! I work in auditing, and distinguishing between material and immaterial is a very important thing. I used to be really uptight about saving money. But then my job crossed over into real life, and I realized that spending a few dollars on small luxuries here or there were making zero impact on my personal finances. By far my largest expenses are related to housing. And saving a few dollars every week on snacks won't do anything to bring my housing costs down.
I’d understand if you were spending $7-$10 on coffee or lunch every day if you could do the exact same thing at home making something you love with extra time to be at home without waiting in crowded lines. That would be a better reasoning than “don’t spend on coffee”. It’s still really important to have your daily staples but don’t go overboard on then, and being humble about it will help keep your mind at ease and keep things simple.
Or, you just buy the gear and make it yourself. A decent espresso machine isn't that expensive these days. A super automatic espresso machine that does absolutely everything except clean and load itself can be had for under $1k new. And if you don't mind foaming your own milk, which isn't really that hard, you can get one for a few hundred dollars. Which is a bit up front, but when a basic coffee shop coffee is upwards of $5 a cup, it doesn't take that long to pay for the machine and start saving. You can even go the route of simply buying a milk frother and an aeropress and get there in a matter of a few weeks of regular coffees without much reduction in taste over chain espresso drinks.
@@SmallSpoonBrigade Between the machine, maintenance, and the quality coffee, you are still spending money on it ---- but forget the coffee, this is missing the point. You can sew your own clothes instead of buying them too, there's lots of things you can do to save money, and by all means, do those things if you are fine with them. Just consider if you are fine with being rich (mildly well off) when you're 70 if you spend your whole life not able to afford minor luxuries that non-rich people get to afford and enjoy their whole lives.
I found cooking at home greatly improved my personal finances. It was a lot of little things that added up. I didn’t spend $5 on a latte, so I also didn’t spend $3 on a brownie. I didn’t spend the money on gas. I didn’t spend $3 on a brownie, so I spent $0.30 on eggs. I started making breakfast, so I started cooking other meals. Cooking at home saved me tons of money. I was at the grocery store more, so I saw when there was deals on toilet paper and paper towel. Finding ways to save became kinda fun for me. I negotiated my Internet bill in half. I canceled subscriptions I wasn’t using. In the end, I saved about $700 per month. When you start being mindful of your spending, you discover you’re bleeding money in useless stuff.
Preach! Love the brutal honesty! I'm 28, earn $112k+ bonus, fully remote, 6% match. I did not allow lifestyle creap to set in. I went from 75k to 112k in 2 years. I probably live like I make 90. Bought a used car cash vs a Tesla like all my friends. I find joy in where I live, my dog, and occasional cruise/trip, buying healthier meals to make at home. As for coffee I make my own only because I HATE GOING OUT FOR COFFEE! lol.
@@gteixeira now it's 117k with bonus of 3-6k🫣 pay raise. Believe me I count my blessings daily as I come from a poor background. Never would I have imagined this for my life simply since I didn't have anyone I know in this situation. Continuing the course and ensuring I stay very marketable.
I think the coffee a day is kinda just a building block for better budgeting. My hope is that people go past just coffee and look at the little habits and things that build up over time, like eating out, mobile purchases, amazon, etc. These all might be small on their own but if you don't arrest control of these impulses, they can get out of hand.
Coffee a day is okay, as long you're not buying an Overpriced coffee, when an instant 20 cent coffee could give you the same effect. most of the time, there are other cheaper alternatives, making money is hard, so don't throw away your effort as if it's worthless, like spending it on some ego booster nonsense
@@jensenraylight8011 True, I bought this instant coffee pack that comes out to about $1 a cup. It's super convenient and since I only drink it like every other day, it ends up being pretty cheap overall, AND it does the desired effect of waking me up. I might just look for that 20 cent coffee you mentioned.
Absolutely. Amazon is always having a sale on something, and even with Prime's selection of free movies, many of the best aren't free and are a constant temptation to rent or buy. And they always have good books on significant sales. It's very easy to do the "oh just this once" or the "but this is really special" or the "this sale is particularly great" thing.
I think you missed the point of the video. Those small things do not add up, and actually do more harm eliminating as it drains your joy for "long term success" that will be sapped by the economy anyways
On one hand I agree that that coffee won’t turn you from poor to rich, however I think the message “saving won’t make you rich so don’t even try” isn’t any better. That $5 a day won’t pay for your retirement, but it sure will come in handy when you lose your job and need an emergency fund. It’ll likely turn you from broke to scraping by in your worst hour, and maybe that’s worth the daily luxury.
Agreed, I get really irked by HMW's 'contrarian to the contrarians' attitude. There are so many people who spend their entire disposable income on lots of small repetitive purchases and then complain about not having any money when something unexpected happens. More people need to think about how to prepare for the future and how to live a financially sustainable lifestyle.
Excellent point. That $5/day could make the difference between running up credit card debt at a disastrous interest rate the first time you're out of work for a month or just pulling from your savings account to cover the critical bills that you can't postpone without running up interest. If you're saving $500/month then $5/day on coffee won't make much difference, but if you're saving $0/month then $5/day will make a huge difference. A buffer of $1825/year will definitely make a difference if that's the amount you DON'T add to your credit card balance in an emergency.
Both my brother & I tried to talk my nephew out of becoming a firefighter starting at $47k in NYC when his dad started in 2008 it was $42k. With promotions his dad is make ok money now & $47k in NYC is the equivalent to $23k a year. People acknowledge high inflation but rarely acknowledge the standard annual inflation so when my brother started he had buying power equivalent of $37,860.15. Housing eats up 60-70% of ppls income around here
As a financial planner, I see this more as a case of "influencers misapplying advice" more than anything else. I use the "daily coffee" issue as an example in too scenarios when talking with clients; either cash flow conversations, where it's an example of how even small purchases can add up over time if made on a regular basis, or savings conversations where I need to illustrate that it is possible to start saving even with only moderate effort. Trying to say coffee purchases are going to cost your financial future, on the other hand, is just unhelpful hyperbole.
I think the take away from the coffee topic is that a lot of people don't budget at all and spend all their money on wants instead of needs and people wonder why they're broke all of the time
The $5.00 Milkshake from the 1994 movie Pulp Fiction is the $20.00 milkshake today. Whatever people think of this video, those small daily impulse purchases really can and do add up.
Good point, and coffee seems to be the easiest example to point out since it's common. Some people have the same habit with energy drinks. My former co-worker used to down 1-2 red bulls a day and I would be surprised he didn't die of high blood pressure for the amount he spends and drinks those terrible things.
I agree… But it really has become a trope. People now use the coffee argument while completely ignoring bigger systemic issues like stagnant wages and overpriced housing
I know it's a luxury to a lot of people, but a budget trip to Europe would be an eye-opener. There they work a third less, make a third less but don't have anywhere near a third less in lving standards and are arguably better off in a lot of ways. Why? Because as a community they can CREATE BETTER OPTIONS on the big stuff like housing, higher education, health care and transportation. If a city is truly car-optional, for example, you've just saved THOUSANDS a year compared to most of the U.S., where people have to fend for themselves and have extremely high housing and health care costs as a result. Not surprisingly, the coffee business in European cities does just fine.
people are broke all the times because they don't earn enough, and they're expected to sacrifice any little joy in order to be deemed "financially savvy" by sadistic freaks who think that eating ramen every day and having a million dollar in the bank account is something to brag about.
There is certainly a case to be made about frugality, but if you just need your usual Starbucks drink to make it through the workday, then why can't we also view this as a necessary work expense like appropriate clothing and transportation? Food for thought. Edit: This was a bit of a silly comment but I'm happy to see people having reasonable discussions about it. Also I rarely drink coffee. Do with that what you will.
if you don't make a lot of money, itemizing your deductions instead of taking the basic personal tax allowance is unlikely to be the better option. it also involves much more math and increases the likelihood you will be audited.
@@lukie-luke3994 I’m going to make the potentially unpopular argument that you can make coffee better, cheaper, and faster than Starbucks coffee if you’re willing to put in the effort. And that’s what makes it an unnecessary expense. I count the coffee I make at home as grocery money
By that argument, you should also consider that when clothing and transportation shopping, in theory, at some point, you look at the situation and weigh all of your options, you don't just accept the cost of the first answer and expense that into the budget. Any job that's business causual or less can be outfitted at Target; fancier clothes can be bought at thrift stores. If you look around, you could probably make public transportation or carpooling work. Likewise, most of the financial advice isn't to cut coffee out; it's to make it at home. Honestly, I've never worked in an office that didn't have free coffee. If you're really picky about your coffee, you can just bring your own K-cups, even starbucks k-cups.
@@Darkfyreofthezenith And a lot of people don't have any effort to spare. Do you honestly think "homemade stuff is usually cheaper" is some sort of a huge revelation to anymore?
Just for a little bit of hope on that $50,000/year quip… when I started working my current job I was right at that mark living alone in a 1 bedroom apartment. I was successfully putting away ~$1,300/month into savings. The trick? Living in a low cost of living area and just spending a little extra time on the front end researching the big expenses (namely apartments cause that’s by far the biggest expense). That makes a MUCH bigger difference than penny pinching on the small discretionary purchases. You can be financially stable on 50k even today as long as you are willing to live in a less flashy apartment and drive an older car. It’s at least partially a lifestyle choice. Helps that most of the things I like to do involve outdoor recreation which is usually cheaper than concerts etc but I go to the bars quite a bit still… since it’s a lower cost of living area, going out is cheaper too
@@soapa4279 Very much depends on where you live. Getting any significant savings or investments put aside on $50k/yr is hard in the bigger/more expensive cities.
@@dingfeldersmurfalot4560 Yeah exactly. Even goes to what county you live in each state. $50K in California, maybe in a tier 2/3 area (central valley etc.) is pretty good. But in San Francisco, Santa Clara, or Dublin, it's almost poverty level.
What should I do, I make $34,000/year as a mid level software engineer, in fucking Serbia, this way I will never reach $100,000/year let alone $250,000/year or more, what should I do?
@@aleksapavlovic2542 Not sure other than try to get work in another country. US mid level software engineers here in California make $150-$200K pretty easily.
I think the big difference is that 5$ a day on a coffee for someone who is in the green and can afford it is one thing, its another if you have credit card debt or a restricted budget. Not everyone is in the same situation. The key is making mindful decisions.
@@cooledcannonwell the thing is that if you get the $5 cup of coffee every day of the month, that is $150 on just a cup of coffee, which isn't gonna help anyone with a tight budget. Small things like that add up man. People don't get this because they're so busy thinking of the present and never of the future. Oh and I'm pretty sure that a cup of coffee and Starbucks is more like 7 bucks after taxes so it would actually be around $200 a month to get a cup of coffee in the morning. And let's not take into account the commute and time is going to take you to get that cup of coffee as well.
@@My_name_is- The author of this video literally proved you wrong by projecting the actual value of these small "adds up" in the future. st - hu and just admit that y'all just want an excuse to blame people for how unaffordable life is nowadays.
The way the influencers promote the idea may have room for improvement, but personally I look at the coffee issue from a mindfullness perspective. The idea is not to cut down every little expense, but to be aware of it. When you’re aware that a coffee cup grows to a million dollar, you automatically reconsider bigger expenses. But even then, there maybe people who don’t really care for coffee and realize how much it can save. We’re not looking to become millionaires, but simply mindful.
Not buying a $5 coffee every day because you can make it faster and cheaper at home will not change your life. But if you apply this same mathematical optimization to every aspect of your life you can significantly reduce every expense in your life including the big ones like houses, cars, raising children, and education (And arguably, medical costs though with many asterisks). So whether you think the "don't buy coffee" advice is stupid or not really depends on whether you can properly extrapolate it into a general life principle.
$1m wont change your life? you also know full well that if someone is buying coffee everyday they are doing something else that is just as bad / worse. Most likely a whole bunch of things.
what do you do if you have extra $300 at the end of the month? you can use it for Books, Netflix, Shoes, education subscription, buy an ipad, buy a used laptop, or all of them, the difference between those who screwed up in life and those who move up in life is that extra $300 a month. $300 is what the average starbucks customer spend every month. $5 coffee is a best case scenario, there are ton of people buy more than one coffee or buy extra food, and snacks
You cannot optimize "every aspect of your life", because you only have 24 hours in a day, and he literally explained what willpower fatigue is. And the time spent doing the "optimizations" could have been spend towards overtime at work, where you'd likely be rewarded more than what you think you're saving by "optimizing" every aspect of your life. It's like you all don't even bother LISTENING!
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Maybe this is very Europe centric, but not having a car and choosing to live further away, and commuting by public transit is a great way to save a ton of money. You save the car, housing is way cheaper, and depending on your job, you may be able to put in hours whilst on the bus or train. I do this (except the working part, because I like to spend the time napping), and some of my peers working kn more expensive cities do as well. It's still not going to make you rich though.
I get what you are saying even though you probably expressed it vaguely. What you should strive for, is social mobility, a change in a person's socio-economic situation, either in relation to their parents or throughout their lifetime. Nordics do it quite well. West&Central EU as well as the U.S, not so much.
The majority of US Cities do not have the luxury of that infrastructure, and sadly, that is steadily increasing the wealth gap between the poor and middle class because you miss out on a lot of opportunities due a lack of transportation
It does require some sacrifice though. Living without a car in suburbia, even in Europe, means you have fewer options and less choice for shopping and other activites. Most suburbanites in Europe do still have a car, even if it's just a weekend runabout to go to the supermarket and the hardware store. But you do still save on fuel and (sometimes) insurance costs.
It helps to think positively when saving, rather than negatively. When saving and investing becomes a small hobby and you are tracking everything you're doing to improve your finances, you stop thinking of these small cuts as things you're losing, and instead think of how much you're gaining instead. With that kind of framing in your mind, it stops feeling like a chore that causes fatigue, and instead feels energizing to be getting closer to your goal.
Yeah I have a lot of fun in google sheets with my budgetting and tracking. Lots of formulas and colors. I have to keep money tight to support my family in a stable home and a stable town with a stable job that I tolerate. I still get surprised by expenses, which is discouraging, but the overall habit is encouraging and effective, been going strong with it for 2 years and I don't plan on quitting. I say no to a lot of fast food and coffee, but I enjoy my home habits snd my structure is strong enough that saying no isnt about willpower but self-made constraints. This video is a bit doomer about the prospect of saving IMO
@@nathanfranck5822 Dude I saved every penny, did all the sacrifices, did everything that someone without financial knowledge would call "financially responsible". Those savings never changed a thing. Having a bike that broke down all the time was more impactful in my finances that all the other shit that I did, having to pay the deductible after an accident that wasn't even my fault was more impactful, my mother getting laid off of her job was more impactful. Saving never helped me with any of that. It wasn't until I started earning more money that I could finally get my shit together, and wasn't until I started earning even more money, that I could finally invest and have a nest if something happens. The reality is that not everybody will be able to achieve a successful financial future. And we all have to learn to be OK with that. If you have to live like that, try changing career or change the city on which you are living. That opens more doors than any savings that you may have. At least thats what happened to me.
