Addicted to caffeine? Unable to resist that large cup o’ Joe during a 2 am cram session? Do you find yourself buying a cup every day? If so, consider Mike, our fictional caffeine addict, whose simple compromise leads him down the road to financial success.

Mike works 15 hours a week, the most he is comfortable working with a full-time class load. Mike gets paid $9/hour and makes about $135/week. This amount will be less once taxes are taken out. If Mike works all of his assigned hours, he makes roughly $540 a month.

Mike's caffeine addiction is specific to cappuccino. He purchases one large cup at least five times a week. He doesn’t like to carry cash, so he swipes his debit card with every purchase. Each cappuccino costs Mike $3.79. Because Mike never has cash, it isn’t until he signs in to his online checking account that he sees how much his caffeine addiction is costing him:

In one week:
$3.79 x 5 times/week = $18.95 a week

In one month:
$18.95/week x 4 weeks = $75.80

Overall, Mike spends about 14% of his income on coffee!

Mike doesn’t want to give up caffeine, but $75.80 is a lot to swallow for a cup of java. Mike and his wallet decide to compromise, exchanging pricey cappuccinos for regular coffee. Additionally, Mike decides to invest in a coffee maker, a travel mug and a bag of coffee grounds.


This means that in the first month Mike brews his own coffee he spends about $55 and saves roughly $20. By month two, Mike saves the full $75.80. In month three, he yields a savings of about $67, as he will likely have to buy more coffee. The savings continues and before Mike knows it instead of spending over $900 a year on coffee he saves over $550.

The key to successful financial planning is compromise. Decide what small but frequent expenditures you are willing to give up or exchange for a more cost-efficient option. Watching the money you’d otherwise be throwing in the trash makes a huge difference in your financial security and your overall happiness.