Is ‘Skip Coffee’ Advice Dead? 3 Money Experts Punch Back With Better Money Tips
The latte factor idea has been around for years. It follows an easy-to-follow mindset: That by regularly purchasing your favorite fancy coffee drink, you sacrifice the chance to achieve long-term goals.
The idea isn’t entirely useless, as unmonitored spending can harm a budget, but skipping coffee to avoid financial problems feels outdated, especially as Americans struggle with rising costs across the board.
Current money experts aren’t espousing reckless spending; they’re saying that intentional spending and a focus on larger money goals simplify money management. Here’s what three current finance experts have to say about skipping coffee.
Ramit Sethi
Ramit Sethi, author of "I Will Teach You to Be Rich," has long been opposed to skipping coffee to grow wealth. The idea may run counter to his championing of wealth-building, but he says skipping coffee won’t help you amass riches.
"Guys, if you save $5 a day by making coffee at home, that's $150 a month, which is $1,800 a year. And if you invest that for 30 years at 7%, you'll end up with $170,000. Is it true? Almost certainly no, because…you are almost certainly missing the things that actually matter," Sethi said in a recent YouTube video.
Instead of focusing on coffee, Sethi often argues for prioritizing big wins with greater impact. In a recent LinkedIn post, Sethi gave some ideas for big wins, which include:
Negotiate a higher salary, either when accepting a new job or during a promotion
Eliminating high-interest debt
Reducing the cost of investing
Increasing your investment rate annually or after each raise
The simple argument is that focusing on those things will reap far more for you over your life than fixating on coffee.
Tori Dunlop
Tori Dunlop is the well-known founder and voice of Her First $100K. Dunlop is another vocal critic of skipping coffee as a way to manage personal finances. Some finance experts might promote cutting everything enjoyable to promote growth, not Dunlop. This isn’t to say she argues to ignore spending, because she doesn’t.
“If coffee is what you love to spend your money on, amazing… I’m here to advocate for you so you can feel confident in saving and spending money on the things that you love,” said Dunlop in a recent article on her site.
Rather than cut coffee, Dunlop recommends asking yourself three questions before making an emotional purchase. Those questions are:
“What is my current head space or emotional state?
“How many taco dollars does it cost?”
“Am I accurately evaluating the worth of this purchase?”
Taco dollars refer to whatever is important to you; it can range from travel to experiences. Dunlop argues that asking these questions helps guide your spending toward what matters to you and helps you build a system that works for you.
Brennan Schlagbaum
Brennan Schlagbaum, better known as the Budgetdog, is another critic of skipping coffee to build wealth. He doesn’t hold back on his thoughts on the latte factor.
“’Skip the latte’ is lazy advice. It makes you FEEL productive, but it doesn’t actually fix anything,” Schlagbaum said on Instagram.
In the same post, he argued that egregious spending on things like expensive cars or failing to comparison-shop for large expenses are the more dangerous costs. Schlagbaum promotes a more traditional approach to money management by living on a budget, but it all starts by listing all your assets and debts on a balance sheet.
“You cannot fix what you cannot see. The balance sheet also tracks progress over time. As you pay down debt and build assets, the net worth number moves. That movement — even when it is slow — is the most honest measure of financial progress available,” Schlagbaum said on his website.
Knowing where your money is going and regularly reviewing your situation will promote progress much more than cutting coffee.
Skipping coffee to improve your finances isn’t dead, per se, but using it as a singular shift is unrealistic today. Small expenses do matter, but adjusting larger levers and employing values-based spending can have a significantly higher impact.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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