One of the easiest ways to save money is to avoid restaurants 95% of the time. A cup of coffee costs over 5 bucks at Starbucks. That's 150 a month, which is essentially a bill on its own. And chances are if you are in the habit of going to Starbucks, you're also in the habit of going to other restaurants frequently
@@chudchadanstud if you think $150 isn't meaningful, you've created a self fulfilling prophecy. People who treat $150 as meaningful will absolutely lead a better life
@@kailaleebabineau3962 I the context of getting rich it isn't. You can literally get 1k-10k+ by just switching jobs or selling your old laptops/phones. Sure 150 is valuable, but it isn't much in the context of your goal.
While I agree with much of what you said, my wife and I recently stopped getting those coffees and I got a coffee maker and switched over to just making my own coffee. I save time by not making trips to the coffee shop now and we're saving about $600-$800 a month which we are now putting into investments. It took a few months to make the transition but now when I do get a coffee from Starbucks it just doesn't taste as good because I adjusted my tastes over time.
I ain't even gonna lie... what coffees were you getting to be saving that much? I at MOST saved $200 a month after switching to coffee and tea from home. I'm starting to wonder if my area just let the coffees out here cost less since everything else is insanely expensive to begin with. Or maybe it's because over half my coffees were from Dunks before they started trying to compete with 'Bucks for pricing hikes. 😂😂😂 Either way. I'm glad you guys got a huge bonus out of the switch, especially for the taste changes. Homemade coffee is the best.
@@lorescien4148 I was getting mochas with almond milk and I was up to two a day while my wife was getting a latte daily. It was all so easy to grab goody every now and then so it adds up fast. Now that I just grabbed a coffee at home I'm not so tempted to get the extra goodies either.
This is like a millionaire saying that they started saving money when they stopped going on ski trips. While likely true, that use case is simply off topic with the use case of the average person. Similarly to you, you and your wife were spending about $30 daily on coffee. You do not represent the average person these cookie-cutter, jUst cUt oUt tHe cOFFee, thinkpieces are usually aimed at.
There is famous joke in my country. Man comes to a doctor and nurse says: "Do yo know, that if yo stoped smoking you would have in 10 years money for buying a brand new Ferrari?" Man: "And you, do you smoke?" Nurse: "Of course, not" Man: "Where is your Ferrari?" Small expenses always add up, no matter you do. People are rich, because they make lot of money, not because they are saving (this is a biggest lie in finfluencer world). If morning coffe increase your mood and increase a chance of promotion in job, just drink it.
Seems more like the defeatist cynicism that sells online these days when talking about money. The video literally starts with the implication that you're too dumb and undisciplined to continuously invest in a low cost index fund without messing with it and continues to say if people making a quarter of a million dollars a year can't get it right surely you can't either... That's not honesty. It's someone that already gave up and wants to drag other people down too.
honesty? he first claimed 50 years of stock returns will be lower... that is a lie, he does not know that and has no viable evidence to support it. Secondly he claimed buying $35 a week coffee everyday wont put a dent in your finances, yes it will. You need a course on how to spot honesty
I think he is overly pesimistic, at least my experience have proven me that: 1. It is possible to get off of the hedonic treadmill and live frugaly. 2. It is possible to have an exciting job that it's also well paid. 3. It is possible to not time time market. He seems to assume that just because most people do very common dumb things, you have to do them as well. Btw, did you notice that he assumed a market return of more than 10% when he claimed that the College Degree was not that good as an investment?
While I do agree with the sentiment that a small amount of wasteful spending won’t ruin your financial future, it is logical that it’s when the purchasing is about more than just coffee like a dozen subscriptions, expensive car payments, higher than needed rent, eating out at fancy restaurants frequently, then these seemingly small purchases do really add up quick. You can easily spend a thousand or two a week on pointless or wasteful expenses.
So basically, we'll all be forever struggling financially unless something major happens. Not enjoying your life won't change that reality, get that coffee
Prices have gone down since then, but rents aren't as much because international students are just coming back now. I think at one point in Sydney they were literally going up at $1000 a day.
Also, coffee, in Australia, has barely risen at all in the last 20 years. I can remember being in yr 12 in 2004, and I went to school in Sydney City and some students bought coffee every morning. Being a non-coffee drinker I was like "$3.50 and is still tastes gross." I remember saying those exact words. Well, coffee is about $4.50 or maybe $5 in those shops in Sydney... That was when 4 bedroom houses in, say, Epping, were $800,000. If coffee had risen that much, it should now be $10.
I know a simple amount like a coffee is not going to change your retirement... But I used to spend a lot on snacks, drinks and eating out on a daily basis and since I started caring about my daily expenses and keep a record of everything I buy I ended up saving more than $4000 a year (plus I feel healthier) so even if is not going to fund my retirement... Is still allowing me to save more money and having more time to work so at least it has worked for me
These things really add up, eating a cake here, drinking coffee there. Its a small expense but it will add up eventually. Not to mention these things add up with life inflation as well, when you are willing to spend more and more on these things
This point is one of the issues I see in this video. Sure, a $5 daily coffee isn't going to prevent you from retiring, but saying it won't have an impact on your financial situation is a stretch. Your experience shows that small changes can have a meaningful impact on your quality of life and financial well being, which shouldn't be discounted cause it won't lead to a FIRE lifestyle.
@@kyletrusler4565 I think the main point from the video is, you'd be better off trying to figure out how to earn more money and how to be smart on big spending decisions. Both these things are easier with willpower and not getting distracted by small things like buying a coffee.
I watch several TH-cam videos on how to trade in the stock market but haven't made any head start because they are either talking some gibberish or sharing their story of how they made it and I do not want to make mistakes by taking risks in my own hands
@@Amelia-Elizabeth Alice Marie Coraggio her trading strategies is working for me for more than a year now and I’m making good profit from the stock market and she's 100% honest, reputable and trustworthy
I see the "save the money you would have spent on coffee" argument more as an abstract principle rather than as an effective end goal in and of itself. Coffee is ubiquitous enough that (for most people, at least) it represents a good first step toward resisting the temptation of the hedonic treadmill. The core principle is about training yourself to give up some luxuries in order to cut out unnecessary expenses, and that exact same principle can be applied to avocado toast, luxury cars, fancy suits, expensive restaurants, or any other luxury expense. If you can't even bring yourself to give up something as simple as coffee, then you're very likely to get stuck in that hedonic treadmill mentality for larger luxury expenses as well. In other words: it's less about the amount of money actually spent on the coffee, and more about nurturing a mindset of frugality.
coffee isnt simple.. once youre hooked on coffee its no longer a luxury its a necessity.. if i try to skip a day i want to jump into traffic from the headaches by 5pm
@@mickwayne3398 try to buy instant coffee and possibly a milk frother, it's very cheap and will give you the caffeine. Might taste worse than you're used to but later you can start exploring better options like proper brewing at home.
Right, but the point of the video is that frugality cannot rescue a low income. It could generations ago, but for this generation you can’t retire, buy a home, or even purchase a car out right thanks to frugality. You have to raise your income. (And yes, not blow your entire new income. But first you have to get the higher income.)
@@youtubename7819 I feel the point of the video is wrong. The median income in 2022 in the U.S. was $54K. I have never made $30K+. I am a millennial. I bought a house. I paid off my house. I contribute to my 401K and have a brokerage account. I could retire early. I don't live in California or New York. I think a point he makes in the video about to earn a higher salary you have to live in a HCOL is very true. However you might as well take that to it's extreme. Is it worth it to make 120 million a year if you HAVE to rent a place that costs 12 million a month?
@@lotoex congrats on your house, but obviously not everyone can enjoy your situation. If everyone moved to your area to get in on the cheap housing you are enjoying, the price of houses would go up. And there would be no jobs around to pay all those people flocking to your area. So we must consider the overall economic situation, not the somewhat rare anecdotes of people doing ok in less populous areas. Millennials are scarily behind retirement savings and nowhere near the home ownership levels they historically should be at by this age. Wages have not kept up with inflation or corporate profits, and that was before the whole pandemic fallout and war fiasco.
I agree with the idea of tackling the issue from a strategic standpoint rather than tactical, making more money and being frugal are not mutually exclusive. And being frugal doesn't have to cause willpower fatigue. Using the coffee example, why would I wake up all bleary eyed, shower, dress, go out and buy a sub-par $7 sbux coffee when I can wake up and first thing and fresh grind really good quality beans for a better tasting and cheaper morning cup and get it sooner? I also agree that $250k doesn't necessarily make you rich in the popular sense, like ferraris and private jets, but I'd say it does let you live at a level above what I'd call just comfortable unless you're starting from scratch and in the most HCOL areas in the nation. This is played up in the vid, but the 66% (we'll throw out the 1%ers) who aren't paycheck to paycheck are doing very well. $10-$15k/month TAKE HOME BASE SALARY plus bonus, plus RSUs isn't impossible to blow through but you gotta make some pretty bad mistakes and then keep doing them over time. :D
I work at Subway and this guy would come in every day and get 2 six inch breakfast sandwiches for over 10 years. The total was $10.70 at the time. Working out the price of a 4 year old Ferrari at the time he started (at least to my knowledge) and assuming he had a 600+ credit score; He did in fact spend more on me making him a breakfast sandwich than the price of a slightly used Ferrari.
When the content of the advice rings hollow its a good indicator that the finfluencers have little to say because the real problem lies outside the bounds of comfortable discussion. So instead they blame coffee instead of greed, wars, economic pressures and lost opportunities. There is a point where self accountability can only take one so far before external factors shit on our desks.
Right but how much can they say if the admit there were external factors that impacted their own outcomes? There is just so much to talk about when it comes to individual behaviors and not much to say about everything else.
I always took the Coffe and avocado on toast takes as referring more to the mindset than the actual purchase. Like, if you’re broke, in debt and you are still willing to put a daily Starbucks on your credit card, something is definitely wrong with your priorities.
Some people who are in debt not only buy avocado toast but also netflix, hbo, disney, spotify, new iphone. They should buy a house and get rid of rents first. They need to put at least 6 months of expenses aside for bad days.
@@notgrubu2179 your statement is totally reasonable… But not practical for most people. It’s very hard to make enough money to afford overpriced housing these days (to qualify for a loan) … people are stuck renting and it leaves hardly any money left to save it for a down payment. Partly due to stagnant wages and commodified housing. Not to mention the fact that so many people have had to work in the gig economy or become self-employed in order to make a living - which makes it extremely difficult (if not impossible) to qualify for a home loan. Especially one large enough to accommodate for over priced housing.
Frugality has been a characteristic of my life style since childhood. I certainly inherited it from my parents. We were always comfortable but found pleasure in life without trying to buy more things that would just burden our lives. I learned about the "miracle" (as our teacher called it) of compound interest and how to calculate it in the 7th grade. My Folks' income was always modest, yet they became millionaires. I was able to retire in my 40's and still have a very substantial passive income. I'm still frugal because it's how I feel most comfortable and I think it's more virtuous, if you will, to support charities, endow scholarships, etc.
That's not the takeaway at all, in fact it's the exact opposite of that. The takeaway is spelled out plain and simple at 10:00. If you want to be financially successful, you should be spending your time and effort on your situation (through upskilling, moving etc) to earn more, not limit minor things which are giving you the strength to get through the day. Thinking that $3-5/day is enough to change your financial situation will fatigue, distract and placate you away from making actually impactful financial decisions.
@@Zxv975 To me the takeaway is that unless you're "willing" to switch careers (as if just wanting a better job could make them give it to you), "willing" to go back to school (as if you could actually afford it) or willing move don't bother. Buy your coffee, you're screwed either way.
@@Zxv975 if everyone did that inflation would hit the roof, the very premise of why people are struggling to keep up with cost of living. Not everyone can upskill, top job will always remain a minority. so yes, looking at everyday bad habits like buying coffee everyday is sound advice
@@James_36 buying a coffee isn't a bad purchase. A coffee will never be the difference that separates you from financial freedom and being broke. I'm just repeating stuff that was covered directly in the video already, did literally nobody watch it? Anyway, the root of the cause is Capitalism, not individualism. The whole narrative of blaming people's poverty on their own personal choices and not on the obvious, systemic problems of a broken system is propaganda created by capitalism to stop people from questioning the system. Remember the quote: "When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist."
The best financial advice I can say just is to learn about finances. Nothing beats knowing what you are doing. It's high time, that we call out the cookie-cutter, surface-level, lukewarm, advice that is on the internet.
I think this kind of misses the problem that this financial advice is meant to solve. Living paycheck to paycheck is a much worse situation than “not being able to make major purchases”. Yes, the economy is harder, and we can’t afford some of the same luxuries as older generations. However, we also have many luxuries precious generations did not have, and it is certainly true that consumerism is a huge issue that sinks many people’s financial future. Fast food and fancy coffee is part of that. The fact that people rely so much on these rather insignificant purchases to feel better is actually extremely concerning, it’s like we’re all addicted to the consumer culture lol
I'll never be able to afford to retire, so I'll keep getting my daily coffee. Thank you. I budget for my coffee with every paycheck and if i buy too much and there isnt any money left on my card, i go without. My daily coffee is one of the few good things in my life
Its not usually just coffee being purchased though… It turns into snacks and breakfast that rack up to $10+ a day just for breakfast alone.. Now imagine not packing lunch everyday.. My coworkers do this everyday and it cost them A LOT. Not to mention the weekend kick it..
It's about balance. I treat myself to one fancy coffee a week. The fact it's not an everyday expense makes it more precious and enjoyable. As for lunch. I primarily bring mine and will occasionally eat out with coworkers. Sure it's $10, but those lunches allow you to build connections, which can pay off down the road.
I stopped going to starbucks and make coffee at home, i went from being out the door in 15 minutes to taking an hour and a half to leave slowly, this also came with a career change, but buying coffee and drinking it on the commute does save some time.
@@Pippy1 well now my round trip commute is 30 minutes and not 2-4 hours and i hit no traffic, i did do that for a bit, it still slowed me down in the morning, but it made it harder for overtime
Yep, great video. You mentioned it a bit with the will power thing but the other side of that coin is that if you're smart, you can use small and relatively inexpensive things like coffees to leverage massive development gains, e.g. I generally require myself to work for 2 hours every morning before I go and make my coffee (I make my own but whatever, it works out about the same anyway) - and looking forward to that first break generally makes me extremely productive for 2 hours. 2 hours of solid work is worth 15-20x as much as the cost of even an expensive coffee.
The things you say at the end of the video hit hard. There's people I know in the UK who work as doctors, surgeons, and other specialists for the NHS and they earn less than a mid-level developer in tech. Don't get me wrong, I think software engineering is a valuable skill that should be rewarded, but the fact that it's rewarded more than the medical professionals I mentioned, and sometimes is arguably delivering less value to a society (eg, they work on a mobile app with predatory monetisation), it seems like we have our values as a society need to be re-evaluated.
@@component9008 That's a trap that I see a lot of discussion on pay disparity between workers fall into. Teachers in the US barely make any money for their value in society, but the answer isn't to decrease software developers' salaries until it matches teachers'. Rather it's to increase teacher's salaries.
