Brewing Your Own Coffee Can Save You Money For Vacation

 

By: Ian Golightly MBA

 

Just to throw it out there, I have to admit that I am a coffee addict! I couldn’t believe the number of coffee drinkers just alone in the US. Studies show that over 100 million people in the US drink coffee and that 24% of daily coffee drinkers consume 13 or more cups per week! One of the most common tips you will find on the Internet to save money is to withhold drinking specialty coffees. Even though that is correct, I wanted to dive a little deeper and show you the numbers related to coffee consumption to show you the possible amount you could save and even yet pay for your vacation.

I’m not advocating that you should stop drinking coffee altogether. I completely understand; some days, you need a pick-me-up caffeine rush. The overall goal is to make you aware of the importance of educated choices and to show the possibilities of how much money can be saved by brewing your coffee at home.

The history of coffee has profound roots, and it’s not a surprise why coffee is a popular beverage. Some scientists and also physicians may also agree that coffee may have health benefits. Dr. Hensrud from the Mayo Clinic states that newer studies have found a possible association between coffee and decreased mortality. Coffee may offer some protection against Parkinson’s disease, Type 2 diabetes, Liver disease (including liver cancer), Heart attacks, and strokes.

Does this mean that you should go to Starbucks and chug down your Frappuccinos two times a day each week? No one should ever do that. Must consumers add in milk, mounds of sugar, whip cream, and more. As a result, these additional ingredients are high in calories and so forth, which causes coffee to get a bad rap. On the other hand, the coffee bean is rich in antioxidants, and a plain coffee cup is roughly around two calories. So, in moderation, coffee has health benefits.

The price of coffee is manageable when going to your local grocery store. You can probably agree that you love going to the coffee shop for convenience. Remember that convenience has a price, and sometimes that price can break the wallet over a long course of time.

Looking At The Coffee Trend:

credit: US Bureau Of Labor Statistics

Before we dive into the numbers, I think it’s essential to look at the annual basis of brewing your coffee at home. Throughout time, the cost rates of coffee have surged. In 2014, the price per pound for coffee beans was roughly $2.20 per pound versus $1.11 per pound the previous year. Obviously, your retail store like Dunkin Donuts and Starbucks are not selling coffee’s ‘at cost’.

Moving forward, let’s take a closer look at the amount you can save for brewing coffee at home.

Cost Of Coffee Brewed At Home:

 

The SCAA (specialty coffee Associates of America) stated that 8.25g of grounded coffee per 150mL of water is the proper ratio to brew a balanced cup of coffee. We’ll compare a 16-ounce cup of coffee (473mL) for our data analysis to make things easy. I chose this size because it is the most common size that many people would take to work. A 16 ounce is the size of a Grande drink at Starbucks. If you were to brew a cup of coffee of this particular size, it would require roughly 26grams of coffee.

The next question in line is evaluating the cost of an ounce of coffee. To make things easy to understand, I’ll round up and estimate that the average person will use 1 ounce of coffee per 16 ounces serving. The most significant variable is to determine the brand of coffee, which will help dictate the cost. I believe depending on where you are living geographically will also dictate the cost. For this example, we’ll be savvy and say a typical ounce is projected to be roughly $0.50.

 

Don’t Dismiss Other Factors:

 

To make things right, we also have to consider other factors. Keep in mind that there is a cost for water and electricity (estimated at $0.01 per cup) and the cost of coffee filters (estimated at $0.02 per cup) required to brew our coffee. We can not dismiss the cost of the cup (estimated at $0.01 per cup) as well! For the cup, we’ll imagine it’s a styrofoam cup for the ease of this example. Lastly, we need to consider the cost of a coffee pot in which we’ll brew our coffee in. Let’s say a cheap pot was invested to pro-rate this over some time at 2-cents per cup of coffee. Now it’s time to add everything together to come up with a total cost of roughly $0.56 per cup of coffee.

