That Whole Latte Budget Thing

I don’t drink coffee, but I am sitting in a legendary coffeehouse wasting time and money. At least that’s what they’d have you think. Of course it’s nonsense to think that a $5 daily habit can make or break whether someone buys a house or funds a retirement portfolio. Easy to say, when someone making six figures wants to chastise someone living on a third of that. Easy to say, coming from someone with a predictable schedule, benefits, paid holidays and sick time, who wants to lecture someone with none of those perquisites. Let me set down my steaming cup of tea long enough to share my thoughts on that whole latte budget thing.

I don’t own a house. It’s not because I can’t, but because for a lot of people in a lot of cities, home ownership is a very poor, even nonsensical use of money. Whether we spend a bunch of money in coffee shops is a moot point. There is no one-size-fits-all financial advice, and that applies to real estate more than to most investments.

Nah. If we’re going to talk about lattes or beverage equivalent, we should be comparing that to other options that represent roughly the same cash flow. So, if I’m spending maybe $25-30 a week at Starbase, what else could I get with the same money, and would it be more or less valuable to me?

$25 a week is ROUGHLY $100 a month, and that’s roughly $1200 a year. That’s about enough to buy a round-trip plane ticket to almost anywhere in the world. Therefore, if you have the vacation time and the ability and desire to travel, it could be said that you’re weighing a latte habit against an international plane ticket.

This is complicated by externalities, such as the fact that you’d also need lodging, ground transport, food, money for museum admissions and tours, an emergency savings cushion, travel insurance, and anything else that makes the difference between a ‘trip’ and a ‘vacation.’ You’re also factoring in expenses at home, such as pet boarding or childcare. Are you bringing someone else? Then this extra person would also need to trade off a $25/week habit for a year in order to come with you.

Maybe this latte IS my vacation. 30 minutes per beverage, five days a week, is a lot of mini-breaks.

I should state for the record that my husband and I save 40% of our income. We’re maxing out our retirement contributions. Because we pay ourselves first, and because we save so much money on our largest expense categories, we feel perfectly justified in wasting our disposable income however we see fit. If we’re gonna spend it on tea, we’re gonna spend it on tea.

We choose to live in a studio apartment, paying about 20% of our income toward rent, because we like the location. We’re minimalists, so we can fit. We’re strategically using the time to get a year ahead on our retirement plan. We also decided to quit owning a car. We don’t drink alcohol, we don’t pay for cable, and we can’t shop recreationally because there’s nowhere to put anything. We don’t really spend money in the ways that most people do. The way we live is radical, but it works for us. At this point we’re used to it.

We DO spend a lot of money on travel, our pets, my gym, the movie theater, and our cafe habit.  When we go to the local Starbase, all we have to do is set down our Thermos cups. Everyone knows us by name, and they even know that the chai goes in the blue cup and the green tea goes in the orange cup. It’s a foolish indulgence, but a pleasurable one, unlike commuting in a car and making the associated payments.

That’s what this whole latte budget thing is all about. Leisure and pleasure! We’re *supposed* to be putting our noses to the grindstone, working long hours, stressing ourselves out, denying ourselves sleep, and demonstrating our 24/7 dedication to being Productive Economic Units around the clock. The way we actually live, it’s... it’s cheating!

We’re not supposed to live in an apartment cheaper than we can afford. What would happen to the economy if everyone did??

We’re not supposed to be debt-free. That means we have no shackles to saw off, and that’s almost like we’re economic free agents. Oh dear, that sounds like trouble.

We’re not supposed to have F.U. money. THAT would put us in the position of being able to turn down sub-optimal job offers or negotiate for a better compensation package, and, what??

We’re not supposed to be uninterested in passive entertainment or recreational eating and shopping. That makes us basically immune to advertisements or social comparison, which strongly implies that we’ll still be free birds ten years from now. Where is our hook?

We’re certainly not supposed to sleep 8 hours a night, hang out in the hot tub, take naps, or lounge around the coffee shop. Where is our appropriate sense of urgency?

The funny thing about all of this is that my husband and I do both work long hours. He’s just submitted the paperwork for his second patent this year, and I’ve got my own stuff going on. We work because we’re interested in things, and because most of the other options are boring. We’re just not going to do it out of a sense of financial instability or existential dread. We happen to share the opinion that it’s better for employers and clients when we work out of passion and fascination, rather than obligation or anxiety.

There are a few things that are smarter than a latte budget, for those who are still in struggle. If the wiggle room can’t come from rent or transportation or utilities or entertainment, here are a few ideas:

Enough for cab fare or a ride share to a place of safety

Enough for a week’s groceries

Enough for the top-end cold medicine

Enough for a first aid kit and a fire extinguisher

Enough for an extra month’s rent

Enough for a moving van and 100 boxes

Enough to replace an appliance or a set of tires

Enough for a new mattress and bedding

Enough for an entire month’s expenses

A thousand dollars can make a huge difference in someone’s life, if it’s carefully nurtured and tended. What can make a bigger difference is a feeling of empowerment, confidence, and self-efficacy. I HAVE THE POWER. Earning more, changing careers, advancing one’s education, running a profitable side hustle, or starting a business can certainly create more additional income than someone could save in nickels and dimes. That whole latte budget thing could be an insignificant line item at a higher earning level. Maybe that life-changing resume or application or admissions essay or business plan happens over a happy cup of caffeine in an overpriced cafe near you. Cheers to you, and may your endeavors be successful.