I’m in healthcare. I kind of see my job as a large cap value company like Berkshire. Slow and steady with reliable cash flow. Tech is more boom and bust like their companion stocks
The things about software is it theoretically has infinite scale. You make it once and can use it until the universe disappears. Tho you need to maintain and add new features, but it adds up layers by layers
Re-stating the obvious here - this video is spot on. The "internet finance gurus" may be pointing to the right direction that people need to be more aware about their spending habits and manage their finances better. But most, if not all, don't really have any good solution and rather just throw out catchy headlines like "quit coffee to be a millionaire" to promote their content - which in turn end up enriching only themselves. It's a bit like "internet health gurus" saying things like you need to take better care of your health (which is right) - but then put out a video titled "why you need to drink apple cider vinegar at 4:55 AM everyday" - which hasn't been proven to provide any health benefits but is an interesting headline that will potentially generate clicks. As the video above pointed out - many of the financial problems are personal and it's up to the individual to fix them - but many are institutional and can't be fixed by merely changing personal spending habbits. And I strongly suspect that the content creators themselves has stopped drinking coffee or have ever met a millionaire who got rich by just cutting out coffee.
Yeah your right on in my option. I am not sure many even want to be rich but they likely don't want to end up poor either. To me the issue is how to make enough to have options.
It isn’t about the coffee. It is about the mindset. Starbucks, eating out, etc. The idea is about buying convenience and the substantial mark up that it comes with. For example, I make food for my self for only $40 a week by buying in bulk and making the food myself. If I bought a sandwich from the shop next to me and ate the exact same then my food bill would be $84 a week if I ate 2 times a day for $6 a sandwich.
I think it’s more like a practice of being mindful about spending and saving money. Rather than taking it literally about stopping buying coffees (or, if you’re from Australia, smashed avocados on toasts 😂)
I live in India... Coffee here costs 15rs or 12¢. While I don't spend a lot on coffee. I do spend on heath. Like gym and running ( I am a marathon runner). It costs me economically... But i benefit from it indirectly... Since I have more stamina now.... I get less tired and can actually get more done.... Because running boosts confidence and mood. Which gets appraisals and bigger projects and hence earning more money.
You adjusted 140k to inflation so yes it will definitely make a down payment on a house in most markets (unless you live in some of the most expensive areas, but even then, it isn’t far off)
It was kind of sneaky the way he said that. I also wonder if he adjusted the contributions every year as the price of coffee would go up each year? Do you think the 140K is taking that into account as well?
I've been a huge fan of your videos, and I really have enjoyed how you have been taking your own stance versus just copying the previous money TH-cam. The points you made in this video are 100% valid and true, but I think you missed the point of the whole coffee a day invested concept. It's not so much about the coffee, but trying to change the way a person views money. Your right that saving all your coffee money would never be enough, but it's not about that. It's about creating a first step to a better financial future that is easy to start, but can also show just how much money that can bee gained if we can cut out things that cost us money that we don't "really" need. There are definitely content creators who legit are saying coffee is making you poor, but the coffee idea is about the concept of finding ways to save money for someone who may have never saved money in their life
Influencers that constantly harp on about a daily latte are so fixated on money, they don't realize the other valuable things about the interaction. Especially if you have local spot where you're a regular, the whole experience can dramtically improve your day. From the baristas that make your drink, to the other regulars you chat with. Go enjoy your coffee!
It matters more when you're young and poor, not so much when you're older and making more. But it's pretty hard to take that advice from Graham Stephan when he's trying to sell you his own brand of coffee.
This definitely assuaged my guilt over getting Starbucks, I appreciate it. I do like Graham Steve for his advice about investing in retirement and encouraging healthy financial habits, but I agree that we all need to have some small luxuries that we love or we just burn out and make bad choices.
I came across a reddit thread where people were confessing spending around $500 a month at Starbucks. That is not an insignificant monthly expense but the daily amount ($16) seems like nothing
There are ways to get that dopamine without spending tho, that's what people with identities have. Also, instead of spending online, you get the same dopamine from putting it in the cart for later, then forget about it while getting the dopamine. Sport is a healthier way to get your daily dopamine and can lead to a better life, even a job. But for some reason, the "luxury" end at Starbucks and not healthy small luxuries...
Coffee at a local shop is what keeps you sane, and mentally stable. Don't spend ridiculous amounts of coffee, but once or twice a week, it is good. If you mix it with a day out with the loved ones, it is even better
Very true. Getting my $3 coffee in the am is the one little thing I look forward to after waking up at 5 am, commuting 2.5 hours and working 8.5. Worth every penny.
Coffee is an easy target, but the point is valid. Those small expenditures do add up, because it usually doesn’t stop with coffee and is part of a wider set of convenience habits, such as ordering take out a couple times a week. Also to keep things fair, when you’re adjusting returns for inflation, you should adjust the cost of coffee for inflation too, and then you end up significantly more than 140k. Even so, 140k for just coffee (while you could’ve paid 10-20 times less by making it at home), isn’t something to think too lightly about. You can’t retire on it, but you might be able to put your kid through college, go traveling, scale back on work earlier, or even afford necessary health care (if you live in the US). It’s an opportunity cost, and therefore I think the point is valid; however I do agree it alone is unlikely to make or break you
Again it depends if you trying to solve math problem (coffee won’t help) or psychological problem - from my experience unless you have strong self control, cutting coffee is sound advice. I never met people spending on small things but having perfect self control on big things. Usually its chain reaction coffee, drinks, restaurants, clothes, latest phone, nice car…
> It seems to me that a majority of U tube ads are for new cars. My theory is that the more intrinsic value something has, the less in needs to be advertised.
My issue is you said hedonic adaptation as inevitable. It's not. The point about coffee, isn't specifically the coffee. It's the mindfulness about how you spend your money. The finfluencers (love this term by the way) almost always mention preventing lifestyle creep as well. A good number of millionaires are regular people working regular jobs, living below their means, and diligently saving and investing. Yes, it takes many years, but it's not inevitable that someone will end up old and broke.
It's not saying don't ever drink coffee, it's that 5-6$ per order is excessive and adds up fast. 1 coffee a day at 5$ adds up to 1850$ a year. They are saying making it yourself is a LOT cheaper. 10$ for a bag of coffee, 6$ for creamer, and 10-20 cups later your spending very little to diy it. Hell I homebrew Iced coffee.
The argument basically boils down to, "People can't even live on $50-100K anymore. Coffee doesn't make a difference, so you might as well do nothing because it's impossible." Which is nonsense spouted by trust fund babies. I make 20K a year working part time, and I bought my home two years ago at the height of prices in my area. I waited tables that year, and was surrounded by this mindset. You DON'T actually have to buy expensive clothes and go to expensive clubs just because your coworkers are doing it. Your high-paying job isn't worth it if your take home pay is low due to "business" expenses. It's not JUST coffee. It's 1-2 energy drinks a day from gas stations, $80 manicures to "treat yoself," ordering delivery TO THE RESTAURANT YOU WORK AT, buying a new car with a $500 montly payment because it comes with free oil changes. It's a complete lack of understanding or perspective of what is a necessity and what is an indulgence.
Obviously it’s silly and reductive to blame a single personal indulgence for someone’s poor financial condition. But clearly the principle behind this statement is true: you may need to trim luxuries out of your life in order to achieve ongoing financial stability. You might say that a cup of nice coffee is not a luxury, but if you are struggling to make rent payments, it certainly is, as are many of the other purchases you are likely making.
anyone with an IQ above room temperature knows that drinking coffee wont financially bankrupt yourself. Its just another catchy clickbait title to lure ppl in. If u struggle with life after a cup of coffee, then it's the job/career you need to change, as stated at 10:10 .
But here's my thing...then they could just say that! Instead of the snark and clear disapproval of anyone not of their ilk (i.e., usually Millennials and older Gen Z), they'd rather snobbily look down upon people who just want one thing to enjoy in their day. They could just say, "Look over your expenses and see if there's something you can cut. That could be the daily coffee and instead make it at home, but if that's a treat to get you through the day, fine. Maybe you can scale back on your streaming services or eating fast food, etc." It reeks of elitism and maybe even classism to hone in very specifically on coffee, instead of just giving the better advice I outlined. And as many comments have also pointed out, these people are also usually shilling their book, or "self help" services and whatnot, which will cost significantly more than the coffee. They're just grifters 😒
You got it! Needing to pay off the student loans that got them that high income salary is just a complicated way to end up in the same place as a median wage earner.
I make a 130k and live in a medium cost area. After taxes, 401k, roth, HSA, insurance, bills, student debt, personal wants, entertainment, food, etc. It really isn't all that much. I am blessed and fortunate, but I know I am no where near luxury and still have to save like I did when I was making 25k/yr for luxurious things.
Bro you just said personal wants and entertainment that’s why there is not much left. Most people don’t even have the money to do those things. Saying 130k isn’t enough is ridiculous your doing fine.
@@Rhino11111111 at no point did he say 130k isn’t enough. He just said it’s not what it used to because the cost of living of is so high. Entertainment and personal wants are very general and you don’t know what he spends on those. What is he meant to do with his spare time? Stare at a wall? You just made loads of assumptions because you saw 130k and stopped reading after that.
@@Rhino11111111 I would be surprised if you did NOT have any personal wants. This can be as small as coffee as the video described to something much larger like a new car. After all taxes, retirement contributions, and bills, personally, I am left with a bit of play money, but it's nothing luxurious as people may first think. When I was making 25k/yr, I had less bills because I was living with my parents (I had no money to move out). Since then, my income has essentially 5x'd, but I have since then moved out and live modestly. I thought that making low 6 figures means I made it, but now that I'm making it, it's really not much and I don't even have kids yet. This is why I know I am fortunate because there are people surviving on much less. Some people may think living = just surviving, but for me, I want to enjoy the finer things in life before I pass away such as nice restaurants, dates, flights, hotels, living area, etc. Personally, I don't want to just barely survive, I want to thrive, and it's sad (for me personally) I cannot do so on my salary.
I love coffee, so I used to make it at home, where it was way better than any coffee I've had outside, and bring it to work. Same with my lunch. It won't get you a comfortable retirement, but wouldn't you rather have an extra $1,820 a year AND drink better coffee, the exact way you want it? That could go toward a vacation, an emergency fund, or whatever you want. If we talk about bringing lunch, that's thousands more a year. You could make great memories with that.
If you make $75k a $5 coffee a day is 2.5% of your income. The avg American doesn’t have $1000 for an emergency and this is $1800 a year. If not buying a coffee a day means you don’t have to resort to credit card interest for that inevitable emergency he points out which is a huge killer of wealth. Than yes a coffee a day is making you broke. This is a common scenario in America
I used to work in sales, and a lot of people would use the coffee trick to guilt people into buying shit they don't need. I made my own script that was entirely ethical and management kept getting on my ass about it even though I was outperforming 85% of my coworkers. I quit because I'm not going to tell exhausted union workers that their source of fuel to get through a grueling work day is something they should be ashamed of.
@GeneralChangOfDanang True that 🤣. I worked the night shift as a security guard while in college, and energy drinks were a must. Super unhealthy, I know
You mention willpower fatigue, but also the opposite could play a role. If you pay 7$ for a coffee a day, you'll spend at least double that for lunch, and 4 or 5 times that when you go out for a dinner. (The figures could be way off, I don't know how much a dinner at a restaurant could cost in the US) Instead if you only spend a quarter for your coffee, you prepare your own meals and so on, not only you'll save a lot of cash, but you start thinking with a certain mindset. In the end I think it depends on how much happines you get from the things you buy. If you drink coffee for the caffeine only, then spending less on it is a no brainer. Instead, if going to Starbucks makes your day, you should keep doing it with no shame.
I'm fairly new to all of this, but 3% return seems too conservative for passively managed accounts. I haven't seen anyone use anything lower than 5% and most are calling 6-7% a safe assumption after inflation. Why did you use that rate? Also, considering that most people today aren't retiring with even $140k, I don't think its worth just shrugging off as something to help with retirement. I agree that we shouldn't remove all simple pleasures from our budget, but if you're paying $5 a day for coffee you can make at home for $0.5, it might be worth it to someone to cut back to buying coffee out less often at least.
The “secret” to building wealth is to decrease our expenses while increasing our acquisition of assets that generate income and gain in value over time. Variable expenses, such as coffee, are an easy place to start when decreasing our expenses but eventually all our expenses should be questioned.
🤣 that was depressing 🤣 However as an accountant, good financial management from the start of your working life (even as a teenager) WILL make a massive difference over your life even if you are on 50k. Your decisions are limited by the amount of money (which is just a tool) you have. Yes you need Evan a small amount of luxury in you life and if that is a coffee then that is is but it might have to be just one coffee a week. Up skilling, side gig or making yourself super valuable at work is a great way to boost your invome
The coffee itself isn't a huge expense but building the financial discipline to use that money for investing in your future is an easy first step on the road to financial independence. Home made coffee with a French press beats Starbucks any day too
I think maybe a better way to look at it would be that skipping the coffee would buy you a share of Coke (KO) each week. If say someone would have done this in 1988 they would stop in 2006 because the dividends would be able to buy them a cup of coffee every day. That is also with spending every dividend payment on coffee as well, so they would still be getting a few cups in 1989, a few more in 1990, so on and so on until 06 when they would now without buying anymore the dividends would be free coffee for life. (As well as have ~$83,500 worth of stock)
Great video. One thing I hate about financial advice is how so many finance gurus speak from a place of privilege and love to talk down and lecture people, shaming people into some minimalist lifestyle. Some people need that $5 Starbucks to keep from collapsing from exhaustion after 8-12 hour shifts. Or that $1000 holiday to decompress after a long year. Sure, one could save the most money by living in a cardboard box and eating only Ramen noodles all day, but it turns out people don't just want to hoard money until some unspecified future date. They want to enjoy the time they have while they're still alive and enjoy some basic comforts. Of course it is easier to cast sanctimonious blame on ordinary people while ignoring broader systemic problems.
The 10% interest rate is definitely exaggerated, i agree, but the cost of coffee will also increase over time, so the real answer is probably between the two numbers. But even at 140k, I find it a significant number to not overlook. Add some meal at restaurant and it become even more important...
I think the $5 coffee idea is more of a “watch your small expenses”. Once you notice your coffee, you may also notice the $15 takeout, the $7 Uber and the $3 bottled water that you barely counted into your expenses. You may say, it’s obscene that we need to watch everyday expenses like food and transportation, and you may be right, but those $900 per month of single use nonessential expenses may lead to piling up credit card debt and an emergency fund that never gets saved. And no matter how fucked up the world is, before people rally up to change it, you can only change yourself.
I think he's acknowledging this. but simply saying if we were not 40 years deep into 2.5% inflation and wage stagnation it wouldn't matter. and people need to adjust to the new economic situation. which is your either living in abundance +80-120k (depending on zip code), or never going to have it anyway -50-80k. essentially the American dream of making 45-75k a year and living comfortable is gone. and most jobs pay 30-50k so by default most people are simply screwed and if drinking coffee keeps you from losing your shit than just do it. when you have 10k at best a year not going directly to bills spending (80% of the pop). $1500 a year in small divisible happiness tokens for sanity is a sacrifice many will take. similar to some broke people spending 2k a year to enjoy a blunt each evening after work. obviously they wont die without it. but even slaves were given a bbq and some beer on Sundays. no one is going to work day in and out with nothing to show for it and keep showing up. without some little bone being thrown at them.
i think you should probably make a video on those young 20 something years old millionaire youtubers too, they been popping up for the past 2 years, selling courses on dropshipping and social media agency , and lots of teen boys are looking up to them, hoping they will become them one day
Nice and informative video. let's always focus on how to earn, because with the current recession and financial crieses world wide, i think getting just a job only isn't the best soluution to attaining financial freedom that's the more reason one should save and invest wisely .
i used to view crypto & forex trading as an afterthought but marking profits was difficult due to the fluctuation in the market, but it turned out to be a major source of passive income ever since i met Mr.Robert david, his experience in the crypto & financial market at large is second to none
It’s really fucked up that we’re fast-approaching an era where the only way to not be poor…is to be born into a rich family and already have the income necessary to not be poor. No matter how hard you work, you’ll be shackled to endless debt unless you inherit riches beyond the human ability to spend it.
