Frugal Living 

Money Leaks: Buying vs. Brewing Coffee

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Coffee CupIt’s most commonly referred to as the Latte factor – it’s that morning cup of coffee that many of us rely on to jump start our mornings. For many, that cup comes from a machine at home. For others, it calls for a stop by your local Dunkin’ Donuts or Starbucks (or wherever). Whether you brew at home or you buy it in a store can make a big difference financially and is the subject of this week’s Money Leaks.

This image, from Consumer Reports, says it all:
Comparing Coffee Prices

This is the latest edition of our new series called Money Leaks.

The prices listed are the average prices for 12 ounces of coffee. The difference between brewing Columbian coffee you buy at the store versus a cup of Starbucks is over a dollar (nothing I’ve ever purchased at Starbucks has been only $1.50, but that’s not the point!). A dollar over five days, fifty-two weeks a year, that’s $260 over the course of a year. If you need two cups to get through the day, that’s $520 a year.

Is it a leak if I really enjoy it? That depends… it’s only a leak if you don’t realize buying coffee from Starbucks each day is costing you a few hundred dollars a year. As long as you are aware of it, it’s not a leak. It’s your money, you are certainly entitled to spend it however you’d like, but the key is understanding how much you’re spending. If you have credit card debt, perhaps you could switch to brewing your own and putting a little more towards that debt.

I’m not going to tell you that you should brew your own coffee, long time readers know that it isn’t my style. I’ll tell you to start your emergency fund, because everyone needs one, but I won’t Suze Orman you and demand you spend your hard earned money a certain way. I will say that you should know where your money goes and be smart about how you spend it – that begins with knowledge like this.

Is the convenience of buying coffee, rather than brewing it, worth $260 a year? That’s up to you.

(Photo: vizzzual-dot-com)

{ 18 comments, please add your thoughts now! }

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18 Responses to “Money Leaks: Buying vs. Brewing Coffee”

  1. Mike says:

    Where is the McDonalds $1.00 Coffee? They are great!

    I’ve always had a problem with the latte factor since overall, it is a small cost in relation to other things. The same people that get coffee every day will also likely get breakfast to go or lunch to go which is closer to $15 a day.

  2. STRONGside says:

    Coffee is an important and integral part of my life. I like to splurge, but I don’t do Starbucks, except for special occasions, or while traveling.

    My wife and I did however, spend a lot of money to be a very nice espresso machine, that we both use to make our coffee drinks every morning. It was a large one time expense, and we obviously still have to buy the coffee beans, but we figured that we would recoup our costs after just 9 months of buying one coffee for each of us from any store for $1. So to us, we found a way to get the item we wanted without an eternal money suck.

  3. Keith says:

    Only time I will buy a Starbucks coffee is when I’m on vacation. Otherwise, I buy Starbucks coffee beans from Costco (~$17 for 2.5 lbs) and make my own coffee at home.

    The other thing that I despise buying is bottled water. I realize my kids need it when they participate in athletic tournaments, but at home they should be drinking water out of the faucet. A quick note, an Ohio amusement park charges $3.00 for a 20 oz. bottle of water!!!

  4. otipoby says:

    I am lucky. My wife works with a guy who buys green beans and roasts them himself. I buy 1 lb for $10. Also, I have a coffee machine that grinds right before it brews. I get extremely fresh coffee – and you can taste the difference.

    I used to get a venti bold every day at Starbucks ~$1.08 per day. I have done the math and I get roughly twice the coffee (8 coffee cups ~ 40 oz)for half the price of Starbucks – and it is much better.

    When I get Starbucks on vacation, I miss my coffee

  5. Courtney says:

    The price on the K-cup is way wrong. I just looked it up on Keurig’s website and the Timothy’s brand columbian k-cups shown in the picture are $14.84 for a box of 24, or $0.62 each. This is the “member price” but membership is free (and even if you paid the regular unit price it’s still only $0.69 each).

    • Dave says:

      Beat me to it! I was going to say, I spend about $0.50 each for the K-Cups I use – just have to wait for them to go on sale at the grocery store or buy them by the caseload at costco.

