Whitbread recently announced their intention to split off Costa and float it as a separate entity. Costa is the UK‘s biggest coffee chain with more than 2,400 coffee shops, and a sizeable overseas operation that it plans to expand. This news got me thinking about how coffee has become such a strong part of our social fabric – along with the amount of money we spend on our habitual cuppa. Could your caffeine habit be replaced with something significantly more enriching for your future?
Chains of household-name cafés sit comfortably cheek by jowl in our market squares, high streets and out-of-town retail parks. These coffee shops service our increasing thirst for a caffeine fix with ubiquitous muffin, panini or over-sized cookie. Nowadays, one decent-sized office block can comfortably support a café.
In the last 10 years, UK coffee houses have almost doubled in number (source: BBC). Such is the demand, bookshops and supermarkets have integrated coffee shops into their retail offering so as not to lose customers when that thirst strikes.
Critics argue there is a social cost, as these shops homogenise our municipal areas and communal spaces, making one town indistinguishable from another. However, coffee is now such an integral part of our lives that coffee.org lists 20 slang terms for our daily caffeine fix: ‘java’, ‘brain juice’, ‘mud’ or ‘dirt’ to name a (somewhat unappetising) few!
Anyway, enough about the social ramifications, what about the financial cost? How much does our daily cup of coffee, tea, or fruit-based alternative cost us long term? When we run workplace financial wellbeing programmes, we often talk to employees about how modest economies can have powerful budgetary benefits. Often, we use the cost of take-out coffee as an example. If your daily commute involves grabbing a flat white, it could cost you about £2.60. Assuming you grab a one each morning on the daily commute, that’s £13 per week, or over £600 a year.
Imagine the psychological effect of paying off some debt a little quicker? Or for the super-saver, the exponential effect of re-directing your hard-earned coffee-cash into funding your retirement? If you instead saved that money into a pension, basic rate taxpayers could squirrel away around £750 each year, thanks for government tax relief. For higher rate taxpayers the benefits are even greater.
There are choices to make everywhere you look in life. Sometimes it’s good to be impulsive (and sometimes you’re just extraordinarily tired), so indulge in that liquid turbo boost. However, it’s also good to keep the future in mind as well. Could you change your routine, resist having a coffee every day and instead channel that cash somewhere more useful?
Whether it’s a pension, ISA, saving for a property deposit or paying off a mortgage; you have the chance to make your bean money work for you.