After buying a coffee machine on sale, an Otago University student says she was shocked to realise her daily coffee fix was costing her $1825 per year.
Coffee is a treat. For many of us, getting that daily caffeine fix is a good reason to take a break and interact with friends and workmates.
But buying coffee rather than making it at home can add up to a lot of money over time. A tall flat white at Starbucks costs $5.70, its website shows on Tuesday. Over a year, making it a daily habit would cost over $2000.
A self-confessed "coffee queen", Otago University student Ashley Faulkner, said on a cold, overcast morning in Dunedin, a warm flat white is one of the best pick-me-ups.
Her $5 per day coffee habit was centered around taking breaks and getting through exams, she said.
Seeing a coffee machine on sale for $200 (down from $400) prompted her to add up what she was spending. Realising it came to around $150 per month, she decided it was time to save money.
"Living as a student, you're just trying to get by...you've got to make sure the bills are paid (rent, power and food) - it all adds up," Faulkner explained,
"It seemed a bit ridiculous that I was spending that much on coffee."
Faulkner and her flatmates bought the coffee machine, splitting the cost six ways. Paying just over $33 each, they vowed to ditch their daily bought coffees and make them at home instead.
Buying coffee beans for the machine costs $6 (just over the cost of a single bought coffee), Faulkner said. One bag lasts around two weeks, costing $12 a month. In the first month alone, after paying her share of the coffee machine and beans, she saved $115.
"You don't even think twice about it...but when you add up $5 every single day, it's $150 per month that's just gone towards nothing," Faulkner added.
Now working part-time as a lifestyle blogger for Informed Investor Magazine, Faulkner has calculated that if she puts that $5 per day ($150 per month) into an investment such as a managed fund (e.g. a balanced fund with a 4.5 percent return*) after 3 years, she'd save $5,762**.
Although she still buys the occasional coffee when meeting up with friends, she always brings a 'keep cup' to the library, giving her a discount.
"It takes off that financial stress...I've been saving up for a car so that's one of my goals."
Pushpa Wood, director of Massey University Financial Education Centre, told Newshub buying coffee seems to have become part of the ritual for students on campus.
There's nothing wrong with spending money on coffee - as long as it doesn't cause financial stress.
Coffee drinkers wanting to save money could ask themselves whether they are simply buying coffee habitually. If this is the case, it could be worth trying to cut down.
"Drinking a bought coffee versus having one using a sachet from home could be a big saving. It may not satisfy your ‘coffee kick’ mentality but it sure will help your pocket and thus increase your overall financial health," Wood said.
*Sorted Smart Investor - (average annualised return of a balanced fund over last 5 years is 6 percent, 4.5 percent used as a guide after fees, tax and inflation). **Cost of a keep cup and beans not deducted.