Friday, 13 April 2012

Frugal Coffee Drinking

An exceptionally frugal colleague of mine asked me this week: is it cheaper to drink coffee made in a plunger, or coffee in those little instant sachets you just add hot water to?

I don’t think he realised what he had unleashed until I provided him with the following breakdown.
Our office provides boiling water, milk, sugar, and poor quality instant coffee powder. So theoretically we could drink coffee all day for free - except that the free coffee powder is disgusting. That’s option one: free, disgusting coffee.
Another option is to buy a jar of decent quality instant coffee powder and use it instead of the gross stuff. A 200g jar of Nescafe Gold costs $16.69 and contains 117 servings, so that’s 14.26 cents per cup of coffee.

Or you could buy ground coffee and a plunger. A single serve plunger will cost you anywhere from $10 up. Let’s assume you’re reasonably savvy and buy it at that price. A 200g package of ground coffee costs $6.93 and contains approximately 40 servings, so each cup of coffee costs you 17.33 cents plus your capital outlay of $10 for the plunger.

My frugal colleague uses ground coffee in a plunger some of the time, but he also uses instant sachets for cappuccinos on other days. They cost 63 cents each, so I was able to give him the quick answer that the plunger-made coffee was cheaper than the sachets.

There’s a more luxurious option: buy yourself a coffee machine and a thermos, and bring your hot coffee into work. Let’s say you’re lazy like me, so the only way you’re going to use a coffee machine is if it’s easy – this limits your choice to the machines that turn tiny alfoil sachets into coffee. I don’t understand this process, so I assume it’s some kind of magic involving tiny alchemist barista elves. I’ve been looking at buying a Nespresso Pixie as a present for someone, and it seems like the best price is about $300. A good quality thermos costs $20. The Nespresso capsules cost between 68 and 75 cents each. You’ll be using your own milk for this scenario, and 250ml of milk will cost you about 41 cents. So this option requires a capital outlay of $320 plus a cost per cup of at least $1.09. This is relatively expensive in terms of "homemade" coffee, but cheaper than buying a barista-made cup by a wide margin.

Of course you could always do what I did for years, and treat yourself to a café coffee each morning. The café at the foot of my office building provides a discount to local workers, so a regular sized flat white sets you back $3 instead of $4.50 (or more) at other cafes. The staff all learnt my name within a few weeks of the building opening, which I LOVE but I also think is probably a ploy to inspire brand loyalty. It works - if I'm buying a coffee during my work day, there's no way I'm going anywhere other than that Coffee Club outlet. I used to think it was just fine to spend $3 on a cup of coffee every day. Then it occurred to me to start looking at my expenses as annual costs rather than daily, weekly or monthly expenditure. Assuming you get four weeks of annual leave, you work about 240 days a year. That $3 cup of coffee just turned into a $720 annual fee.

Don’t get me wrong – I don’t think it’s always worth spending less money than you could on life’s little luxuries. Some days I really want that flat white, so I buy one, and I don’t feel guilty. But your everyday habits involving small amounts of cash add up in the long term. That’s why it’s a good exercise to look at your budget and expenditure across the year, not just that pay period. You might love coffee enough to spend $720 a year just for that morning cup on work days. I don’t. I love it enough to bring my own jar of instant coffee into work and drink that most days (that’s a $34.22 a year habit) and only buy barista coffees when I really, really want one. Because if that means I spend $500 less a year on coffee, that’s $500 a year I could spend on clothes, books, eating out at fancy restaurants, or paying down the mortgage. Or if you’re digging your way out of poverty, it’s $500 towards your emergency fund or paid off your credit card debt.

I would also think about the other factors here – are you really going to bother making a cup of coffee at home each day and carrying it in to your office in a thermos, or is that too hard for you? I don’t know that I’d bother to do it. Do you feel like the break from staring at the computer screen for fifteen minutes is worth the cost of the coffee you buy on that trip to the café? I know a lot of people cherish that coffee buying break, so it's worth it to them. If every cent you earned was committed to other areas, you’d be willing to drink that gross free coffee to avoid overdrafts on your bank account, but otherwise the point of mindful spending isn’t always to spend as little as possible. It’s that you know how much your coffee costs so you can choose whether or not it’s worth the money to you.

Keep in mind that my costings are based on only one cup a day, and having an office that provides everything you need for your coffee - except that its coffee powder will make your eyes water, and not in a good way.

Luckily my colleague was very patient with me while I gave him a full cost analysis of his coffee options.

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