December 04, 2023

The 'Coffee Money' Investment Strategy

Hey fellow finance explorers!

Have you ever skipped a coffee and thought, “It’s just one coffee, what difference will it make?” Well, according to James Clear's "Atomic Habits," if we improve by just 1% daily, we're 37 times better off by year's end.

Here's how that works with your wallet: Say your daily coffee costs Rs. 100. Instead of that caffeine fix, if you invest that Rs. 100 daily, you're making a small change without much sacrifice. Now, let's say you invest it in a mutual fund with an average annual return of 8%.

After a year, that's not just Rs. 36,500 saved; thanks to the magic of compounding, it's a bit more. Continue this for five years, and it's not just Rs. 182,500; it could be over Rs. 200,000. And that number only grows over time.

I tried this 'coffee money' strategy myself. Initially, it felt like a drop in the bucket. But watching those 'drops' turn into a stream, then a river, was both exhilarating and empowering. It's a practical example of how tiny, consistent actions can lead to significant financial health. Those savings didn't just sit there; they were working for me, growing silently in my investments. And over time, those investments can start to pay for the little luxuries in life, guilt-free.

This incremental approach doesn't just apply to coffee money; it's about rethinking small daily expenses. For instance, opting for a more economical broadband plan or downgrading your streaming service subscription can add up. I found that by scrutinizing these 'little' costs and redirecting them into my investments, I was harnessing the full potential of my earnings.

The beauty of this strategy lies not just in accumulation but also in the psychological shift it creates. By making these micro-changes, we're training ourselves to be mindful of our financial habits. It's like muscle memory; the more you practice, the stronger you become. Personally, it's led me to make better financial decisions without feeling constrained.

So, why not start today? Your future self will thank you for these seeds of financial prudence you sow today. ☕🌿💼