Credits: Social Media
Money expert says ditching your daily coffee won’t make you rich – but this will�
A common piece of financial advice regularly circles the internet: start skipping your daily takeaway coffee to save money. However, a money expert says it won’t actually change your life or help you get rich.
Yes, saving that $3 every day will give you a little bit of extra disposable income to go on holiday or save up for a new car, but if you actually want to be wealthy and build a future, there is something else you need to do.
Ditching your daily coffee won’t make you rich
Speaking on Steven Bartlett’s Diary of a CEO podcast, Ramit Sethi said caring about the small expenses like your daily coffee is a “waste of time”.
“They are three-dollar questions. If you actually added up how much they cost you, it’s actually not that much,” he revealed.
Sethi said many spend their life agonizing over whether to buy a coffee, but never actually do anything with the money they saved.
- MONEY SAVING TIPS: 5 money-saving tips for Christmas start by overcoming major social taboo
It ends up sitting in their bank account where it’s not gaining any interest. So, saving that $3 every day was pointless.
Investing your money is the key to being wealthy
Skipping those small purchases like a daily coffee or a new shirt to save is a good idea, but it’s what you do with the cash after that really matters.
“Not only do you have to make the decision every single day to save on these tiny little things. You then have to properly invest that money, and you have to do this every single day for the rest of your life,” Sethi explained.
Too many people focus on the small picture, like ditching their vanilla latte, rather than the bigger picture, which is why they aren’t gaining wealth.
To get rich, you need to invest any spare income you have, whether it be in financial schemes, shares, property, or commercial ventures. It doesn’t matter – you simply have to put money into a project to get a profit.
Money expert shares simple investing tip
Sethi recommends setting a savings rate and investment rate every year. For example, you hope to save 8% of your income and invest 6% of that. Then, the key is to increase both amounts each year.
“Whatever the number is, let’s make a rule that every December we increase it by 1%. If you just did that, it will be worth hundreds of thousands of dollars to you. More than all the coffee you will ever buy in your entire life,” the expert continued.
“So, why the hell would you focus on coffee, when you can make one decision per year and make way more than all those coffees combined?”
What are you waiting for? Start saving today with these three money-saving challenges and work towards your first investment goal.
Ramit Sethi is an American author, entrepreneur, and media personality who wrote the 2009 bestseller I Will Teach You to Be Rich. He also hosts a podcast of the same name and hosted the 2023 Netfllix series How to Get Rich.
- SAVE ON GROCERIES: Discount expert reveals five smart tips to save money on your grocery shop
