Enjoy Your Matcha Latte

You should make it a habit to not go overboard with your spending on everyday items. That’s a rule that I live by. However, calories are calories and sometimes that sweet, crappy Starbucks drink is the pick-me-up you need to get to cranking out office tasks. It’s a little bit of happiness. Maybe not every day, but three times a week, maybe?

That’s not going to make you go broke. But, people will point a finger at the sugary drink and then at you if you are broke. The drink is the reason, your reliance on quick dopamine fixes is the reason.

Well, yes and no.

Money can be abundant if you give it time. Money can also be tight when the world is so expensive. Why do we fixate on expensive lattes as the crux of why everyone feels so broke?

It’s maybe 1% of the cost of what you spend every day of your life. You might not be shelling out $500 a day on discretionary spending, but between built-in “life” costs like bills, interest, opportunity costs, gas, subscriptions, memberships…you might be getting up there. For someone who makes $200 a day–which is generous if you’re young and especially impressive if you live in the Midwest (like yours truly)–you might have $20 worth of wiggle-room realistically. Especially if you are paying for your own rent, your own car, your own bills.

Using nearly a third of that $20 on a latte is insane–when you put it like that.

BUT--If you still want your latte, then you want that latte. That’s what you should purchase! If you look at some of the richest people on earth, they’re not thinking about $7 expenses unless it’s hundreds or thousands of $7 expenses. They’re looking at the things that add up to a lot of money and the things that compound or get exponentially bigger over time.

How do you do the same thing?

First, you should look at the things that bring you a return. If you have a 9-5 job, you likely have a 401k, 403(b), pension–or if you don’t have any of those, there are Roth IRAs, Traditional IRAs, and brokerage accounts. Sometimes your employer matches your 401k. Whether that is a 50% or a 100% match, that is doubling your money immediately.

You’ll want to make sure, however many lattes you get with your avocado toast, that you are taking advantage of that. Plus, a 401k and 403(b) are pre-tax accounts, meaning there is a tax advantage to investing in those. That’s basically a sale on your money.

401ks and 403(b)s often choose your investments for you or give you a limited option of target-date funds. Picking the one that will cost you the least amount of money in fees means the difference of hundreds or even thousands of latte’s.

Yes, you heard me correctly: having these investments costs you money, and not just the theoretical “cost” associated with market risks. These are the fees, but some investments or funds have lower fees or expense ratios associated with them. These aren’t flat fees, but they compound. So, studies show that just a 2% fee could cost the average 401k holder hundreds of thousands of dollars over the course of their life. 1% fees are also bad. Luckily, the lower fees actually perform better than a lot of these high-fee ones and they save you money. How?

Well, high-fee funds are a scam. They’re trying to sell you a higher return on your investment. They might say that an index fund can return 8% annually, but for a 1% fee, you can probably earn 15% in return. The problem is, the index fund actually does, on average, return 8% annually since the creation of the S&P 500 itself. That fund they’re offering you has only existed for a few years or a decade and some change. They likely just got lucky. That fund is likely going to level-out, but you’ll still be on-the-hood for the 1% fee, compounded.

Investing in all of those things is great. If you focus on doing these things, you can buy a sugary latte every day of your life. Buy a grande, buy a venti.