Daily Coffee Habit: Can Small Expenses Impact Your Financial Goals?

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Contrary to what you may have been told, buying coffee won't necessarily stop you from meeting your financial goals.

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Key points

• Saving for key goals, like retirement, is important.
• Small purchases won't necessarily stop you from meeting those goals.

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"Give up your daily coffee purchases and you can retire wealthy."

It's a line we've all heard or read on personal finance sites. The idea is that the small purchases you make can really add up over time, and, in some cases, prevent you from meeting important financial goals, whether it's buying a home, paying for college, or retiring comfortably.

But the reality is that smaller purchases won't always stop you from meeting major goals. And what they may do is make life more enjoyable or manageable while you work hard to get there. It's for this reason that I buy myself a coffee almost every workday, even though making it at home would be much cheaper. And I don't feel bad about it at all.

How I justify my daily coffee

I spend $3 on coffee almost every workday. Assuming 20 workdays a month, that's $60 a month, or $720 a year. Clearly, that's not a negligible amount when you add it all up. But I don't regret those purchases for a few reasons.

1. My coffee helps my productivity improve

Between my job, my kids, and running my household, I don't get the most sleep. And my daily coffee is what gives me the jolt of energy I need to stay focused at work, even though I actually drink decaf. (Go figure.) As such, it's easy for me to argue that my coffee enables me to earn an income.

Now could I make coffee at home? Sure. But I don't enjoy it as much, and so I often just skip it -- and sometimes feel sluggish at my desk as a result.

2. My coffee purchases fit into my household budget

I live in a pretty modest home given my income, and while we own two cars (a necessity out in the 'burbs), one of them is a 14-year-old vehicle that's seen better days. I also don't buy fancy clothing for myself or my kids, and while we enjoy the occasional restaurant or takeout meal, we don't order in or dine out five nights a week like many of the people I know.

It's for these reasons that I can justify my coffee purchases. Because we're frugal in other regards, there's room in our budget for small treats. Or, to put it another way, I'm not risking debt by buying $3 coffee most days.

3. I'm on track with my savings

If I were behind on emergency or retirement savings, I'd have a much harder time spending money on coffee. But thankfully, I have enough money in savings to cover roughly a year's worth of bills, which is more than what the typical person is advised to sock away for emergencies.

I also have my retirement savings automated so that money lands in my account off the bat. And because I contribute the maximum allowable amount, I can spend my extra money more freely.

When small luxuries make a difference to you

If you're currently sitting on credit card debt, have no money in savings, or are really trying to work toward a near-term goal, then cutting back on small daily purchases like coffee could be a good bet. But if your savings are solid, you don't have unhealthy debt, and you're on track to meet your most pressing goals, then there's no reason to deprive yourself of the small luxuries that get you through the day and make life more enjoyable for you. This especially holds true if you're frugal in other ways (for example, if you rent a $900 apartment when you can afford to spend $1,200).

My daily coffee is something I look forward to. It makes me feel warm, alert, and content as I contemplate a marathon day of writing, school pickups, kids' activities, homework, dinner, and the evening hours at my desk I generally put in. And so I'm not going to feel guilty about those $3 purchases, even though I could technically be putting the money into the bank.

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