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This video hits the nail on the head. Coffee ain’t gonna destroy you.
"These dirty financial TH-camrs only want you to sacrifice your coffee to join their program"
"And now, please get started on OUR program instead"
lol
@@shaunmoorefinance That isn't the point about the coffee. You are buying a cup of coffee that you could make at home for 10 cents that you could buy at a gas station for a buck at the price starbucks charges which is what 7 bucks. How many people get that cup every day. That adds up. Also where else are they spending money that they don't need to spend.
@@olstar18 Yeah I understand completely the maths of not buying coffee. Though, a cup of coffee or 2 cups of coffee at Starbucks does not break the bank.
If it does break the bank, then the issue is with your wider lifestyle or lack of earnings. They would be the issues you have to start with.
Your retirement shouldn’t be resting on your decision to get a macchiato before work.
@@mixmax6027You do realize that you can't disprove a study that has been replicated hundreds of times by failing to replicate it once? The supposed disproval of ego depletion has had more than a few fair criticisms levied at it.
I had a $2 Million net worth, made over $300K a year and drove a 458 Ferrari Italia. Sadly, I started drinking coffee. My life spiraled out of control and I lost everything. My wife left me because she couldn't stand me ordering $5.75 Lattes at Starbucks anymore and we couldn't agree on 1 extra pump of espresso. My kids despise me for smelling like coffee beans and said "Father, I no longer recognize you!" My Ferrari self transformed into a Pontiac Fiero. Coffee ruined my financial future!
😂😂😂
Lol, satire.
Gosh im so sorry that happened to you. Coffee is an evil evil thing
Sounds like an episode of Nat Geo's "Drugs, Inc."
This is golden ✨️. Love it 😂
My response to the latte argument:
"I went to school, became an engineer, worked hard, and don't live beyond my means. If I can't enjoy an overpriced coffee once a week after all that then I might as well die pennyless" 😂
Now replace that "coffee" with "a boat/expensive car/flying lessons" because as your income grows, so does your ability to spend big on really insane indulgences.
That's what EE means by "lifestyle creep".
@@gromm93 This is true. You also have to look at it as a proportion of your income, though. $500/year on coffee when making $80k is about half a percent of your income. The same proportion on a $300k income is $1800. That is very far from boat/sports car territory.
@@gromm93 “ do nothing but work, save, and you can die a millionaire!”
@@gromm93 You can easily avoid this by just not being an idiot. I used to be a student and I work now, so I have like 2k more monthly to spend, but I maybe spend like 300 more or something and I just invest the rest of it into stocks.
An overpriced coffee everyday, not once a week. This video is full of crap. All of the top investors in the world know that fast food and coffee are costing most of us to fall behind. Please stop making excuses for bad money behavior
When I was in grad school, I had a habit of reading books in an overpriced coffee shop, and for a while, I was stressed about it "being a waste of money". Then I compared it to rent & realized that even going there every single day was relatively insignificant, and in fact, that entire cost was eliminated by the rent change when I moved at the start of my third year. A modest fluctuation in the big-ticket items can completely dominate months of diligent frugality in the small things.
I love that statement
That last sentence is perfect
Can't remember who said it, but they had the same sentiment: if you save money on the big-ticket expenses - housing, transportation, etc. - no amount of happy hours is going to ruin you. Obviously, there is still a limit to where you can cut or how much you spend elsewhere, but the point still stands.
It’s as simple as tactics vs strategy
What if you compound both though? I like brewing coffee and can have a top tier speciality drip or aeropress for around 1/10 or less price and in 10 minutes including cleanup.
I think willpower fatigue is the strongest point in this video. I think there is a balance though, where you don't force yourself to completely cut out "Starbucks", but rather tell yourself sometimes it's fine and on other days you'll make your own coffee. It's the same reason a lot of diets don't work, because once you're done with the diet you tell yourself that you "owe" yourself or "deserve" to splurge, which is basically like opening the floodgates. So, I think having a balanced approach is important.
I allow myself 1 coffee / lunch / breakfast out every 2 weeks to celebrate payday
The old adage: "Everything in moderation".
Wasn't there a hoopla proving willpower fatigue doesn't exist due to the experiment that was used?
@@cottoncandiez8872 I'm not aware of that, but would be interested to hear a different perspective/study. All I know is that from my own experience and other's experience it seems like a real thing. IE. Keeping myself from some type of food, drink, or whatever for several weeks, months, etc and end up binging on it.
@@discerningfreedom4124willpower fatigue is definitely real, but there are ways to "manipulate" it so that it happens slower or in a more benign way. For instance, not having junk food easily accessible can drastically reduce junk food consumption.
I never took the "its the coffee" line literally. Its that plus the eating out, the impulse buys, the fancy gizmo you use once. Its what the coffee represents. People spend lots of money in tiny increments that they think doesn't matter, but when its all added up it does.
Recently did the math a few days ago and found out that my food expense was by far my 2nd highest expense just below rent. $12 fast food + $6 coffee + $5 mid day snack comes out to $690 per month.
Even if I just went with the coffee and went without the fast food and snack that's still equals out to my car insurance $180 and one month's rent after a year. Like you said it all adds up.
Yea this video felt more like him trying to take down Finance Bros than anything of actual substance. Lots of conflating and cherry picked stats it seemed.
@@alexbernard6220one of the videos he showed, the influencer was literally recommending getting an espresso machine. Clearly he isnt using it as a a short hand for small expenses.
Yep. I've done the math. 50% percent of income going to rent. Another rough 20% going to transport and utilities. Another 25% going towards food, and that eating homemade beans and such in order to scrap every penny. Didn't ate a steak for years. And after bringing in my own food and tea or coffee for work in order to save 20 dollars a month I am supossed to feel guilty for having a nice cup of coffee, a burguer, or a beer every once in a while when planets align? F*ck off.
Your problem is that you are labelling human necessities such as housing, food and company as a luxury. All of this while placing money, work, hustling and productivity as the utmost priority. And you are supossed to just keep up with that withouth a healthy dose of drinkable stimulants? Don't make me laugh.
Think instead of how much you could save if you had an actual reasonable living wage and expenses, in which housing and utilities does not add up to more than 20% of your income. Then start demanding that CEOS give away their own coffee and fancy food budget in favor of offering you reasonable prices and wages.
@@hannesRSA Oh yeah, how dare we apply the 48 hours rules before buying stuid things, ending in spending 600 euros on useless thing that doesn't make us happy ! /S
Andrei Jikh and Graham Stephen are partially responsible for people losing millions to FTX and BlockFi. The sheer audacity of them talking about how your coffee habit is costing you your financial future is beyond my capacity to understand.
Not to excuse them for that, because frankly, there is no excuse, but to grahams credit is the reason I have a retirement account and care about my financial future in the first place. I no longer am subscribed to him, but I am subscribed to How Money Works so you win some you lose some.🤷🏼♂️
dont forget kevin oleary. his dude also partially responsible
I unsubscribed from them for this reason. Graham's videos in particular are too click baitey now.
Grifters gonna grift, my dude
@@goods1224 Graham seems a genuinely nice guy, trying his best. But his huge mistake was promoting Kevin David and never owning it.
I don’t know how but you’ve managed to package an unbiased analysis that is more entertaining than the sensationalized segment of economic and financial news. Thank you for your efforts to be the signal and not the noise. I understand that the economy is currently in a downturn and that we must wait for things to get better.
As hard as it may sound you can plan for the recession. If you are working, find extra work and get an Investment advisor. Protect your deposits by having enough cash in short term fixed income. Then cut your expenses, minimal insurance, cut utilities.
@@IrenaDolinsek I think the current market might give opportunities to maximize profit within a short term, but in order to execute such strategy , you must be a skilled practitioner and that's exactly why i enjoy my day to day market decisions being guided by a portfolio-coach and for over 2years+ and I've netted over $800k.
@@AstaKristjan Even if you have a humongous income you still need to draw up futuristic plans because anything can happen. One could lose one's job or whatever. Investment cannot be overemphasized. About your advisor, how does one reach pls?
@@Erinmills98 Jennifer Puckett Hunter. She's a reputable tutor who showed me that profits can be produced in both bull and downturn markets. She talks about investing, insurance, making sure your retirement is well-funded, and searching for methods to create a volatility buffer for investment risk, among other topics.
@@IrenaDolinsek Buy guns and ammo
10:35, "Most crucial jobs fall below (Being financially comfortable)" is the part of the video that I think is very concerning about our generation. The cost of living has far outpaced wage growth in many important jobs that we rely on as a society. If something does not change, there are going to be irreversible consequences as Gen Z enters the workforce.
If you consider what "crucial" *really* means, you quickly see that these are literally the lowest paid jobs in our economy, and the bottom has already fallen out of it.
Someone working a minimum wage job stocking a grocery store can't live anywhere near that store if they rent. I live in a very unique space where I have already qualified for a mortgage in a place where I can live right next door to my job. Anyone starting out in the job I have now couldn't do that no matter what, and most of my coworkers have to spend an hour or two riding the bus to work. They can't afford to buy a car, and even if they could it would be an impossible drain on their finances or a maintenance nightmare or both. And even then, they'd still have to spend at least half an hour commuting each way. Next door? Impossible.
But once you're finally in that place where you can own instead of renting, your mortgage often doesn't grow with inflation, and you can't be evicted because your landlord wants an extra $800 a month out of the next person. Good luck getting there with that low paying job though.
@@gromm93 and a huge part of the problem is how wages are already sky high in the US, compared to our first world peers like Germany, NL, UK, etc.
The crux of the issue is that the cost of living has been allowed to grow too high. Wages can only go so high in the US before America becomes simply unable to compete globally.
@@thelight3112 "Allowed to"?
What can a government do about this that does not directly manage its economy?
@@gromm93 "Allowed to", as in failed take action to prevent it from happening. Preventive measures such as:
- Cracked down on increasingly complex & expensive building codes/permits/inspections
- Forced re-zoning to allow medium and high density housing (you currently can only build big single family homes in many housing-stressed areas)
- Constructing public housing
- Strategic subsidies to small/medium farms to prevent market consolidation
Most of the increase in the cost of living has come from a shortage of housing in the areas that have lots of jobs.
@@thelight3112 a lot of communities infrastructure can barely support single family home neighborhoods. I don’t think you realize the infrastructure necessary to support urban high density buildings…
I never heard that term “ willpower fatigue “ before but it resonates with me immediately.
I grew up in Los Angeles in the 1960s . My father would often take our family of four to a donut shop on Sunday. We were a one income family and it was usually the only thing we had to look forward to. My Dad bought a paperback book that said we could be rich in the future if we gave up the weekly trips to the donut shop. It also explained how he could pay his mortgage off faster and the importance of investing in retirement. He managed to have an excellent retirement by most people’s standards even though my mother left him after 24 years. There’s another term called “ mind numbing frugality “ and I did not have an enjoyable childhood. Wearing tattered clothes, no vacations and nothing to look forward to other than a retirement that you aren’t guaranteed anyway is a regretful way to exist.
Indeed😅
Sounds like it worked for him.
A LOT of people close to retirement now, or retired, are very surprised when they're made to realize what life in 'the big city' is like compared to when they did it.
A buddy kept hearing 'Why don't you have a car? I don't understand...' from his father who did a stint in the same large city decades ago. Well, it's harder and very expensive to park it, costs more to insure it and fuel it, cost of living in general is higher, young people sign leases and take jobs that check their credit history, etc.
His father used to just resort to leaving an apartment or room if he didn't have the rent, sleeping in his car, and finding another one the next day.
People today, including young people trying their stint in 'the big city' are locked into high costs in renting and everything else, and can't just run away from bills as everyone has their info everywhere they turn. In the end, it is much more expensive for average salary and especially normal starting salaries in most places in the western world today than some just retiring/retired generations had it.
@@raysmith1127i disagree, old bones will not remember the amount of money he has left, only his memories of his family.
To summarize this video in 1 sentences: "Don't be penny wise and dollar dumb."
I learned this lesson from my previous employer. I did the bookkeeping so I saw her and everyone else's salary. She made a lot. Yet, without a hint of irony, she always complained about never having enough money. Yet, she drove a Mercedes, had her dream house built from scratch, and was paying for her daughter's college and housing expenses in the downtown of a major city. Then she complained how she didn't know how she could possibly ever afford to save for retirement.
Some people are just idiots with money. Generally speaking, the more expensive the car, the stupider the owner. With dealing with anyone who isn't super mega rich, this is a statement that basically always holds true.
The car stupidity measure only works up to a certain level of wealth. If you have 100m in the bank and are buying a $300k car, it’s not the same as buying that same car on a 200k annual income.
@@nyob4938 people who have 100m in the bank are the ones who buy 50m dollars yachts. If it's not cars it's something else.
Ever see the government (and probably a lot of corporations, too) try to "prevent waste"?
Tons of wasteful paperwork to make sure that poor people are not lying about how poor they are to get food stamps they don't "deserve", yet basically no effort put into preventing obvious tax fraud.
Spending millions on wages instead of thousands on the tools to make the employees more productive, because the tools aren't "in the budget".
Spending more money to make sure you're getting the best price on something than the actual price of the thing itself. And still managing to get ripped off anyway.
@@nyob4938
99.9% of Mercedes are bought by people who are not rich. I can guarantee you that. The amount of people with 100 million or more is very small and wouldn't be able to be the base for the business. The people who buy them are people who want to feel rich.
Or, some people just love complaining. Regardless of their monetary status. :D
I've tried to explain this concept to folks and they just double down. They expect you to have absolutely zero joy until you are independently wealthy or can afford a home. Yes, excersise some caution, but a $6 cup of coffee or eating out once in awhile will not make you rich by any means especially if you are in the rat race, your income is controlled by someone else and most of us make due with that by switching jobs every 2 years.
Avoiding pointless expenses is a key to building wealth, in my experience.
You get JOY from buying coffee at Starbucks? I certainly do NOT.
If you really get JOY from Starbucks, I think you need to check to see if you have some screws loose somewhere. And if you DON'T and spend $6 a day on such an expense, I think you have a wasteful habit or another screw that is loose someplace.
However, if you have your house paid off, your retirement funded, the car paid off and ample money for expenses in the bank, and you still want to spend money at Starbucks ---go for it. I have nothing against spending for luxuries that someone really enjoys if actual needs and necessities are paid for first.
I know, you tell them to cut back, they cry thinking lose it all. There is no self control. Which is why it's no use trying to educate these folks
@@rsb7608 I think you've cut so much back that it's having an effect on your comprehension: you and AIBot are not talking about the same thing.
I am trying to move to a new job and it's difficult af... I hate it all. I want to be reincarnated sometime in the early 1900s.
