What happens to the €2 you were going to spend on that coffee?
If you enjoy reading articles about frugal living, cutting costs or getting out of debt, you’ve doubtlessly come across the following gem of advice:
“Brew your own coffee at home and save €3 every day. Grabbing coffee on your way to work can easily cost upwards of €500 every year!”
If you’ve ever struggled with debt, or have had to meticulously assign every Euro to make sure you don’t have too much month at the end of your money, the adage ‘Every Little Helps’ is likely burned on the inside of your eyelids.
Unfortunately, that saying isn’t without its flaws.
The Myth of Frugality
The rise of frugal living is in no small part down to rising debt and stagnant wages. Millennials are being constantly berated from both sides of the consumerist coin, from “killing off paper towels” to “spending too much on avocados”. It’s a no-win situation for a generation who (on the whole) care less about material items and yet are still unable to scrape together an emergency fund, let alone a house deposit, without help from family members or first-buyer schemes.
It’s also become synonymous with ‘skip the morning coffee’.
I take umbrage at how this piece of advice is used as a blanket statement for two reasons.
1. It’s my damn coffee
In a book I’ve never read (but may as well have, thanks to the hype), The Life-Changing Magic of Tidying Up by Marie Kondo, she mentions that decluttering items that you’re keeping for the sake of it is important, and to only keep items that spark real joy.
I don’t know about you, but when I buy a coffee for merienda* it makes me pretty darn happy.
Of course, splurging on a new laptop would also make me happy (darn you, Asus!) but I’m not about to do that. So what’s the difference?
Return on Investment
Yes, the well-known ‘ROI’ phrase that’s thrown around by businesses actually has plenty of use in day to day living, too. It’s less about the cost of an item, and more about the value of it. Whenever I make a purchase, I ask myself whether I would willingly pay even more for the item.
Example: I pay €2 for a coffee, but I would happily pay €2.20 for the exact same coffee.
It’s about value, not price. This means that I generally never fall victim to impulse-buy stuff like snack-foods any more.
Of course, I also need to ask myself if I can afford it in the first place. I’m privileged enough that the answer in this case (for small ticket items) is usually yes.
2. It’s never followed up
“Okay, I have €2 left in my purse. Now what do I do with it?”
Let’s be honest, if that ever happened then we’d just end up buying something else instead later in the day (probably a croissant. Or…no, definitely a croissant). Cutting out habitual spending is one of the best ways to save some cash, but just cutting out the spending isn’t enough – it’s a multiple-step process.
Step 1: Decide why you need the extra cash (e.g. paying debt)
Step 2: Stop spending on a particular habit (e.g. Coffee)
Step 3: Keep that money safe for a week, month, quarter (depending on how often the habitual spend occurs. For coffee, it may be a good idea to save the amount for one week, say €15).
Step 4: Actively put the saved amount somewhere. (e.g. take the time to pay the extra €15 towards the loan in a one-off payment. OR, increase your direct debit by the amount you now save to ensure it’s a consistent occurrence).
As you can see, it’s a bit more involved than simply not buying that coffee each day. And this is why most folks don’t see any beneficial return when they do cut out habitual spending. (Which usually just leads to a different type of habitual spending in the future: “Oh, I don’t have a coffee anymore, so I’m gonna buy a croissant instead…”)
The Spending Habit Tri-Question
The overall trick to Frugal Living is in being Mindful. Even if you don’t have a spend-sheet (which I highly recommend, but I appreciate it isn’t for everyone), then at the very minimum get into the habit of making sure that everything you buy – whether it’s a new laptop or a chocolate bar – is something you can afford, can see the true value in, and want more than your current goal.
A ‘hack’ I recently found online suggested that in order to make the price of something more tangible, you can figure out how long you need to work for in order to purchase it. So for example, if you earn €12 an hour and a coffee and croissant cost €3, then you’d have to work for 15 minutes to ‘earn’ that.
The Real Cost
I am still amazed by how few articles about enforced frugality deign to give the time of day to the mental pressure associated with it. But it’s dangerous to focus solely on the numbers, even if you have the best, most honourable intentions in the world of helping folks become financially stable/free.
I’ll be writing a few posts specifically about bias and mindset, but for now I want to make one thing very clear:
Unless you have a mentor or financial advisor with whom you discuss everything relating to your financial life, then only you fully understand the emotional journey you’re experiencing when it comes to your finances. And while there’s usually a disconnect (to begin with) between actions and intentions, which is perhaps why you sit and read articles like this one, you know your priorities.
So if you can afford it, you value it, and it makes you happy? Drink your damn coffee.
If not, play an active role in where that money actually ends up.
* merienda: A Spanish word that loosely translates to ‘afternoon snack’, usually taken between 5-6pm. A coffee and a croissant (or similar).