Long-Term Cost of that Daily Cup of Coffee

My love affair with Starbucks began while I was in a college. I distinctly remember this girl in my early morning Literature class. She always made a graceful entrance, one hand with a firm grasp on books tucked under her arm and the other hand holding a Starbucks tumbler. She was poised and immaculately dressed. She would take sips of aromatic coffee in between regaling us with  witty and insightful comments on the latest text we were tackling. Even her small talk on the horrible traffic on her drive to school would have me hanging on her every word.

I, on the other hand, was always a mess, dressed in jeans and a crumpled T-shirt, obviously just having gotten out of bed and running from my dorm near the edge of campus to get to class on time. I was at the university on a full scholarship; my parents would never have been able to afford sending me there on their income. This young lady was one of many in my school who came from privileged backgrounds. She was not the most charming girl I had ever met, nor the prettiest, nor the smartest, nor the richest. She was actually very average in that campus. But she was the first one I met who would go to class every morning with coffee – Starbucks coffee, which cost more than my daily food budget. I had bought myself a Starbucks frappuccino a few times in the past, but only for very, very special occasions. Here was this girl who was drinking Starbucks coffee every single day!

The Good Days

Back then, on my paltry student allowance, Starbucks represented luxury. In recent years, with my rising income, the cost of a Starbucks coffee has become much more affordable for me. My favorite drink is the white chocolate mocha, which I normally get in tall size (12 fl oz) for 440 JPY. On occasions when I feel very stressed from work, I may order the grande size (16 fl oz) for 480 JPY. The accessibility of a Starbucks coffee has also increased for me – there is a store at the train station near my house and a store in my office building. The 24-hour convenience stores also carry the Starbucks Discoveries chilled coffees, which are priced at 210 JPY here in Tokyo.

I normally drink two cups of coffee a day – one at breakfast and another during or after lunch. Until about three years ago, my husband used to buy me chilled coffee for breakfast, either a Starbucks Discoveries or one of the local brands like Mt. Rainier, which are normally around 140 to 170 JPY. My second cup of coffee I would get from either a lunch set or from Starbucks.

Cutting costs

After a while, my husband began to notice the cost of my breakfast coffee. He bought the 140 JPY Mt. Rainier half of the time and the 210 JPY Starbucks Discoveries for the other half, so we were spending an average of 175 JPY every day just for my morning coffee fix. This is 63,875 JPY in a year!

Now what about my lunch-time coffee? I would probably get a tall-sized Starbucks coffee twice a week – 45,760 JPY in fifty-two weeks. The lunch sets with coffee normally cost 100 to 200 JPY more than regular lunch. Assuming an average of 150 JPY per day for the other three days of the week that I didn’t go to Starbucks, I was shelling out 23,400 JPY more in a year for getting the extra coffee at lunch.

In total, my coffee habit was costing us 133,035 JPY in a year!

Finally realizing how much money I was wasting, we went to the nearby Yodobashi shop, which sold kitchen appliances, and bought one of the cheaper coffee makers – the Toshiba HCD-6MJ model. Along with some filters and ground coffee, I was all set for my morning cup of coffee. Now, every month I use up about one pack of the Royal Kona Coffee brand, which costs 1,100 JPY, amounting to 13,200 JPY a year.

My lunch-time coffee has been a little bit more difficult to replace. I still give in to my cravings and buy one cup of Starbucks a week and have one lunch set in a week – 30,680 JPY in a year. On other days of the week, I’ve settled for the free Brook’s drip bag coffee that we have at the office, which is not so bad.

All in all, our efforts have allowed us to bring down my coffee costs to around 43,880 JPY a year, about a third of what we were spending three years ago.

Investing in Starbucks

What if instead of spending my money on coffee, I had bought shares in Starbucks for the past three years? Here is a little table to illustrate how many shares I would have been able to buy yearly with 133,000 JPY:

Year Last Price Exchange rate Savings in USD Number of shares
2010 32.13 USD 81.54 JPY/USD 1631 USD 50
2011 46.01 USD 77.21 JPY/USD 1722 USD 37
2012 53.63 USD 86.64 JPY/USD 1535 USD 28

I would be in possession of 115 shares today, if I had forgone the coffee!

The last price on April 15 was 57.71 USD per share. If I had sold then, I would have amassed 6636 USD, which is now equivalent to 648,000 JPY! Note that this is almost double of the 399,000 JPY I would have spent on coffee for three three years, with both share prices and conversion rates playing a factor in the boost. This is an oversimplified calculation, of course, which does not take into account the spread when exchanging currency, the brokerage fees, and taxes. But still, that’s quite a lot of money earned in just three years!

I hope this illustrates just how expensive certain daily habits can be. I’m not giving up my daily cup(s) of coffee any day soon, but I am taking steps to cut down my intake and going for cheaper alternatives. And maybe I will end up investing in Starbucks this year – we’ll see!

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