I just make my own coffee not because I am cheap, but because I am too lazy to go to the store and wait in line.
Same plus I can choose the beans that I like
I do the same because it's also better. I have no idea what the person behind the counter will interpret if I say "flat white". Some people seem to think the "flat" refers to the taste of the coffee.
Laziness is why I drink instant. I'm sure other methods taste better, but I can't be bothered and the results from instant coffee are good enough.
Ok
This is the way
When I was in college, I saved practically every penny I got. I knew I would need it for tuition and was afraid of letting my loans get too high. It was the right decision then, but now I don't need to do that and it's a tough habit to break. I have to continually remind myself that I've already put aside the money I wanted to save and can spend the rest guilt free on whatever I want to keep me happy in the moment.
It's the unconscious insecurity driving you till now even if your context doesn't need it anymore. :)
I also had the same. If I still had money leftover at the end of the month (after already saving and investing) I would save/invest it and even though that’s probably a good habit, I found that if I wanted to buy myself something a bit more expensive that it would be quite painful because I’d have to take it from my savings which are meant towards a down payment on a house.
What works for me is that I created a separate savings account/bucket (I think most banks enable this nowadays free of cost), where I would deposit the money leftover at the end of the month that I had actually reserved for spending. It’s literally called ‘guilt free spending’. In this way if something more expensive comes up, I don’t feel bad for spending the money, as it was always meant to be spent. It’s just a way to trick myself mentally as all money is the same in the end, but for me it works. I also don’t consider it part of my assets. It’s like a reservation; mentally its spent, I just haven’t found a purpose yet. Maybe something like that would help for you too
I used to be like this too..in a way I still am where I constantly ask myself if I really need to buy that item? Is it something i really need? Can it wait? Those sorts of questions.
Its still good to practice financial restraint but if you do it to the point you are saving a dollar only to spend a hundred bucks later. Its is a problem.
Case and point some people wash zip loc bags so they can save money but when they get sick due to food contamination, when they go to the doctor the few dollars they tried to save just went down the drain.
There are things in life you have to spend on if you want to live a qualitiy and happy life. Money is a tool so use it so you can live properly
I think it’s still a good habit to be mindful of all expenses.
Once you take care of savings/retirement, etc... it's good to have some areas that you allow yourself to spend on.
So basically "Don't be penny wise and dollar foolish". Personally I think it's a good idea to occasionally revisit what things are being bought on autopilot. The idea being that sure you don't want discipline fatigue, but if you can set up a cheaper option that happens automatically it can save you a lot without the mental fatigue. Some personal examples: switching to a cheaper cell provider, stop rental modem and router from cable provider.
Can you clarify on the rental modem? I hadn't heard that one before😊
@@sourdoughsavant22 In the US, cable companies like Comcast will install their own hardware by default and then charge monthly rental fees along the lines of $5-$10 per month. So an easy way to save money is to buy a compatible modem and router. Often the purchase will pay for itself within a year on saved rental fees.
Only in the US 😕
I appreciate how this is one of the only financial advice/info channels that doesn’t have a condescending tone or makes me feel (even if unintentionally) looked down upon for not earning as much as finance bros
The so-called "latte effect" was a good shorthand for the little, almost unconscious expenses that we pay no attention to, but do add up over time. And there is something to be said about being more mindful in all areas of expenses. But the biggest expense anyone will make is housing, transportation and other use debt, like student loans or credit card debt. What little is saved in coffee is not going to make up for that house or car that you really cannot afford. But rather than being miserly about expenses, the best tool for wealth building is still to increase your income. You can only save so much, but earning potential is limitless.
Yes, I think it's well known that it's a metaphor for all the consistent small pointless purchases we make rather than financial advice, it goes without saying that buying too much house or car is a bad idea.
I mostly agree, but there is a certain degree of relativity involved too.
If your earning 30k, and you want to upskill to earn more, but you need 3k to pay for whatever, then every dollar you spend counts.
Buying things you cant afford is the obvious thing, and most people are broke cus of that, but after you cut out the Rolls Royce payments and mcMansion mortage whats left that you can cut out.
@@orionh5535 "upskilling" for money is a scam all in itself, people don't go to work and ask to become the nominated Health and Safety Rep, Fire Marshall, IT trainer or First Aid rep to give them a good bargaining position, they go online and try and get gurus to teach them to "upskill" instead.
Poor people who receive windfalls end up poor within a few years. If you can't curb spending you will stay poor.
fantastic comment. You can't win a game by just by playing defense... at some point you need to put points up on the board. In reality, you need both a strong offense (creating income growth via a biz) AND defense (disipline to keep and invest what you've made).
I love this logic. I grew up watching my parents saving costs on groceries. But when it comes to buying a car, they pay more for a better looking car because they "saved enough" and "deserve to have a better looking car". So buying something tastier in a day is bad. But paying extra for several months for a new car that does the exact same thing as the previous is ok.
edit: So many replies. I don't feel I'm on the right for commenting what others do with their money. But since the discussion is about saving money, I think it is important for us to talk about it.
In addition to wanting a nice car did they put money away for a rainy day fund like roof replacement, hot water tank replacement, furnace replacement etc ? If they did, I don't personally see an issue with saving for a want.
@@scrumtrellecent it doesn't seem like saving for a want but rather rationalizing an extraordinary expense.
dont be like your parents, you are smarter than that
@@tomlxyz Exactly..IMO as long as the rationality of purchasing a luxury big ticket item or let's say vacationing first class doesn't impact a families basic needs, I say scrimp and save in every way possible.
Technically the logic works out. Save more now so I can spend more on a car later. Right?
Financial advice of all of the finfluencer space:
- Make minor sacrifices to your life such as don't buy coffee
- Invest in an Index fund
That's it.
Which is ceatlainly better financial advise as telling people to spent their money on coffee.
+ Buy my course and products (affiliate link)
TBH, buying a series of funds to cover stocks and bonds for both foreign and domestic markets will get you most of the way there in terms of that aspect of your financial life. The problem is that a lot of the advice doesn't work very well for people who are living on the brink of disaster.
For individuals that are truly living paycheck to paycheck that coffee is roughly 1/150 of the way to a decent starter emergency fund. I'm definitely not saying that people can't have their coffees, I just think that they should be aware of the fact that the money could be saved and provide a level of comfort that greatly exceeds the cups of coffee.
Or, just spend some money on an aeropress for about $20 and a frother for between $20 and $80 and buy the milk and coffee yourself. It's nearly the same experience in terms of the coffee, but it comes with a financial hug as you get closer to a more sustainable financial life.
@@marcfelix1006 or better yet, saying buying that coffee every week doesn't create a dent in peoples finances like this video literally said, so encouraging people to not worry about it and continue.... this guy should be sued for his name "how money works" because its literal fraud based on what he said in this video lol
@@James_36 If that's what you got from the video then you obviously need to go back and rewatch. He literally says that yes, cutting out these purchases will save you money, but it's not going to lead to the rich and famous lifestyle that is sold to you.
I feel you SO MUCH on the willpower fatigue. As a teacher, it's something I've thought about a lot. Children literally borrow the emotional regulation and willpower abilities of their teachers because they don't yet have brains that can do that on their own. This means I wind up making absolute shit tons of choices for others during the day, and lend out my ability to focus to people who can't. It really doesn't leave me with much in the tank after work for doing the work and making the choices I need to properly take care of my personal life. Fortunately I recently got a new higher paying job that isn't teaching and I'll be switching out soon, but that's just one of many reasons why we need to prioritize paying teachers more highly. It's a job that takes an extreme toll, and it just isn't properly compensated.
This.
I actually agree with this, and think its abhorrent how low teachers are paid.
I don't really do small repetitive purchases, but you know what end up happening? My sink broke, my frigerator broke, my car needs maintenance, family needs help, medical issues, at the point of it all at the end of the day a little coffee doesn't really make a difference it's all about making as much money as you can and keeping as much money as you can. And everything is infected by inflation except our pay check
Long time watcher, first time commenter. This video was super refreshing to see.
How Money Works (in my opinion) is always down to earth and level headed. It’s the only finance channel that I really watch anymore.
Andre and Steven (in my opinion) are more the product of luck than “smart” investing. Your perspective about things always include more angles, and is always more insightful.
Thanks for all the good work :)
Thanks for the kind words and being a long-time subscriber!
You should definitely also watch Patrick Boyle, Plain Bagel, Economics Explained and a few others that this channel has promoted too
@@PsyrenXYthe only sane channels on this corrupt financial space
even this channel is a product of luck...
The best lesson from this video: don't focus so much on your daily expenses but rather focus more on how you could increase your future income streams and net worth to fund your daily expenses without worries (and that does not mean don't borrow money at all).
One of the things that accountants learn is that you don't have to worry about things that aren't large enough to be material and aren't going to have an impact on the decisions that you make. If it's only a couple bucks you probably don't need to worry about it unless you're in an extremely tight financial situation or those charges add up to something significant.
@@SmallSpoonBrigade So true! I work in auditing, and distinguishing between material and immaterial is a very important thing. I used to be really uptight about saving money. But then my job crossed over into real life, and I realized that spending a few dollars on small luxuries here or there were making zero impact on my personal finances. By far my largest expenses are related to housing. And saving a few dollars every week on snacks won't do anything to bring my housing costs down.
And don’t increase your lifestyle spending as you make more money
@@SmallSpoonBrigade yep, i was extremely frugal a while ago. My father taught me about this concept you just mentioned.
I’d understand if you were spending $7-$10 on coffee or lunch every day if you could do the exact same thing at home making something you love with extra time to be at home without waiting in crowded lines. That would be a better reasoning than “don’t spend on coffee”.
It’s still really important to have your daily staples but don’t go overboard on then, and being humble about it will help keep your mind at ease and keep things simple.
Can't see the point of being rich one day if I spend 90% of my life not even able to have a coffee when I want one...
The point of life is saving every penny and not enjoying life so you can die a millionaire /s
Or, you just buy the gear and make it yourself. A decent espresso machine isn't that expensive these days. A super automatic espresso machine that does absolutely everything except clean and load itself can be had for under $1k new. And if you don't mind foaming your own milk, which isn't really that hard, you can get one for a few hundred dollars. Which is a bit up front, but when a basic coffee shop coffee is upwards of $5 a cup, it doesn't take that long to pay for the machine and start saving.
You can even go the route of simply buying a milk frother and an aeropress and get there in a matter of a few weeks of regular coffees without much reduction in taste over chain espresso drinks.
How often do you drink coffee? Assuming you only drink it when you wake up, if you just make your own, wouldn’t that still be whenever you want one?
@@SmallSpoonBrigade Considering that an aeropress was like $30 last I checked...I still got mine at a garage sale for $5
@@SmallSpoonBrigade Between the machine, maintenance, and the quality coffee, you are still spending money on it ---- but forget the coffee, this is missing the point.
You can sew your own clothes instead of buying them too, there's lots of things you can do to save money, and by all means, do those things if you are fine with them. Just consider if you are fine with being rich (mildly well off) when you're 70 if you spend your whole life not able to afford minor luxuries that non-rich people get to afford and enjoy their whole lives.
I found cooking at home greatly improved my personal finances. It was a lot of little things that added up. I didn’t spend $5 on a latte, so I also didn’t spend $3 on a brownie. I didn’t spend the money on gas. I didn’t spend $3 on a brownie, so I spent $0.30 on eggs. I started making breakfast, so I started cooking other meals. Cooking at home saved me tons of money. I was at the grocery store more, so I saw when there was deals on toilet paper and paper towel. Finding ways to save became kinda fun for me. I negotiated my Internet bill in half. I canceled subscriptions I wasn’t using. In the end, I saved about $700 per month. When you start being mindful of your spending, you discover you’re bleeding money in useless stuff.
How did you negotiate I usually get a not full payment if I negotiate a price that was agreed upon before?
Preach! Love the brutal honesty! I'm 28, earn $112k+ bonus, fully remote, 6% match. I did not allow lifestyle creap to set in. I went from 75k to 112k in 2 years. I probably live like I make 90. Bought a used car cash vs a Tesla like all my friends. I find joy in where I live, my dog, and occasional cruise/trip, buying healthier meals to make at home. As for coffee I make my own only because I HATE GOING OUT FOR COFFEE! lol.
@md-xe8uf I'm a business analyst consultant in Biotech.
@@djm2189 Brb
Going on cruise ships is a great use of money. To bad a lot of people don't understand how fun they are.
112k USD a year for a full remote job is a ton of money. Consider yourself lucky. Most people won't get that much, even by working 996.
@@gteixeira now it's 117k with bonus of 3-6k🫣 pay raise. Believe me I count my blessings daily as I come from a poor background. Never would I have imagined this for my life simply since I didn't have anyone I know in this situation. Continuing the course and ensuring I stay very marketable.
I think the coffee a day is kinda just a building block for better budgeting. My hope is that people go past just coffee and look at the little habits and things that build up over time, like eating out, mobile purchases, amazon, etc. These all might be small on their own but if you don't arrest control of these impulses, they can get out of hand.
Coffee a day is okay, as long you're not buying an Overpriced coffee,
when an instant 20 cent coffee could give you the same effect.
most of the time, there are other cheaper alternatives, making money is hard,
so don't throw away your effort as if it's worthless, like spending it on some ego booster nonsense
@@jensenraylight8011 True, I bought this instant coffee pack that comes out to about $1 a cup. It's super convenient and since I only drink it like every other day, it ends up being pretty cheap overall, AND it does the desired effect of waking me up. I might just look for that 20 cent coffee you mentioned.
@@soapa4279 Find an in-house brand, like Safeway's Signature brand, that you like. I can get a jar of that to last me a month for 5 bucks.
Absolutely. Amazon is always having a sale on something, and even with Prime's selection of free movies, many of the best aren't free and are a constant temptation to rent or buy. And they always have good books on significant sales. It's very easy to do the "oh just this once" or the "but this is really special" or the "this sale is particularly great" thing.
I think you missed the point of the video. Those small things do not add up, and actually do more harm eliminating as it drains your joy for "long term success" that will be sapped by the economy anyways
On one hand I agree that that coffee won’t turn you from poor to rich, however I think the message “saving won’t make you rich so don’t even try” isn’t any better. That $5 a day won’t pay for your retirement, but it sure will come in handy when you lose your job and need an emergency fund.
It’ll likely turn you from broke to scraping by in your worst hour, and maybe that’s worth the daily luxury.
Totally agree, I think the message was a bit extreme..
Any small expense you can avoid and save is only going to help and compound over time 🤷🏻♂️
Agreed, I get really irked by HMW's 'contrarian to the contrarians' attitude. There are so many people who spend their entire disposable income on lots of small repetitive purchases and then complain about not having any money when something unexpected happens. More people need to think about how to prepare for the future and how to live a financially sustainable lifestyle.
Excellent point. That $5/day could make the difference between running up credit card debt at a disastrous interest rate the first time you're out of work for a month or just pulling from your savings account to cover the critical bills that you can't postpone without running up interest. If you're saving $500/month then $5/day on coffee won't make much difference, but if you're saving $0/month then $5/day will make a huge difference. A buffer of $1825/year will definitely make a difference if that's the amount you DON'T add to your credit card balance in an emergency.
Forgoing the coffee could make your job performance suffer and increase the likelihood of a layoff.
