Suze Orman: Your Coffee Addiction Could Cost You $1M

“If you waste money on coffee, it’s like ‘peeing $1 million down the drain,’” says Suze Orman.

“You need to think about it as: You are peeing $1 million down the drain as you are drinking that coffee,” Orman says, as quoted by CNBC. “Do you really want to do that? No.”

Consider this. 

Right now, the average cup of coffee can cost about $7. If you get coffee once or twice a week, it’s not too bad. But if you’re doing it every day – which many of us do- it’s costing you $210 a month, and $2,520 a year.

“It would be one thing if you had a cup of coffee once a week, maybe three times a month, but that’s not what you do. You go in every single day,” she added, as quoted by Yahoo Finance.

While $2,520 may not sound like a lot, if done over 40 years, it’s $100,800 for coffee.

Instead, according to Suze Orman, “$100 a month in a Roth IRA, over 40 years, is $1 million. So, you need to think about it as you are peeing $1 million down the drain after you are drinking that coffee. If you just simply used your money to purchase needs versus wants, you would find the money to invest in your retirement account.”

You Should Also Cut Back on Going Out to Eat

For those in a tough financial situation, one of the expenses you need to cut immediately is going out to eat, says Suze Orman.

“For you to have money, you have to learn to live below your means but within your needs. How do you do that? You do that by simply purchasing needs versus wants. What is a need? Need is food that you buy at a grocery store. What is a want? A want is going out to eat at a restaurant and doing it over and over again.”

Going out to eat contributes to massive credit card debt, too, which can weigh on you in retirement. Most people don’t realize how much money they spend by heading to the drive-through or going out to a fancy restaurant once in a while. Some of us, including me, stop by Dunkin every morning and spend about $20 on coffee and a hot bagel, which comes out to about $600 a month.

Also, according to Bankrate.com, “Americans say they’re willing to go into debt for the sake of experiences this year. Nearly 2 in 5 (38 percent) U.S. adults are willing to go into debt to travel, dine out, or see live entertainment, according to our Discretionary Spending Survey. The highest percentage of people would be willing to take on debt to travel, at 27 percent, followed by dining out (14 percent) and live entertainment (13 percent).”

In short, if you want to save more money, trim back on what you spend on coffee or going out to eat. While it’s okay to do it once in a while, don’t overdo it if you want to save money.

Other Ways You May Be Wasting Money 

Coffee and going out to eat aside, millions of us waste money on recurring subscription charges, some of us aren’t even aware of. We may make impulse purchases, usually on items that are just there at the food store, for example. 

Many of us are also guilty of carrying heavy credit card debt.  Instead, rely on cash or debit cards. “There is no more expensive form of bondage than spending more than you have and paying interest of 15% or more on your credit card,” Orman said, as quoted by GoBankingRates.com.

Some of us are also guilty of borrowing against our retirement, which is a bad idea.

Remember, taking a loan from your retirement account to pay off debt or for something frivolous is a major mistake, even if your plan allows it. Orman warns that you are sacrificing the money’s tax-deferred growth and may face a penalty for doing so.

About 33% of middle-class Americans cash in their retirement savings before they retire, notes Kiplinger. But by doing that, they’re risking not having enough cash through retirement. Plus, many don’t realize that if you withdraw money from your 401(k) before the age of 59.5, you get hit with early withdrawal penalties, which aren’t worth it.

Plus, many of us are leaving money on the table when we don’t take advantage of employer matches. Let’s say you earn $100,000 a year and that your employer will match 50% of your contributions up to 5% of your salary or $5,000. With your contribution and the employer match, $7,500 is saved every year. Over 30 to 40 years of that, you’ll have a solid balance.

Why leave that money on the table?