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Kevin O’Leary, one of the hosts of Shark Tank, is a vocal critic of those who purchase a daily cup of coffee. The CNBC contributor sees this daily habit as throwing away precious dollars for no reason, and he might have a point. Coffee companies, like Starbucks ($SBUX), are killing your wallet.

“Do I pay $2.50 for a coffee? Never, never, never do I do that… That is such a waste of money for something that costs 20 cents. I never buy a frape-latte-blah-blah-blah-woof-woof-woof for $2.50.”

Kevin O’Leary

Young people are in love with Starbucks.  Personally, I am not a big coffee guy. Aside from the ridiculous naming for beverage sizes, the prices are simply outrageous.  A tall coffee (or a small at a normal coffee place) costs $2.95. Roughly $3 for a cup of coffee every day is maddening, and that is only if one were to buy a small.  Their venti drinks (or a large) can end up being anywhere from $5 to $6.

So, if someone were to buy Starbucks every morning before work or school, they could be spending upwards of $500 per year on coffee, which is only a low-end estimate.  This estimate is for a tall coffee every workday for forty-weeks. If someone were to order a more expensive drink or order more frequently, they could easily be paying upwards of $1,000 per year. 


Dunkin is Killing Your Wallet Too

Now, you may be thinking: “But, Anthony, I know Starbucks is expenses. That’s why I get my coffee elsewhere, like Dunkin.”

It is true that Starbucks is much more expensive than Dunkin ($DNKN). However, there is a cultural element associated with Starbucks that other companies cannot replicate. For whatever reason, consumers are willing to travel significant distances for their iced frappuccino.

But, let’s say you do go to a cheaper alternative, like Dunkin.  A small coffee from Dunkin is $1.59, which is half the price of a small (tall, whatever) from Starbucks.  Just going to Dunkin or another cheaper alternative can save you a great amount on your coffee expenses.

Even with that, Dunkin is still not cheap.  Using the same estimate as Starbucks, paying $1.59 for a small coffee would cost over $300 per year. Again, if you were to buy a more expensive drink or order more frequently, you could easily pay more than $500 per year for coffee.


What Is The Solution?

Is having your daily fix of caffeine worth $300-$700 per year?  I definitely do not think so. For people, this simply is not about the coffee; it is more about convenience.  It is quicker for people to go through a drive-thru to have their daily coffee in the morning, especially if they commute to work. 

So let’s rephrase that last question: Is being lazy convenience worth $300-$700 per year?  If you cannot just quit your caffeine kick, then there is a simple solution: make your own coffee!

If a person were to brew their own coffee in the morning, they would save a substantial amount of money, which could be used for paying bills, saving, and investing. On average, a pound of coffee, which can make 273 ounces of brewed coffee, costs $8.50.  That one pound of coffee can serve 34 cups of coffee, which equates to $.25 per cup.  If consumed every day, this would cost an individual $50 per year, using the same method as above.  Brewing your own coffee can save someone roughly $250-650 in this scenario. So, imagine the financial benefits if you were to do this. Additionally, making your own coffee can take minutes, which can be shorter than the wait in a drive-thru.

If in a pinch, convenience can be nice. Going to a Starbucks or Dunkin occasionally will not leave you broke, but doing so should be considered a luxury and not a necessity. Make your own coffee, stop wasting, and use those savings to invest in your future.


What to Do with Those Savings?

We just estimated that one could save $250 to $650 on coffee yearly by making it at home. Now, one may ask: what should I do with these savings? And, I have a solution: instead of wasting it on their product, why not invest directly in the company?

At the time of this article, Starbucks is trading for around $77. Those savings would currently be enough for three to eight shares of the coffee brand, depending on how much was saved. Because SBUX pays a dividend of 2.13%, you would most likely see a positive return on the money that you would have wasted on coffee otherwise.

If you would prefer to invest in Dunkin, those savings could afford you four to ten shares currently. Currently, Dunkin and Starbucks are down for the year, but that is only due to the Coronavirus. Going forward, both should fare well, considering that America has addictions to caffeine.

Obviously, you do not only have to invest in these companies with these savings, but this is just to give you a different perspective on your spending. Do not only be a consumer; be an investor. Look at a company not only for its products but for the value it can bring to you financially.


What are your thoughts? Are you ready to give up the coffee spending? Comment below!

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Post Author: Anthony Crincoli

Anthony is the Founder and Lead Content Creator for Common Cents Finance. Away from the platform, Anthony is a CPA Candidate and an auditor for a Big Four public accounting firm. He has a passion for personal finance and looks to promote financial literacy whenever and however he can.

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