So much of the prevailing advice about how to get ahead with money centers around what you should eliminate from your spending. What can you cut? People love to talk about a Starbucks latte.
I think that’s a joke, but we can’t entirely ignore the math. If you spend $7/day on a coffee, you’re spending roughly $2,500 every year on coffee. If you make your own coffee each morning for $500/year, and you invest that $2,000 savings every year, after 20 years that should be worth roughly $1,400,000.
That’s not a small number, but it really doesn’t matter. What if you love Starbucks? What if that latte is the greatest moment of your day? What if you just don’t want to make your own coffee?
Cutting unnecessary spending is an important part of becoming financially secure, but I would argue that it’s even more important to focus on earning more income. If you could earn an extra $2,000 annually, you can have your fancy coffee and invest. That’s earning an extra $5.50/day.
The truth is, you can only cut so much. Eventually you’ll run out of things to cut. But your income potential is limitless. Both are important, but we should focus more energy on earning a larger income.
Enjoy your coffee.