@@Bradimoose No, forgoing the most expensive coffee doesn't mean you have to forego coffee altogether.
This video was actually sponsored by Starbucks.
Both my brother & I tried to talk my nephew out of becoming a firefighter starting at $47k in NYC when his dad started in 2008 it was $42k. With promotions his dad is make ok money now & $47k in NYC is the equivalent to $23k a year. People acknowledge high inflation but rarely acknowledge the standard annual inflation so when my brother started he had buying power equivalent of $37,860.15. Housing eats up 60-70% of ppls income around here
Right bigger problem!!!!
As a financial planner, I see this more as a case of "influencers misapplying advice" more than anything else.
I use the "daily coffee" issue as an example in too scenarios when talking with clients; either cash flow conversations, where it's an example of how even small purchases can add up over time if made on a regular basis, or savings conversations where I need to illustrate that it is possible to start saving even with only moderate effort.
Trying to say coffee purchases are going to cost your financial future, on the other hand, is just unhelpful hyperbole.
I think the take away from the coffee topic is that a lot of people don't budget at all and spend all their money on wants instead of needs and people wonder why they're broke all of the time
The $5.00 Milkshake from the 1994 movie Pulp Fiction is the $20.00 milkshake today. Whatever people think of this video, those small daily impulse purchases really can and do add up.
Good point, and coffee seems to be the easiest example to point out since it's common. Some people have the same habit with energy drinks. My former co-worker used to down 1-2 red bulls a day and I would be surprised he didn't die of high blood pressure for the amount he spends and drinks those terrible things.
I agree… But it really has become a trope. People now use the coffee argument while completely ignoring bigger systemic issues like stagnant wages and overpriced housing
I know it's a luxury to a lot of people, but a budget trip to Europe would be an eye-opener. There they work a third less, make a third less but don't have anywhere near a third less in lving standards and are arguably better off in a lot of ways. Why? Because as a community they can CREATE BETTER OPTIONS on the big stuff like housing, higher education, health care and transportation. If a city is truly car-optional, for example, you've just saved THOUSANDS a year compared to most of the U.S., where people have to fend for themselves and have extremely high housing and health care costs as a result. Not surprisingly, the coffee business in European cities does just fine.
people are broke all the times because they don't earn enough, and they're expected to sacrifice any little joy in order to be deemed "financially savvy" by sadistic freaks who think that eating ramen every day and having a million dollar in the bank account is something to brag about.
There is certainly a case to be made about frugality, but if you just need your usual Starbucks drink to make it through the workday, then why can't we also view this as a necessary work expense like appropriate clothing and transportation? Food for thought.
Edit: This was a bit of a silly comment but I'm happy to see people having reasonable discussions about it. Also I rarely drink coffee. Do with that what you will.
if you don't make a lot of money, itemizing your deductions instead of taking the basic personal tax allowance is unlikely to be the better option. it also involves much more math and increases the likelihood you will be audited.
@@perfectallycromulent good point. To clarify, I don't mean necessary as in tax deductible but more so in a cultural / acceptance kind of way.
@@lukie-luke3994 I’m going to make the potentially unpopular argument that you can make coffee better, cheaper, and faster than Starbucks coffee if you’re willing to put in the effort. And that’s what makes it an unnecessary expense. I count the coffee I make at home as grocery money
By that argument, you should also consider that when clothing and transportation shopping, in theory, at some point, you look at the situation and weigh all of your options, you don't just accept the cost of the first answer and expense that into the budget. Any job that's business causual or less can be outfitted at Target; fancier clothes can be bought at thrift stores. If you look around, you could probably make public transportation or carpooling work.
Likewise, most of the financial advice isn't to cut coffee out; it's to make it at home. Honestly, I've never worked in an office that didn't have free coffee. If you're really picky about your coffee, you can just bring your own K-cups, even starbucks k-cups.
@@Darkfyreofthezenith And a lot of people don't have any effort to spare. Do you honestly think "homemade stuff is usually cheaper" is some sort of a huge revelation to anymore?
Just for a little bit of hope on that $50,000/year quip… when I started working my current job I was right at that mark living alone in a 1 bedroom apartment. I was successfully putting away ~$1,300/month into savings. The trick? Living in a low cost of living area and just spending a little extra time on the front end researching the big expenses (namely apartments cause that’s by far the biggest expense). That makes a MUCH bigger difference than penny pinching on the small discretionary purchases. You can be financially stable on 50k even today as long as you are willing to live in a less flashy apartment and drive an older car. It’s at least partially a lifestyle choice. Helps that most of the things I like to do involve outdoor recreation which is usually cheaper than concerts etc but I go to the bars quite a bit still… since it’s a lower cost of living area, going out is cheaper too
Should also mention depends what state you live, but $50K a year anywhere is still pretty decent for single folks.
@@soapa4279 Very much depends on where you live. Getting any significant savings or investments put aside on $50k/yr is hard in the bigger/more expensive cities.
@@dingfeldersmurfalot4560 Yeah exactly. Even goes to what county you live in each state. $50K in California, maybe in a tier 2/3 area (central valley etc.) is pretty good. But in San Francisco, Santa Clara, or Dublin, it's almost poverty level.
What should I do, I make $34,000/year as a mid level software engineer, in fucking Serbia, this way I will never reach $100,000/year let alone $250,000/year or more, what should I do?
@@aleksapavlovic2542 Not sure other than try to get work in another country. US mid level software engineers here in California make $150-$200K pretty easily.
I think the big difference is that 5$ a day on a coffee for someone who is in the green and can afford it is one thing, its another if you have credit card debt or a restricted budget. Not everyone is in the same situation. The key is making mindful decisions.
It's almost the same principle if you are in debt because it's literally $5
@@cooledcannonwell the thing is that if you get the $5 cup of coffee every day of the month, that is $150 on just a cup of coffee, which isn't gonna help anyone with a tight budget. Small things like that add up man. People don't get this because they're so busy thinking of the present and never of the future. Oh and I'm pretty sure that a cup of coffee and Starbucks is more like 7 bucks after taxes so it would actually be around $200 a month to get a cup of coffee in the morning. And let's not take into account the commute and time is going to take you to get that cup of coffee as well.
@@My_name_is- The author of this video literally proved you wrong by projecting the actual value of these small "adds up" in the future. st - hu and just admit that y'all just want an excuse to blame people for how unaffordable life is nowadays.
The way the influencers promote the idea may have room for improvement, but personally I look at the coffee issue from a mindfullness perspective. The idea is not to cut down every little expense, but to be aware of it. When you’re aware that a coffee cup grows to a million dollar, you automatically reconsider bigger expenses. But even then, there maybe people who don’t really care for coffee and realize how much it can save. We’re not looking to become millionaires, but simply mindful.
Not buying a $5 coffee every day because you can make it faster and cheaper at home will not change your life. But if you apply this same mathematical optimization to every aspect of your life you can significantly reduce every expense in your life including the big ones like houses, cars, raising children, and education (And arguably, medical costs though with many asterisks). So whether you think the "don't buy coffee" advice is stupid or not really depends on whether you can properly extrapolate it into a general life principle.
$1m wont change your life? you also know full well that if someone is buying coffee everyday they are doing something else that is just as bad / worse. Most likely a whole bunch of things.
what do you do if you have extra $300 at the end of the month?
you can use it for Books, Netflix, Shoes, education subscription, buy an ipad, buy a used laptop, or all of them,
the difference between those who screwed up in life and those who move up in life is that extra $300 a month.
$300 is what the average starbucks customer spend every month.
$5 coffee is a best case scenario, there are ton of people buy more than one coffee or buy extra food, and snacks
I was gonna leave a comment but you pretty much hit this right on the money.
You cannot optimize "every aspect of your life", because you only have 24 hours in a day, and he literally explained what willpower fatigue is. And the time spent doing the "optimizations" could have been spend towards overtime at work, where you'd likely be rewarded more than what you think you're saving by "optimizing" every aspect of your life.
It's like you all don't even bother LISTENING!
Maybe this is very Europe centric, but not having a car and choosing to live further away, and commuting by public transit is a great way to save a ton of money. You save the car, housing is way cheaper, and depending on your job, you may be able to put in hours whilst on the bus or train. I do this (except the working part, because I like to spend the time napping), and some of my peers working kn more expensive cities do as well.
It's still not going to make you rich though.
US does not have good enough infrastructure to support that
The US has a very car centric infrastructure. Public transit is pretty bad here
I get what you are saying even though you probably expressed it vaguely. What you should strive for, is social mobility, a change in a person's socio-economic situation, either in relation to their parents or throughout their lifetime. Nordics do it quite well. West&Central EU as well as the U.S, not so much.
The majority of US Cities do not have the luxury of that infrastructure, and sadly, that is steadily increasing the wealth gap between the poor and middle class because you miss out on a lot of opportunities due a lack of transportation
It does require some sacrifice though. Living without a car in suburbia, even in Europe, means you have fewer options and less choice for shopping and other activites. Most suburbanites in Europe do still have a car, even if it's just a weekend runabout to go to the supermarket and the hardware store. But you do still save on fuel and (sometimes) insurance costs.
It helps to think positively when saving, rather than negatively. When saving and investing becomes a small hobby and you are tracking everything you're doing to improve your finances, you stop thinking of these small cuts as things you're losing, and instead think of how much you're gaining instead. With that kind of framing in your mind, it stops feeling like a chore that causes fatigue, and instead feels energizing to be getting closer to your goal.
Yeah I have a lot of fun in google sheets with my budgetting and tracking. Lots of formulas and colors. I have to keep money tight to support my family in a stable home and a stable town with a stable job that I tolerate. I still get surprised by expenses, which is discouraging, but the overall habit is encouraging and effective, been going strong with it for 2 years and I don't plan on quitting. I say no to a lot of fast food and coffee, but I enjoy my home habits snd my structure is strong enough that saying no isnt about willpower but self-made constraints. This video is a bit doomer about the prospect of saving IMO
Investments are inherently risky though. How can I possibly afford to lose money. Any investment has the potential to lose money.
@@nathanfranck5822 Dude I saved every penny, did all the sacrifices, did everything that someone without financial knowledge would call "financially responsible". Those savings never changed a thing. Having a bike that broke down all the time was more impactful in my finances that all the other shit that I did, having to pay the deductible after an accident that wasn't even my fault was more impactful, my mother getting laid off of her job was more impactful. Saving never helped me with any of that. It wasn't until I started earning more money that I could finally get my shit together, and wasn't until I started earning even more money, that I could finally invest and have a nest if something happens.
The reality is that not everybody will be able to achieve a successful financial future. And we all have to learn to be OK with that. If you have to live like that, try changing career or change the city on which you are living. That opens more doors than any savings that you may have. At least thats what happened to me.
@@petelee2477 Holding cash is investing. It is 100% guaranteed to lose its value because of inflation. Investments in any other assets are much safer.
One of the easiest ways to save money is to avoid restaurants 95% of the time. A cup of coffee costs over 5 bucks at Starbucks. That's 150 a month, which is essentially a bill on its own.
And chances are if you are in the habit of going to Starbucks, you're also in the habit of going to other restaurants frequently
He literally took that into account. That 150 isn't enough to get you anywhere meaningful.
@@chudchadanstud if you think $150 isn't meaningful, you've created a self fulfilling prophecy. People who treat $150 as meaningful will absolutely lead a better life
@@kailaleebabineau3962 I the context of getting rich it isn't. You can literally get 1k-10k+ by just switching jobs or selling your old laptops/phones.
Sure 150 is valuable, but it isn't much in the context of your goal.
@@kailaleebabineau3962 I never said it isn't meaningful. I said it isn't enough to get you anywhere meaningful.
While I agree with much of what you said, my wife and I recently stopped getting those coffees and I got a coffee maker and switched over to just making my own coffee. I save time by not making trips to the coffee shop now and we're saving about $600-$800 a month which we are now putting into investments. It took a few months to make the transition but now when I do get a coffee from Starbucks it just doesn't taste as good because I adjusted my tastes over time.
I ain't even gonna lie... what coffees were you getting to be saving that much? I at MOST saved $200 a month after switching to coffee and tea from home. I'm starting to wonder if my area just let the coffees out here cost less since everything else is insanely expensive to begin with. Or maybe it's because over half my coffees were from Dunks before they started trying to compete with 'Bucks for pricing hikes. 😂😂😂 Either way. I'm glad you guys got a huge bonus out of the switch, especially for the taste changes. Homemade coffee is the best.
@@lorescien4148 I was getting mochas with almond milk and I was up to two a day while my wife was getting a latte daily. It was all so easy to grab goody every now and then so it adds up fast. Now that I just grabbed a coffee at home I'm not so tempted to get the extra goodies either.
I mean, Starbucks is crap coffee anyways.
This is like a millionaire saying that they started saving money when they stopped going on ski trips. While likely true, that use case is simply off topic with the use case of the average person. Similarly to you, you and your wife were spending about $30 daily on coffee. You do not represent the average person these cookie-cutter, jUst cUt oUt tHe cOFFee, thinkpieces are usually aimed at.
There is famous joke in my country.
Man comes to a doctor and nurse says:
"Do yo know, that if yo stoped smoking you would have in 10 years money for buying a brand new Ferrari?"
Man: "And you, do you smoke?"
Nurse: "Of course, not"
Man: "Where is your Ferrari?"
Small expenses always add up, no matter you do. People are rich, because they make lot of money, not because they are saving (this is a biggest lie in finfluencer world). If morning coffe increase your mood and increase a chance of promotion in job, just drink it.
If getting $5 coffee is bad then why is my health insurance deductible $3000
capitalism baby!
Fiat monopolies
You either are very sick or you're getting checkups for frivolous reasons. Either way, a doctor's time is valuable.
Only $3000?
You've got a pretty good plan.
I've seen 25K deductibles.
@@samsonsoturian6013 Moronic stance is what you have
Your honesty is always refreshing. Depressive, but refreshing [sips homemade coffee]
Seems more like the defeatist cynicism that sells online these days when talking about money. The video literally starts with the implication that you're too dumb and undisciplined to continuously invest in a low cost index fund without messing with it and continues to say if people making a quarter of a million dollars a year can't get it right surely you can't either... That's not honesty. It's someone that already gave up and wants to drag other people down too.
honesty? he first claimed 50 years of stock returns will be lower... that is a lie, he does not know that and has no viable evidence to support it. Secondly he claimed buying $35 a week coffee everyday wont put a dent in your finances, yes it will. You need a course on how to spot honesty
I think he is overly pesimistic, at least my experience have proven me that:
1. It is possible to get off of the hedonic treadmill and live frugaly.
2. It is possible to have an exciting job that it's also well paid.
3. It is possible to not time time market.
He seems to assume that just because most people do very common dumb things, you have to do them as well.
Btw, did you notice that he assumed a market return of more than 10% when he claimed that the College Degree was not that good as an investment?
While I do agree with the sentiment that a small amount of wasteful spending won’t ruin your financial future, it is logical that it’s when the purchasing is about more than just coffee like a dozen subscriptions, expensive car payments, higher than needed rent, eating out at fancy restaurants frequently, then these seemingly small purchases do really add up quick. You can easily spend a thousand or two a week on pointless or wasteful expenses.
