There is a long and drawn out debate in the personal finance world that deals with the Latte.
It’s even got its own cool name:
On one side you’ve got the frugal camp who says spending $4 – $5 for a Starbucks coffee is just plain stupid. They argue that you should stop wasting that money and invest it instead.
On the other side, you’ve got the people who believe you should focus on the big wins like your cars, mortgage, and job rather than wasting time worrying about daily Lattes.
Obviously, the Latte is meant to represent more than just a coffee.
It’s essentially a debate between people who focus on cutting spending and people who focus on increasing income.
And to be fair, there are a lot of well known and great minds in both camps.
While there are plenty of people in the big wins camp, the overwhelming advice amongst popular personal finance is that you should give up the latte.
Heck, I even wrote an article about it called 3 Habits That Are Costing You Hundreds of Thousands.
But regardless of what mindset you tend to have when it comes to these small purchases like special coffee, you need to realize something about both ways of thinking.
Both groups are completely missing something.
They both start off with a false assumption.
Both Camps Assume That You Actually Want The Latte
The frugal argument is that you should learn to make sacrifices in the present so that you can save money for the long term.
They encourage you to put aside your wants for the sake of saving money. It’s all about learning to suppress your desires and channel it elsewhere. It’s the Mr. Money Mustache way.
Now again, let’s go back and look at the other group. The ones who focus on the “big picture.”
People like Ramit Sethi argue that you should just focus on the really big purchases and automate your investments so that you can buy all the lattes you want.
Don’t you see the problem?
They both assume you actually want the latte.
But have you ever actually thought about it? Have you ever asked the question? Or have you just assumed that of course you want the Latte!
But what if you don’t?
Could This Just Be Habit?
In a journal article titled The Habitual Consumer, Wendy Wood, and David Neal found that 45% of people’s behavior is repeated almost daily.
That means nearly half of everything you do is based on habits.
The article states:
Consumers sometimes act like creatures of habit, automatically repeating past behavior with little regard to current goals and valued outcomes.
Do you think that your coffee habit could be just that?
To further illustrate my point, let’s look at some hard data from the mega coffee empire themselves, Starbucks.
Starbucks gets roughly 60 million visits per week. That’s 240 million visits per month.
The average Starbucks customer visits a store 6 times per month.
That means on average Starbucks customers go 1 and 1/2 times per week.
And get this, the top 20% of Starbucks customers visit 16 times per month. That’s 4 times per week!
Let’s look at this another way.
At 60 million customers per week and an average customer going 1.5 times each week, that means a total of 40 million unique people go to a Starbucks once a week.
That’s 99 people making a purchase every single second.
That’s equivalent to 12.5% of the entire U.S. population visiting Starbucks every single week.
And for that top 20% who go 4 times a week, it’s a total of 8 million people.
Did you catch that?
8 million people are visiting Starbucks 4 times every. single. week.
The bottom line is: there’s a TON of people getting coffee habitually and you can’t convince me that all of those people are making a conscious decision every time they purchase.
A lof of it is just plain old habits kicking in.
It’s the same reason we eat at the same restaurants, drink the same drinks, hang out at the same places, do the same vacations, and watch the same tv shows day after day, week after week, year after year.
We humans are creatures of habit.
Remember, 45% of what you do every single day is based on habits, so there’s a good chance that what you’re buying is too.
So how do you break this habit?
You Must Get Clear On What You Actually Want
I’ve talked about getting clear on what you want when it comes to the really big things. These are things like what experiences you want to have and what you want your daily life to be like.
The big things also include large purchases and big career choices. But most people already know that it’s extremely important to make clear choices when it comes to large purchases like cars and houses.
And that makes sense because if you mess those up, it doesn’t really matter that you saved $5 by not having your Starbucks.
But despite how important the big things really are, it’s also important to clearly define what you want in small things as well.
Unlike the two camps I discussed earlier, I’m not telling you to give up the coffee or buy the coffee.
I’m just here to ask you one question.
And that is, do you actually want the coffee?
You see, many times we find ourselves buying things we don’t really want. We just buy out of habit or because our friends do it.
We get into a routine of paying for cable, using an iPhone, buying a daily coffee, or drinking 2 beers every night.
And if you get really honest with yourself, you probably don’t actually want a lot of those things. At least, not as much as things you truly want.
Imagine if you come to grips with the fact that you really don’t enjoy cable as much as you pay for it. So you cut the $100 cable bill and now you’re able to save an extra $1,200 a year. That’s more than enough to take a nice big vacation every single year.
And that’s just from cable.
I’m not saying you can’t have cable or that if you do you’re an idiot. Just like the Latte, all I ask is that you question it.
If You Actually Want the Latte, Then Just Buy the Latte
The main point is just to ask the question.
But if the answer is yes. Then don’t feel bad.
But If the Honest Answer is No, Then Find Something Better
If you really ask the question and decide you don’t really want it then find somewhere better to put that money.
Understand that it’s not about suppressing your wants.
It’s about figuring out what you really want and then spending your money on that.
As one of my most favorite bloggers would say, “You can Afford Anything, you just can’t afford everything.”
Focus on finding your Anything.
Find the things that really matter to you, cut out all the other crap, and then don’t feel bad about buying your Anything.
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