      • Courtney says:

        I don’t mind buying them directly from Keurig; I can usually get a coupon code to save a little extra and get free shipping too. My last order was four boxes and I paid $0.57 per K-cup. Combine that with the fact that there’s no mess, no measuring, and I have a cup of coffee in under 2 minutes and I’ll gladly “leak” a quarter a cup.

  6. Cassie says:

    I really love this post. So many have pointed to the “latte factor” as a root cause of many people’s lack of financial success. That’s just silly.

    As you stated so well, it is the spending without intention (sometimes for coffee) that derails desires to be financially free.

  7. greg says:

    People have mental blackouts over the notion that coffeeshops have employees. Because the #1 cost in a retail cup of coffee isn’t coffee, profits, even rent — it’s labor.

    People get the math that when you pay more at a restaurant, you’re getting someone to procure, cook, and serve the food, clean the bathrooms, etc. But retail coffee somehow finds a way to do all that by itself.

    It’s just a lot easier to trivialize the personal time and labor efforts that go into making your own coffee every day than it does for cooking up your own breakfast. So people tend to trend the labor costs to zero, valuing their own personal time at zero. It’s not like you pay a maid service a tidy profit on the pennies cost of cleaning supplies to clean your toilet.

  8. Amanda says:

    K-Cups are awesome – my favorite way to go. My rule is .50 each or I don’t buy them. Amazon runs great deals, Target puts them on sale, or you can use the 20% off coupon to get them at Bed Bath and Beyond.

  9. Shirley says:

    Coffee from other than our own kitchen is not a money leak for us… but replacing coffeepots due to mineral laden water used to be. Now we fill gallon jugs with water from the kiosk outside the grocery store.

  10. tbork84 says:

    I love brewing my own coffee. I have yet to find a cup that I enjoy as consistently as the one that I make myself while grinding up fresh beans every few days.

  11. Brianne says:

    I’ve been trying to do the math on this myself recently. I like to doctor my coffee with Splenda and creamer, so the math is a little more complicated when I brew at home versus stopping for it on the way to the office. Also, I usually only get my coffee at 7-11 in a reusable mug so it’s only $0.99 and they provide all the Splenda and creamer I might want.

    I think the biggest difference is that by not stopping at 7-11 in the morning, I’m not tempted to buy anything else while I’m there.

  12. Sai Samineni says:

    I am a college student currently and as a freshman I used to spend $3-5 daily on espresso or some type of coffee. As the economy’s affect on my buying power and my progression through college became inversely related, I went and bought coffee powder.

    While it initially felt like the world was coming to an end with me having to make my own coffee, I spend $15 total now/month for all my coffee necessities.

    Also, don’t buy star bucks, dunkin donuts, etc… coffee grinds or powder. It brews like crap at home. Go to a specialty coffee start and spend the extra $5 and you won’t even notice any difference in how much you indulge.

  13. Interesting analysis but I think many many people buy coffees that cost much more than $1.70. They pay $3, $4, $5 – even $6 cups and these add up much more than the low end offerings. In addition, when buying the coffee their is the pastry factor. Impulse buys of sweets which add to the bill. I think many coffee drinkers who buy instead of brew are spending a lot more than $250 than do their thrifty counterparts.

    • Courtney says:

      $3-6 cups (frappuccinos, caramel macchiatos, etc) are not coffee…that’s a dessert 😛

  14. Maloyo says:

    I want to drink coffee at my desk at work, not at home in the morning. I’m not going to carry a grown-up sippy cup on the 4-5-6 trains–the most crowded subway in NYC–while trying to hang on. It is hard enough as it is. I’m also not dragging a Thermos back and forth every day. I make my favorite Starbucks coffee at home on the weekends, but if I made and drank it before I left home weekdays, I’d wet myself before I got to work each morning. Not conducive to holding on to one’s job. This isn’t a joke, BTW. A couple hundred dollars isn’t worth the misery this would cause.

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