Do Whatever You Want With Your Discretionary Income
I’m back from my short vacation and found this in my inbox while catching up on email:
I am in my late 20s and live in California. I try to be responsible on a modest salary: I keep a budget, live with roommates, pack my lunch, etc., and save quite a bit: Emergency fund is covered, my 401(k) gets the maximum contribution and I’ll max out my Roth this year.
So the whole financial responsibility thing is going decently well, I think, EXCEPT: I spend $75 a month at coffee shops. SEVENTY-FIVE DOLLARS! That’s $900 a year. Good grief, it looks horrifying when I type it out like that.
I know I should just drink from the communal office coffee pot (which I pay $5 a month for) and go for a walk instead. And I do, sometimes. But it’s so relaxing to leave work for a few minutes in the afternoon, and professional baristas make a far better cup of coffee than I can. So in a way, I’m paying for peace of mind.
But … $75 a month is a lot of money. I know the “give up your coffee habit, become a millionaire” storyline is trite, but: Do I need to give this up?
If you are a long-time reader of this site you already know the answer to this: Latte Guilt, it’s fine, stop feeling so guilty.
Listen to Helaine Olen at Billfold Live on the history of the The Latte Factor:
Or read this defense of buying iced coffee by Jamie Keiles.
I don’t know your life beyond what you’ve told me, and I’m not going to tell you that you can’t afford to spend $75 a month on coffee. You are clearly a financially mindful person who is aware of where exactly each one of your dollars are going to every month and that’s great: You are allowed to give yourself small “luxuries” like coffee made by a barista.
Every two weeks or so you will get a paycheck from your job (if you work at the kind of job that pays you every two weeks). You will take some of that money and pay your bills and regular expenses. You will also take some of that money and put it into savings (this part is harder for some people, but easier if you automate it). Whatever you have left is your discretionary money. Discretionary money can be used for whatever you want: going out to dinner, vacations, books, video games—whatever makes you happy. If you want to use all of your discretionary money on coffee, great, feel free—you’ve already met all of your financial obligations and there’s no need to feel guilty about it.