If you enjoy a cheap brand, the price may be slightly lower and inversely different if you want a brand that has more expensive grounds.

 

Most coffee consumers don’t enjoy their coffee black. Additional ingredients like cream and sweeteners will vary based on your coffee preferences. For a cheap creamer, you can see an additional $0.10 more per cup or a $0.25-$0.30 more per cup for more expensive creamers. Overall, we’re still under the $1.00 mark, but to be conservative, our cup of coffee is roughly around the $0.75 mark.

 

Most would never factor the cost of time in this type of analysis. However, I’m going to omit the breakdown on ‘cost of labor.’ Most readers would probably agree that picking up coffee at their local coffee shop is more convenient or efficient. To argue that statement, to set up a pot of coffee will roughly take 2-3 minutes. Also, it’s a good habit to force yourself to do a task in the morning to wake up. By the time you pour your cup of coffee and add other things to your cup, you’ve most likely spent 5 minutes of total labor for your cup of coffee. Most wait times are roughly 10-plus minutes during peak times at coffee shops. Most likely, it will take less time to make a pot of coffee versus waiting to get coffee.

It’s Time To Look At The Total Savings:

 

Depending on your geographical area, it will dictate the varying price of coffee cost. To make this a friendly analysis, let’s say that a typical cost for a cup of coffee is around $2.00. To be conservative, it is appropriate to say a $1.25 per cup is an average saving to give you an idea of how much you can save by getting in the habit of brewing your own coffee at home.

If you enjoy your coffee black and plain like me, expect to save roughly 23%.

 

16 Oz Cups Per Week Weekly Savings Monthly Savings Annual Savings
2 $2.50 $10 $120
5 $6.25 $25 $300
7 $8.75 $35 $420
14 $17.50 $70 $840

 

 

Studies show that the average coffee drinker consumes roughly 27.9 ounces of coffee per day—nearly 75% more than the amount of coffee used in the 16oz comparison above. We’d get a daily savings of $2.19 per day ($1.25 x $1.75) to do the recalculation. In the table below, we included the adjusted figure to show the average savings that an average coffee drinker should expect based on the number of days per week you’ll consume coffee.

# Of Day / Week Weekly Savings Monthly Savings Annual Savings
1 $2.19 $8.76 $105.12
2 $4.38 $17.52 $210.24
3 $6.57 $26.28 $315.36
4 $8.76 $35.04 $420.48
5 $10.95 $43.80 $525.60
6 $13.14 $52.56 $630.72
7 $15.33 $61.32 $735.84

 

The estimates presented in the chart are based on a slightly conservative cost differential for your traditional cup of coffee that contains high-quality cream and sweetener for a consumer who drinks an ‘average’ amount of coffee per day. Suppose you drink more coffee than the average coffee drinker, or you’re in the habit of purchasing a more expensive caffeinated drink. In that case, the depicted estimates are low, and you could save even more money by switching to homebrew.

Overall Thoughts:

 

The data supports the result of saving money by switching to home brew coffee. Suppose you are in a position to save for a vacation, pay off debt, or even increase your monthly cash flow. In that case, a simple adjustment of eliminating your trip to the coffee shop may make a big difference pertaining to your personal finance goals. Where you get your coffee has very little to do with your financial freedom. There is a lesson to be learned in this analysis: the opportunity to own your choices. The coffee has no significance but only the understanding of the power of moderation and ownership of daily choices.

The data is a clear example to demonstrate how small choices in your lifestyle can significantly impact the stability of your finances. This example is also applicable to other decisions like how often you go out to eat, go to the bar, go to the movies, and many other choices you make during the week. An excellent piece of advice is that personal money management is a matter of understanding your priorities and making them a commitment.  If you find yourself struggling with debt, saving for college, or even a home, I advise that you do not cut off coffee from your personal life. Instead, I suggest you take the time to analyze the costs associated with your daily expenses to put you in a position to make educated choices that supports your personal goals.