So basically, we'll all be forever struggling financially unless something major happens. Not enjoying your life won't change that reality, get that coffee
But if you drink 2 coffees a day you'll definitely never retire.
LOL
What happens when it's 4 a day? I need to call down or may need another dose of caffeine
@@imonyahoo87 4 a day is not bad my sister has 10 a day
That's why I drink one cup of coffee and one cup of tea *Long way to Tipperary plays*
@@imonyahoo87Your grandkids will still be paying your coffee debts.
During covid the house price went up 20% in a year in Melbourne Australia, that's roughly $4,000 a week. Don't blame the coffee.
Rent increased at least 55% where I live, from $900 to $1,400. Cutting a $5 daily coffee habit won't fix that.
Prices have gone down since then, but rents aren't as much because international students are just coming back now. I think at one point in Sydney they were literally going up at $1000 a day.
Also, coffee, in Australia, has barely risen at all in the last 20 years. I can remember being in yr 12 in 2004, and I went to school in Sydney City and some students bought coffee every morning. Being a non-coffee drinker I was like "$3.50 and is still tastes gross." I remember saying those exact words. Well, coffee is about $4.50 or maybe $5 in those shops in Sydney... That was when 4 bedroom houses in, say, Epping, were $800,000. If coffee had risen that much, it should now be $10.
Had you not bought all that coffee you would have had the down-payment necessary for a house before the pandemic and the major price increases.
@@SweBeach2023 $4 a day x 5 days a week x 50 weeks = $1,000 a year what down payment?
I know a simple amount like a coffee is not going to change your retirement... But I used to spend a lot on snacks, drinks and eating out on a daily basis and since I started caring about my daily expenses and keep a record of everything I buy I ended up saving more than $4000 a year (plus I feel healthier) so even if is not going to fund my retirement... Is still allowing me to save more money and having more time to work so at least it has worked for me
Exactly why I think this videos focus is…off. Focuses to much on the “Gurus” and not the savings itself
These things really add up, eating a cake here, drinking coffee there. Its a small expense but it will add up eventually. Not to mention these things add up with life inflation as well, when you are willing to spend more and more on these things
This point is one of the issues I see in this video. Sure, a $5 daily coffee isn't going to prevent you from retiring, but saying it won't have an impact on your financial situation is a stretch. Your experience shows that small changes can have a meaningful impact on your quality of life and financial well being, which shouldn't be discounted cause it won't lead to a FIRE lifestyle.
@@collan580 I agree, moderation needs to be kept in mind.
@@kyletrusler4565 I think the main point from the video is, you'd be better off trying to figure out how to earn more money and how to be smart on big spending decisions. Both these things are easier with willpower and not getting distracted by small things like buying a coffee.
I watch several TH-cam videos on how to trade in the stock market but haven't made any head start because they are either talking some gibberish or sharing their story of how they made it and I do not want to make mistakes by taking risks in my own hands
@WilliamEthan00 What is the name of your broker and how do i connect with him or her ?
@rachealhubert74 Wow that was easy, i found her website and left a message for her . i hope she reply me. thanks.
@@Amelia-Elizabeth Alice Marie Coraggio her trading strategies is working for me for more than a year now and I’m making good profit from the stock market and she's 100% honest, reputable and trustworthy
@@Patricia-Margaretdo they trade your money? or you handle the trafes yourself?
In case it isn't obvious: THESE ARE BOTS PROMOTING A SCAM!
I see the "save the money you would have spent on coffee" argument more as an abstract principle rather than as an effective end goal in and of itself. Coffee is ubiquitous enough that (for most people, at least) it represents a good first step toward resisting the temptation of the hedonic treadmill. The core principle is about training yourself to give up some luxuries in order to cut out unnecessary expenses, and that exact same principle can be applied to avocado toast, luxury cars, fancy suits, expensive restaurants, or any other luxury expense. If you can't even bring yourself to give up something as simple as coffee, then you're very likely to get stuck in that hedonic treadmill mentality for larger luxury expenses as well. In other words: it's less about the amount of money actually spent on the coffee, and more about nurturing a mindset of frugality.
coffee isnt simple.. once youre hooked on coffee its no longer a luxury its a necessity.. if i try to skip a day i want to jump into traffic from the headaches by 5pm
@@mickwayne3398 try to buy instant coffee and possibly a milk frother, it's very cheap and will give you the caffeine. Might taste worse than you're used to but later you can start exploring better options like proper brewing at home.
Right, but the point of the video is that frugality cannot rescue a low income.
It could generations ago, but for this generation you can’t retire, buy a home, or even purchase a car out right thanks to frugality.
You have to raise your income. (And yes, not blow your entire new income. But first you have to get the higher income.)
@@youtubename7819 I feel the point of the video is wrong. The median income in 2022 in the U.S. was $54K. I have never made $30K+. I am a millennial. I bought a house. I paid off my house. I contribute to my 401K and have a brokerage account. I could retire early. I don't live in California or New York. I think a point he makes in the video about to earn a higher salary you have to live in a HCOL is very true. However you might as well take that to it's extreme. Is it worth it to make 120 million a year if you HAVE to rent a place that costs 12 million a month?
@@lotoex congrats on your house, but obviously not everyone can enjoy your situation. If everyone moved to your area to get in on the cheap housing you are enjoying, the price of houses would go up. And there would be no jobs around to pay all those people flocking to your area.
So we must consider the overall economic situation, not the somewhat rare anecdotes of people doing ok in less populous areas.
Millennials are scarily behind retirement savings and nowhere near the home ownership levels they historically should be at by this age.
Wages have not kept up with inflation or corporate profits, and that was before the whole pandemic fallout and war fiasco.
I agree with the idea of tackling the issue from a strategic standpoint rather than tactical, making more money and being frugal are not mutually exclusive. And being frugal doesn't have to cause willpower fatigue. Using the coffee example, why would I wake up all bleary eyed, shower, dress, go out and buy a sub-par $7 sbux coffee when I can wake up and first thing and fresh grind really good quality beans for a better tasting and cheaper morning cup and get it sooner?
I also agree that $250k doesn't necessarily make you rich in the popular sense, like ferraris and private jets, but I'd say it does let you live at a level above what I'd call just comfortable unless you're starting from scratch and in the most HCOL areas in the nation. This is played up in the vid, but the 66% (we'll throw out the 1%ers) who aren't paycheck to paycheck are doing very well. $10-$15k/month TAKE HOME BASE SALARY plus bonus, plus RSUs isn't impossible to blow through but you gotta make some pretty bad mistakes and then keep doing them over time. :D
I work at Subway and this guy would come in every day and get 2 six inch breakfast sandwiches for over 10 years. The total was $10.70 at the time. Working out the price of a 4 year old Ferrari at the time he started (at least to my knowledge) and assuming he had a 600+ credit score; He did in fact spend more on me making him a breakfast sandwich than the price of a slightly used Ferrari.
When the content of the advice rings hollow its a good indicator that the finfluencers have little to say because the real problem lies outside the bounds of comfortable discussion. So instead they blame coffee instead of greed, wars, economic pressures and lost opportunities.
There is a point where self accountability can only take one so far before external factors shit on our desks.
Right but how much can they say if the admit there were external factors that impacted their own outcomes? There is just so much to talk about when it comes to individual behaviors and not much to say about everything else.
I always took the Coffe and avocado on toast takes as referring more to the mindset than the actual purchase. Like, if you’re broke, in debt and you are still willing to put a daily Starbucks on your credit card, something is definitely wrong with your priorities.
Some people who are in debt not only buy avocado toast but also netflix, hbo, disney, spotify, new iphone. They should buy a house and get rid of rents first. They need to put at least 6 months of expenses aside for bad days.
@@notgrubu2179 your statement is totally reasonable… But not practical for most people. It’s very hard to make enough money to afford overpriced housing these days (to qualify for a loan) … people are stuck renting and it leaves hardly any money left to save it for a down payment. Partly due to stagnant wages and commodified housing.
Not to mention the fact that so many people have had to work in the gig economy or become self-employed in order to make a living - which makes it extremely difficult (if not impossible) to qualify for a home loan. Especially one large enough to accommodate for over priced housing.
All the people saying not to drink coffee to save money are the same ones telling you to dump your life savings into ftx 🤣
Frugality has been a characteristic of my life style since childhood. I certainly inherited it from my parents. We were always comfortable but found pleasure in life without trying to buy more things that would just burden our lives. I learned about the "miracle" (as our teacher called it) of compound interest and how to calculate it in the 7th grade. My Folks' income was always modest, yet they became millionaires. I was able to retire in my 40's and still have a very substantial passive income. I'm still frugal because it's how I feel most comfortable and I think it's more virtuous, if you will, to support charities, endow scholarships, etc.
I guess the main takeaway is that 3-5 bucks a day, if invested can become a lot of money, but it doesn't have to be taken from coffee money
That's not the takeaway at all, in fact it's the exact opposite of that. The takeaway is spelled out plain and simple at 10:00. If you want to be financially successful, you should be spending your time and effort on your situation (through upskilling, moving etc) to earn more, not limit minor things which are giving you the strength to get through the day. Thinking that $3-5/day is enough to change your financial situation will fatigue, distract and placate you away from making actually impactful financial decisions.
@@Zxv975 To me the takeaway is that unless you're "willing" to switch careers (as if just wanting a better job could make them give it to you), "willing" to go back to school (as if you could actually afford it) or willing move don't bother. Buy your coffee, you're screwed either way.
@@Zxv975 yes 😎
@@Zxv975 if everyone did that inflation would hit the roof, the very premise of why people are struggling to keep up with cost of living. Not everyone can upskill, top job will always remain a minority. so yes, looking at everyday bad habits like buying coffee everyday is sound advice
@@James_36 buying a coffee isn't a bad purchase. A coffee will never be the difference that separates you from financial freedom and being broke. I'm just repeating stuff that was covered directly in the video already, did literally nobody watch it?
Anyway, the root of the cause is Capitalism, not individualism. The whole narrative of blaming people's poverty on their own personal choices and not on the obvious, systemic problems of a broken system is propaganda created by capitalism to stop people from questioning the system. Remember the quote:
"When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist."
The best financial advice I can say just is to learn about finances. Nothing beats knowing what you are doing. It's high time, that we call out the cookie-cutter, surface-level, lukewarm, advice that is on the internet.
you mean like don't buy coffees everyday? like this video claims is not a problem lol
I think this kind of misses the problem that this financial advice is meant to solve. Living paycheck to paycheck is a much worse situation than “not being able to make major purchases”. Yes, the economy is harder, and we can’t afford some of the same luxuries as older generations. However, we also have many luxuries precious generations did not have, and it is certainly true that consumerism is a huge issue that sinks many people’s financial future. Fast food and fancy coffee is part of that. The fact that people rely so much on these rather insignificant purchases to feel better is actually extremely concerning, it’s like we’re all addicted to the consumer culture lol
I'll never be able to afford to retire, so I'll keep getting my daily coffee. Thank you. I budget for my coffee with every paycheck and if i buy too much and there isnt any money left on my card, i go without. My daily coffee is one of the few good things in my life
Its not usually just coffee being purchased though… It turns into snacks and breakfast that rack up to $10+ a day just for breakfast alone.. Now imagine not packing lunch everyday.. My coworkers do this everyday and it cost them A LOT. Not to mention the weekend kick it..
It's about balance. I treat myself to one fancy coffee a week. The fact it's not an everyday expense makes it more precious and enjoyable. As for lunch. I primarily bring mine and will occasionally eat out with coworkers. Sure it's $10, but those lunches allow you to build connections, which can pay off down the road.
@@ShannaFarley Exactly. Spot on.
I stopped going to starbucks and make coffee at home, i went from being out the door in 15 minutes to taking an hour and a half to leave slowly, this also came with a career change, but buying coffee and drinking it on the commute does save some time.
So why not make it at home and still drink it on the road..?
@@Pippy1 well now my round trip commute is 30 minutes and not 2-4 hours and i hit no traffic, i did do that for a bit, it still slowed me down in the morning, but it made it harder for overtime
Yep, great video.
You mentioned it a bit with the will power thing but the other side of that coin is that if you're smart, you can use small and relatively inexpensive things like coffees to leverage massive development gains, e.g. I generally require myself to work for 2 hours every morning before I go and make my coffee (I make my own but whatever, it works out about the same anyway) - and looking forward to that first break generally makes me extremely productive for 2 hours. 2 hours of solid work is worth 15-20x as much as the cost of even an expensive coffee.
The things you say at the end of the video hit hard.
There's people I know in the UK who work as doctors, surgeons, and other specialists for the NHS and they earn less than a mid-level developer in tech.
Don't get me wrong, I think software engineering is a valuable skill that should be rewarded, but the fact that it's rewarded more than the medical professionals I mentioned, and sometimes is arguably delivering less value to a society (eg, they work on a mobile app with predatory monetisation), it seems like we have our values as a society need to be re-evaluated.
I mean with all of these layoffs and tech growth slowing down the reevaluation might be now, although not in a good way
@@component9008 That's a trap that I see a lot of discussion on pay disparity between workers fall into. Teachers in the US barely make any money for their value in society, but the answer isn't to decrease software developers' salaries until it matches teachers'. Rather it's to increase teacher's salaries.
I’m in healthcare. I kind of see my job as a large cap value company like Berkshire. Slow and steady with reliable cash flow. Tech is more boom and bust like their companion stocks
You could say the same about pro athletes.
The things about software is it theoretically has infinite scale. You make it once and can use it until the universe disappears. Tho you need to maintain and add new features, but it adds up layers by layers
Re-stating the obvious here - this video is spot on. The "internet finance gurus" may be pointing to the right direction that people need to be more aware about their spending habits and manage their finances better. But most, if not all, don't really have any good solution and rather just throw out catchy headlines like "quit coffee to be a millionaire" to promote their content - which in turn end up enriching only themselves. It's a bit like "internet health gurus" saying things like you need to take better care of your health (which is right) - but then put out a video titled "why you need to drink apple cider vinegar at 4:55 AM everyday" - which hasn't been proven to provide any health benefits but is an interesting headline that will potentially generate clicks.
As the video above pointed out - many of the financial problems are personal and it's up to the individual to fix them - but many are institutional and can't be fixed by merely changing personal spending habbits. And I strongly suspect that the content creators themselves has stopped drinking coffee or have ever met a millionaire who got rich by just cutting out coffee.
Yeah your right on in my option. I am not sure many even want to be rich but they likely don't want to end up poor either. To me the issue is how to make enough to have options.
It isn’t about the coffee. It is about the mindset. Starbucks, eating out, etc. The idea is about buying convenience and the substantial mark up that it comes with. For example, I make food for my self for only $40 a week by buying in bulk and making the food myself. If I bought a sandwich from the shop next to me and ate the exact same then my food bill would be $84 a week if I ate 2 times a day for $6 a sandwich.
I think it’s more like a practice of being mindful about spending and saving money. Rather than taking it literally about stopping buying coffees (or, if you’re from Australia, smashed avocados on toasts 😂)
I live in India... Coffee here costs 15rs or 12¢. While I don't spend a lot on coffee. I do spend on heath. Like gym and running ( I am a marathon runner). It costs me economically... But i benefit from it indirectly... Since I have more stamina now.... I get less tired and can actually get more done.... Because running boosts confidence and mood. Which gets appraisals and bigger projects and hence earning more money.
