I feel guilty.
It’s not because of the article I wrote trashing hedge funds, it’s because of the comment I wrote on someone’s article.
I’m not going to link the article here or use the author’s name, that would be cruel. You’ll figure out why if you keep reading.
The story in question was about how this author’s daily $4 coffees are actually a good investment because of a variety of reasons.
Very early on in the article, she does the math and works out that her habit is costing her $1,000 a year, a number she says her father would call “pure madness.”
She follows up this statement with the single cringiest line in the entire piece,
“But, guess what; today’s generation’s priorities have shifted.”
I honestly felt a chill run down my spine reading that nugget. After that noteworthy line, she admits that her coffee and cake budget is 8% of her monthly earnings (yet another gasp of horror) then justifies the “investment” with these points.
It makes her feel rich.
For this argument, she talks about mindsets, both scarcity and abundance.
She talks about her efforts to create a positive vibe around money, which allegedly breaks her money-based anxiety.
She somehow ends the point by saying that she manages her mindset in the same way that she manages her business, with the mindset of investment and ROI.
This craziness makes me bananas. I can’t overstate how often I’ve heard people talk about mindsets when it comes to money. People seem determined to marry emotions with finances when the two mix about as well as water and oil.
“Don’t cry for money; it won’t cry for you.” — Kevin O’Leary.
Having financial anxiety isn’t a result of having the wrong mindset, financial anxiety is the result of making terrible financial decisions and not having the safety net you should have to protect you in case of an emergency situation.
You know deep down whether or not you’re financially stable, and if you’re not, anxiety is the right and justified way to feel.
I’ve heard of hundreds of emotional solutions to this logical problem, so this is just one of many.
Instead of trying to figure out your mindset, just sit down with a spreadsheet and work out a plan that takes you from anxiety to comfort.
What should you plan for?
I’ll tell you. You should have six months worth of wages set aside in a high interest bank account just in case you need it for an emergency. In case you’re injured, laid off, or the world is hit by a widespread pandemic; you would have a large cushion to fall on.
How do you achieve that?
You cut out extravagances and instead put that money directly into savings until you’ve achieved the goal. These extravagances include clubbing, alcohol, cigarettes, salon hair-dyes, and yes, barista coffees.
Do today’s generation’s priorities allow for sacrifice? I bloody hope so.
You should also have a year’s worth of wages invested (depending on your age) in shares, bonds, and ETF’s.
The older you are, the more you should be transferring money out of higher-risk shares and into lower-risk bonds and ETF’s.
The more money you have invested in interest and dividend-paying investments, the safer you can feel, and the more manageable you’ll find your anxiety becoming.
If you’re really disciplined, you’ll eventually get to the point where your investments are paying you so much money that you can live on the payments. Try having financial anxiety at that point!
Also, no-one who isn’t rich should ever be feeling rich. That’s a trap that leads to really crappy decisions, like a car you can’t afford or a designer handbag.
Be comfortable feeling what you are, it’ll drive you to a better life faster than a crippling car loan ever will.
It’s a routine.
She talks about the need for routine to manage her clarity, and I understand that. Routine has a positive effect on all of us, but we all have the power to choose what we add and take away from that routine.
She loves her trips to the cafe, so this routine justifies her coffee “investments” because of its positive effect on her clarity.
But is the coffee shop the only place where she could be getting these benefits?
I’ve found that my local park gives me clarity. It’s breezy, the nature is beautiful, and best of all it’s completely free.
In my comment on her story, I recommended that she consider making cold brew coffee at home. It’s far more delicious, it keeps well in a thermos, and you can drink it in the park.
Imagine sitting on a park bench, drinking the coffee you didn’t pay a barista to burn, enjoying the breeze and taking a minute for yourself.
If the park doesn’t do it for you, find somewhere that will. Maybe your local bookshop? If you’re lucky, you might live near a beach?
Her last point is that the coffee shop gives her a “Pavlovian reflex” and forces her into a creative space in her mind.
She’s, therefore, able to think of a new chapter for her book or a new Medium article while she’s there.
My argument for this is the same as I made for her routine point. If she has successfully trained her mind to think of good ideas in a cafe, then it can be just as easily trained to think of good ideas in a park, or in a library.
At the end of the day, I understand that the cafe makes her happy and she just wants to justify that happiness by calling her purchases there an investment.
I agree that cafe-bought coffee can be a source of happiness, they sure are for me.
But what they’re not is an investment, no matter how hard you try and convince yourself that they are. It’s an indulgence that costs $1,000 a year, and if you want to spend your money doing it, you’re more than free to do so.
But just imagine for a second that you cut back all expenses and focused intensely on your investing.
You push yourself for a few years and really go hard until you’ve invested a sizeable sum in various shares and ETF’s.
Then one day you check your balance and one of the companies with which you own shares has paid a dividend, and it’s with this dividend that you can afford your coffees for the next several months.
The resulting feeling is an abundance mindset that you could never get from a cafe. The benefits you receive from actual investments can never be understated or imitated.
A coffee feels good, freedom feels better.
Disclaimer: This article does not constitute financial advice. If you’d like proper advice before making an investment, please seek out a registered fiduciary financial advisor for help.