One of the advantages of writing this blog is that readers send me their stories. One such story, about a coffee machine, got us talking about compounding. The reader told me about her coffee machine, now nearly a decade old, that had recently gone in for service. Astonishingly, she learnt that the machine had registered 23 113 cups of coffee.
The realisation that followed was equally striking: her family would have spent nearly R700 000 on coffee over the period, had they bought all their coffee out. Instead, they spent around R110 000.
The reader pointed out that at R20 497, the coffee machine was a considerable investment at the time. However, based on the average prices of coffee beans and milk over the period, the return on investment for this machine was nearly 3 000%, or 45% per year. Multiples you would have expected of any reasonable investment.
There is so much to unpack in this story. It is unbelievable what we spend over time on things like coffee, which is something we sometimes consume without thinking about it. The coffee aficionados among us will probably disagree; most will say they always think about their coffee.
But mindless spending is often where our money disappears. Magazines. Unused gym memberships. Fast food. When we check our bank statements, we may find funds that can be rechannelled into savings, investments, or the things we really want to do.
One cappuccino a day, saved rather than mindlessly consumed, will amount to nearly R2 million over forty years (in today’s money). I’m not saying we shouldn’t spend money on coffee. I am saying that we can often find money to save simply by checking what we spend on without thinking.
It’s about deciding what’s important to you and spending mindfully on that.
I love a cup of tea, certain blends specifically, loose-leaf tea that I ask people to bring from my favourite purveyors: Mr Mittal in Delhi, or Fortnum & Mason in London. I don’t always get the chance to make a cup, but when I do, I savour it. I pour from a small silver teapot, through a vintage sieve, into a special cup. The lesson is to make the moments and savour them.
The joy of a coffee machine or a good packet of tea lies in the mindfulness of the moment.
My reader reminded me of this: the greatest return on that investment was probably in the moments, in the friendships built around a cup of coffee, or the caffeine that helped with exams.
I hope your next coffee reminds you to enjoy the moment, and to be deliberate about where you spend and where you save.
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Kind regards,
Sunél
