Time to Give Up Your Starbucks Habit?

In The Millionaire Next Door – a book I read years ago – authors Thomas J. Stanley and William D. Danko summarize their findings after spending 20 years interviewing millionaires. They boil their findings down to seven simple rules, including the bookends ‘always live well below your means’ and ‘choose your occupation wisely.’

The Millionaire Mind

Following the success of The Millionaire Next Door, Stanley followed up with The Millionaire Mind (another book I read in my quest to become more financially savvy). As the description on Amazon notes, “The Millionaire Mind targets a population of millionaires who have accumulated substantial wealth and live in ways that openly demonstrate their affluence. Exploring the ideas, beliefs, and behaviors that enabled these millionaires to build and maintain their fortunes, Dr. Stanley provides a fascinating look at who America’s financial elite are and how they got there.”

The behaviors, according to Stanley, are key. One of the observations is that the less well-to-do should modify their behavior if they hope to attain millionaire status. Perhaps give up habits such as paying for a cup of coffee each day; give up the Starbucks or Dunkin’ Donuts.

Starbucks Coffee Beans

A lot of people latched on to the idea that simply giving up one habit, such as a $3.50 cup of coffee a day would set them on the road to being a millionaire. Is it possible to become a millionaire simply by giving up your daily coffee? Put another way, can you become a millionaire by saving $3.50 a day? Could it possibly be that easy?

Time and Compound Interest

Let’s check out the numbers. We’ll assume someone pays $3.50 a day [$1,277.50 annually] for their cup of coffee. Let’s further assume their rate of return is 7% – the rate I use in my own financial planning – they modify their coffee habit at age 25, and plan to retire at age 60, a 35-year period.

Coffee Table 1

Well, that doesn’t quite get us to millionaire status. What if we use 12%, the rate Dave Ramsey often suggests is possible? While it is possible, it is highly, highly unlikely, despite what Dave says. Scratch that, I will go so far as to say you can forget about achieving a 12% average return over 35 years. But just for fun, let’s assume you could.

Coffee Table 2

Still short. Even at the mythical Dave Ramsey rate.

Clearly, you will not become a millionaire simply by giving up one habit, the daily cup of coffee being just one such habit, and saving/investing the money instead. It seems to me the key to becoming a millionaire is not to focus on modifying your behavior in one way. It takes more than that. Savvy individuals understand that they will need to develop a detailed plan and manage their plan over a number of years to reach millionaire status.

What would be the point of becoming a millionaire if you practiced nothing but deprivation for 20 – 35 years anyway? Don’t go crazy with being frugal. The key is to take a holistic view of your spending habits and find areas where you can reduce your spending without giving up all the activities, drinks, or foods that bring you pleasure.

Final Thoughts

In short, don’t give up your daily coffee from Starbucks if that is something you enjoy. However, take the time to understand how that expense, along with all the other expenses you incur on a daily basis impact your long-term plan. Stay savvy, my friends.

Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.


  1. Nice post, James, and good point. Getting to millionaire status isn’t that simple. But limiting your expensive coffee with a combination of other habits can get you there. I like my Starbucks and DD as much as the next person, but I don’t get it every day. I’ll try to limit that to just a few times a month, making it more of a treat than the norm. Disciplined habits like this certainly help, and I still get to enjoy my special coffees!

    • All nicely stated, my friend. It takes a holistic understanding – and management – of your financial plan to reach millionaire status or whatever might constitute financial independence for each of us.

      Thanks for stopping by and sharing your thoughts.

  2. i have a friend who is on welfare and other disability who buys those 4.00 cups of coffee from coffeeshops. He usually runs out of money by the 12th of the month or so because he doesnt know how to budget.

  3. When I worked in NYC people I’m my office easily spent $10-$15 a day on Starbucks, lunch and snacks. I think it’s the mindset behind giving up your Latte Factor, as David Bach calls it, that’s important. Whether you actually give up your Starbucks or trim down your cable package, for most people who aren’t wealthy but want to be wealthy, some things have got to go. Since I liked buying Mochas at Starbucks, over $4 a piece 10 years ago, I limited that to once a week.

  4. Thanks for another great article James. I appreciate that you provided some intelligent and well-reasoned context on this well-known axiom. There are no shortcuts!

    • “There are no shortcuts!” Indeed. Education and attention to detail over a sustained period of time are key. Thanks for stopping by, my friend.

  5. Spot on James. One small saving isn’t going to get you to financial freedom. It’s a bunch of modifications and changes that becomes the frugal lifestyle. And once these lifestyle changes become ingrained as a habit, you’re well on your way to financial independence. Great post mate.

    • Indeed and well stated. Thanks for stopping by, my friend.

  6. Good post as usual JM. I can tell you unequivocally that the book “Millionaire Next Door” is spot on, read it cover to cover and still revert back to it every now and then. Mrs C and I were fortunate to cross this mythical number yet we didn’t have sky high salaries over our working careers as you know. It’s a way of life, making smart financial/life decisions to include career choices as well as financial ones, i.e., does a 20 something really need that $65,000 BMW and how much house do you really need. I don’t care what the car dealer or mortgage lender say you can afford! I’m not promoting frugality, just smart financial decisions. Of course it also helps to have a spouse that is on the same page as you and I both do!

    A future conversation/topic might be how to protect your nest egg in this over litigious world we know live in.

    Also, I know you have it out for Dave Ramsey (I’m not a big follower as well) but in his defense, in his 12% annualized rate of return comment made a few years ago, he was merely referring to the average rate of return in the S&P 500 from 1926 – 2012. This was actually 11.69%. Is it attainable, apparently so, but I prefer to use your number of 7%, much more realistic!

    Time for a steak at Sullivans…..and of course good conversation!

    • “Of course it also helps to have a spouse that is on the same page as you and I both do!” Indeed. Two people rowing together is a whole lot better than two pulling in different directions.

      Definitely looking forward to trying out a new restaurant – comparing it to Fleming’s, the gold standard – and the company and conversation … always top notch!

  7. I love this blog. It’s very true that becoming financially free isn’t as easy as giving up a single habit. As you mentioned, James, it’s requires a holistic approach.

    Giving up the coffee can provide more $$ to be directed towards stocks, becoming debt free, starting a profitable business, or something else that can make millionaire status more achievable. But the act of giving up a habit, by itself, definitely isn’t enough. Reaching financial independence requires an entire lifestyle not just small sacrifices.

    • It absolutely requires a holistic approach, a commitment to building a smart, practical lifestyle. Great to hear from you again, my friend and I hope you’re well.

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