You adjusted 140k to inflation so yes it will definitely make a down payment on a house in most markets (unless you live in some of the most expensive areas, but even then, it isn’t far off)
It was kind of sneaky the way he said that. I also wonder if he adjusted the contributions every year as the price of coffee would go up each year? Do you think the 140K is taking that into account as well?
I've been a huge fan of your videos, and I really have enjoyed how you have been taking your own stance versus just copying the previous money TH-cam. The points you made in this video are 100% valid and true, but I think you missed the point of the whole coffee a day invested concept. It's not so much about the coffee, but trying to change the way a person views money. Your right that saving all your coffee money would never be enough, but it's not about that. It's about creating a first step to a better financial future that is easy to start, but can also show just how much money that can bee gained if we can cut out things that cost us money that we don't "really" need. There are definitely content creators who legit are saying coffee is making you poor, but the coffee idea is about the concept of finding ways to save money for someone who may have never saved money in their life
Influencers that constantly harp on about a daily latte are so fixated on money, they don't realize the other valuable things about the interaction. Especially if you have local spot where you're a regular, the whole experience can dramtically improve your day. From the baristas that make your drink, to the other regulars you chat with. Go enjoy your coffee!
It matters more when you're young and poor, not so much when you're older and making more. But it's pretty hard to take that advice from Graham Stephan when he's trying to sell you his own brand of coffee.
His coffee is 20 cents
This definitely assuaged my guilt over getting Starbucks, I appreciate it. I do like Graham Steve for his advice about investing in retirement and encouraging healthy financial habits, but I agree that we all need to have some small luxuries that we love or we just burn out and make bad choices.
I came across a reddit thread where people were confessing spending around $500 a month at Starbucks. That is not an insignificant monthly expense but the daily amount ($16) seems like nothing
There are ways to get that dopamine without spending tho, that's what people with identities have.
Also, instead of spending online, you get the same dopamine from putting it in the cart for later, then forget about it while getting the dopamine.
Sport is a healthier way to get your daily dopamine and can lead to a better life, even a job.
But for some reason, the "luxury" end at Starbucks and not healthy small luxuries...
Coffee at a local shop is what keeps you sane, and mentally stable.
Don't spend ridiculous amounts of coffee, but once or twice a week, it is good.
If you mix it with a day out with the loved ones, it is even better
Very true. Getting my $3 coffee in the am is the one little thing I look forward to after waking up at 5 am, commuting 2.5 hours and working 8.5. Worth every penny.
I know these youtubers specify coffee, but I always took this as a metaphor - i.e. instant gratification over delayed gratification.
Coffee is an easy target, but the point is valid. Those small expenditures do add up, because it usually doesn’t stop with coffee and is part of a wider set of convenience habits, such as ordering take out a couple times a week.
Also to keep things fair, when you’re adjusting returns for inflation, you should adjust the cost of coffee for inflation too, and then you end up significantly more than 140k. Even so, 140k for just coffee (while you could’ve paid 10-20 times less by making it at home), isn’t something to think too lightly about. You can’t retire on it, but you might be able to put your kid through college, go traveling, scale back on work earlier, or even afford necessary health care (if you live in the US). It’s an opportunity cost, and therefore I think the point is valid; however I do agree it alone is unlikely to make or break you
Again it depends if you trying to solve math problem (coffee won’t help) or psychological problem - from my experience unless you have strong self control, cutting coffee is sound advice.
I never met people spending on small things but having perfect self control on big things. Usually its chain reaction coffee, drinks, restaurants, clothes, latest phone, nice car…
>
It seems to me that a majority of U tube ads are for new cars. My theory is that the more intrinsic value something has, the less in needs to be advertised.
My issue is you said hedonic adaptation as inevitable. It's not. The point about coffee, isn't specifically the coffee. It's the mindfulness about how you spend your money. The finfluencers (love this term by the way) almost always mention preventing lifestyle creep as well. A good number of millionaires are regular people working regular jobs, living below their means, and diligently saving and investing. Yes, it takes many years, but it's not inevitable that someone will end up old and broke.
Living below your means is the ONLY way to financial freedom.
It's not saying don't ever drink coffee, it's that 5-6$ per order is excessive and adds up fast. 1 coffee a day at 5$ adds up to 1850$ a year.
They are saying making it yourself is a LOT cheaper. 10$ for a bag of coffee, 6$ for creamer, and 10-20 cups later your spending very little to diy it. Hell I homebrew Iced coffee.
The argument basically boils down to, "People can't even live on $50-100K anymore. Coffee doesn't make a difference, so you might as well do nothing because it's impossible." Which is nonsense spouted by trust fund babies. I make 20K a year working part time, and I bought my home two years ago at the height of prices in my area. I waited tables that year, and was surrounded by this mindset. You DON'T actually have to buy expensive clothes and go to expensive clubs just because your coworkers are doing it. Your high-paying job isn't worth it if your take home pay is low due to "business" expenses.
It's not JUST coffee. It's 1-2 energy drinks a day from gas stations, $80 manicures to "treat yoself," ordering delivery TO THE RESTAURANT YOU WORK AT, buying a new car with a $500 montly payment because it comes with free oil changes. It's a complete lack of understanding or perspective of what is a necessity and what is an indulgence.
Obviously it’s silly and reductive to blame a single personal indulgence for someone’s poor financial condition. But clearly the principle behind this statement is true: you may need to trim luxuries out of your life in order to achieve ongoing financial stability. You might say that a cup of nice coffee is not a luxury, but if you are struggling to make rent payments, it certainly is, as are many of the other purchases you are likely making.
anyone with an IQ above room temperature knows that drinking coffee wont financially bankrupt yourself. Its just another catchy clickbait title to lure ppl in.
If u struggle with life after a cup of coffee, then it's the job/career you need to change, as stated at 10:10 .
@@hoangle2483 that is hilarious. I'm stealing that phrase off of you.
@@hoangle2483 it’s not about simply drinking coffee, it’s about paying for luxuries you can’t afford.
@@Kizamo thank u, Captain obvious. People with IQ below room temperature will very much appreciate your input.
But here's my thing...then they could just say that! Instead of the snark and clear disapproval of anyone not of their ilk (i.e., usually Millennials and older Gen Z), they'd rather snobbily look down upon people who just want one thing to enjoy in their day. They could just say, "Look over your expenses and see if there's something you can cut. That could be the daily coffee and instead make it at home, but if that's a treat to get you through the day, fine. Maybe you can scale back on your streaming services or eating fast food, etc." It reeks of elitism and maybe even classism to hone in very specifically on coffee, instead of just giving the better advice I outlined.
And as many comments have also pointed out, these people are also usually shilling their book, or "self help" services and whatnot, which will cost significantly more than the coffee. They're just grifters 😒
You got it! Needing to pay off the student loans that got them that high income salary is just a complicated way to end up in the same place as a median wage earner.
The "mortgage without the house."
I make a 130k and live in a medium cost area. After taxes, 401k, roth, HSA, insurance, bills, student debt, personal wants, entertainment, food, etc. It really isn't all that much. I am blessed and fortunate, but I know I am no where near luxury and still have to save like I did when I was making 25k/yr for luxurious things.
Hyperinflation is destroying everyone outside of the top 1%.
Bro you just said personal wants and entertainment that’s why there is not much left. Most people don’t even have the money to do those things. Saying 130k isn’t enough is ridiculous your doing fine.
@@Rhino11111111 at no point did he say 130k isn’t enough. He just said it’s not what it used to because the cost of living of is so high.
Entertainment and personal wants are very general and you don’t know what he spends on those. What is he meant to do with his spare time? Stare at a wall?
You just made loads of assumptions because you saw 130k and stopped reading after that.
I don't think aiming for luxury is really worth it, I would prefer to aim for well being first, then convenience, and then financial independence.
@@Rhino11111111 I would be surprised if you did NOT have any personal wants. This can be as small as coffee as the video described to something much larger like a new car. After all taxes, retirement contributions, and bills, personally, I am left with a bit of play money, but it's nothing luxurious as people may first think. When I was making 25k/yr, I had less bills because I was living with my parents (I had no money to move out). Since then, my income has essentially 5x'd, but I have since then moved out and live modestly.
I thought that making low 6 figures means I made it, but now that I'm making it, it's really not much and I don't even have kids yet. This is why I know I am fortunate because there are people surviving on much less. Some people may think living = just surviving, but for me, I want to enjoy the finer things in life before I pass away such as nice restaurants, dates, flights, hotels, living area, etc. Personally, I don't want to just barely survive, I want to thrive, and it's sad (for me personally) I cannot do so on my salary.
I love coffee, so I used to make it at home, where it was way better than any coffee I've had outside, and bring it to work. Same with my lunch. It won't get you a comfortable retirement, but wouldn't you rather have an extra $1,820 a year AND drink better coffee, the exact way you want it? That could go toward a vacation, an emergency fund, or whatever you want. If we talk about bringing lunch, that's thousands more a year. You could make great memories with that.
If you make $75k a $5 coffee a day is 2.5% of your income. The avg American doesn’t have $1000 for an emergency and this is $1800 a year. If not buying a coffee a day means you don’t have to resort to credit card interest for that inevitable emergency he points out which is a huge killer of wealth. Than yes a coffee a day is making you broke. This is a common scenario in America
I used to work in sales, and a lot of people would use the coffee trick to guilt people into buying shit they don't need. I made my own script that was entirely ethical and management kept getting on my ass about it even though I was outperforming 85% of my coworkers. I quit because I'm not going to tell exhausted union workers that their source of fuel to get through a grueling work day is something they should be ashamed of.
Those guys are usually on the hard stuff anyway: Monster Ultra Zero Calorie
@GeneralChangOfDanang True that 🤣. I worked the night shift as a security guard while in college, and energy drinks were a must. Super unhealthy, I know
You mention willpower fatigue, but also the opposite could play a role.
If you pay 7$ for a coffee a day, you'll spend at least double that for lunch, and 4 or 5 times that when you go out for a dinner.
(The figures could be way off, I don't know how much a dinner at a restaurant could cost in the US)
Instead if you only spend a quarter for your coffee, you prepare your own meals and so on, not only you'll save a lot of cash, but you start thinking with a certain mindset.
In the end I think it depends on how much happines you get from the things you buy.
If you drink coffee for the caffeine only, then spending less on it is a no brainer.
Instead, if going to Starbucks makes your day, you should keep doing it with no shame.
The contrarian voice of reason in the TH-cam finance space. Love this channel
I'm fairly new to all of this, but 3% return seems too conservative for passively managed accounts. I haven't seen anyone use anything lower than 5% and most are calling 6-7% a safe assumption after inflation. Why did you use that rate?
Also, considering that most people today aren't retiring with even $140k, I don't think its worth just shrugging off as something to help with retirement. I agree that we shouldn't remove all simple pleasures from our budget, but if you're paying $5 a day for coffee you can make at home for $0.5, it might be worth it to someone to cut back to buying coffee out less often at least.
Discipline over time becomes habit. The closer you get to habit, the less willpower you have to use.
The “secret” to building wealth is to decrease our expenses while increasing our acquisition of assets that generate income and gain in value over time. Variable expenses, such as coffee, are an easy place to start when decreasing our expenses but eventually all our expenses should be questioned.
🤣 that was depressing 🤣
However as an accountant, good financial management from the start of your working life (even as a teenager) WILL make a massive difference over your life even if you are on 50k.
Your decisions are limited by the amount of money (which is just a tool) you have.
Yes you need Evan a small amount of luxury in you life and if that is a coffee then that is is but it might have to be just one coffee a week.
Up skilling, side gig or making yourself super valuable at work is a great way to boost your invome
The coffee itself isn't a huge expense but building the financial discipline to use that money for investing in your future is an easy first step on the road to financial independence. Home made coffee with a French press beats Starbucks any day too
I think maybe a better way to look at it would be that skipping the coffee would buy you a share of Coke (KO) each week. If say someone would have done this in 1988 they would stop in 2006 because the dividends would be able to buy them a cup of coffee every day. That is also with spending every dividend payment on coffee as well, so they would still be getting a few cups in 1989, a few more in 1990, so on and so on until 06 when they would now without buying anymore the dividends would be free coffee for life. (As well as have ~$83,500 worth of stock)
Great video. One thing I hate about financial advice is how so many finance gurus speak from a place of privilege and love to talk down and lecture people, shaming people into some minimalist lifestyle.
Some people need that $5 Starbucks to keep from collapsing from exhaustion after 8-12 hour shifts. Or that $1000 holiday to decompress after a long year.
Sure, one could save the most money by living in a cardboard box and eating only Ramen noodles all day, but it turns out people don't just want to hoard money until some unspecified future date. They want to enjoy the time they have while they're still alive and enjoy some basic comforts.
Of course it is easier to cast sanctimonious blame on ordinary people while ignoring broader systemic problems.
The 10% interest rate is definitely exaggerated, i agree, but the cost of coffee will also increase over time, so the real answer is probably between the two numbers. But even at 140k, I find it a significant number to not overlook. Add some meal at restaurant and it become even more important...
I think the $5 coffee idea is more of a “watch your small expenses”. Once you notice your coffee, you may also notice the $15 takeout, the $7 Uber and the $3 bottled water that you barely counted into your expenses. You may say, it’s obscene that we need to watch everyday expenses like food and transportation, and you may be right, but those $900 per month of single use nonessential expenses may lead to piling up credit card debt and an emergency fund that never gets saved. And no matter how fucked up the world is, before people rally up to change it, you can only change yourself.
I think he's acknowledging this. but simply saying if we were not 40 years deep into 2.5% inflation and wage stagnation it wouldn't matter. and people need to adjust to the new economic situation. which is your either living in abundance +80-120k (depending on zip code), or never going to have it anyway -50-80k. essentially the American dream of making 45-75k a year and living comfortable is gone. and most jobs pay 30-50k so by default most people are simply screwed and if drinking coffee keeps you from losing your shit than just do it. when you have 10k at best a year not going directly to bills spending (80% of the pop). $1500 a year in small divisible happiness tokens for sanity is a sacrifice many will take. similar to some broke people spending 2k a year to enjoy a blunt each evening after work. obviously they wont die without it. but even slaves were given a bbq and some beer on Sundays. no one is going to work day in and out with nothing to show for it and keep showing up. without some little bone being thrown at them.
@@humpteedumptee8629 did you sit on a wall?
@@imonbanerjee2997 idk even know what your asking.
i think you should probably make a video on those young 20 something years old millionaire youtubers too, they been popping up for the past 2 years, selling courses on dropshipping and social media agency , and lots of teen boys are looking up to them, hoping they will become them one day
This is a good idea, I know teens who still look up to Andrew Tate as a finance guru.
Doesn't he already cover that by his videos on 9 to 5 jobs?
He did something kind of similar. It was something like The Problem with Financial Gurus.
Nice and informative video. let's always focus on how to earn, because with the current recession and financial crieses world wide, i think getting just a job only isn't the best soluution to attaining financial freedom that's the more reason one should save and invest wisely .
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It’s really fucked up that we’re fast-approaching an era where the only way to not be poor…is to be born into a rich family and already have the income necessary to not be poor.
No matter how hard you work, you’ll be shackled to endless debt unless you inherit riches beyond the human ability to spend it.