Your morning coffee isn’t destroying your financial future

first_imgWhen you live paycheck to paycheck, everyone (including you) likes to blame your financial woes on the tiniest expenses. However, you’ll have a harder time than you think ruining your retirement plans by buying a morning coffee.As personal finance author Helaine Olen explains in Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, the idea that you can ruin your budget with small indulgences is a tempting one because it’s something we can control. The idea, as popularized by personal finance advisor David Bach, is that if you simply skip the coffee every morning and invest that money instead, you’ll be a millionaire by the time you’re ready to retire.However, as Olen points out, the math on this concept doesn’t add up. For example, check out this Latte Factor Calculator. Assuming a $5 expenditure every single day, a generous 8% annual return for investing that money, and a 30 year wait, the potential interest only comes out to around $171k on top of $54k in coffee savings. While that’s not chump change, you also can’t retire on it. continue reading » 27SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblrlast_img read more

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