Sometime recently there was a big hubbub about a personal finance personality saying, and I do paraphrase, “If you didn’t spend $5/day on coffee you would have $1 million at retirement.” (Orman, maybe?)

Anyhoo, the responses went something like:

“You can’t save your way to wealth!”

“Nobody gets rich saving $5!”

“F you! I like my coffee!”

My response was a little more incredulous… “Coffee costs $5?!”

The “$5 cup of coffee”

Caffeine is one helluva drug. I’m one of billions of fans of its ability to boost focus and alertness.  Mmmm, sweet nectar of the gods.

My fellow addicts consumers are a passionate bunch… those who suggest we consume less (or do so more cost consciously) are not often treated with civility.

So do as you will. Me, the proverbial $5 cup of coffee got me thinking… just how much do people pay for their daily boost?

Caffeine prices

We make coffee at home, often with one of those fancy Nespresso machines (I think we paid $100?), but I occasionally use a french press (~$20?) or steep some cold brew in a large glass jar on a fine summer day. I’m also a big fan of Earl Grey tea.

From the comfort of the local coffee shop I did some basic research on the price of caffeine from various sources. Prices are from and a menu price database. Caffeine data is from the Center for Science in the Public Interest.

This table shows estimates for the cost of consuming 100 mg of caffeine from various sources (typical amount in a single 8 oz cup of coffee.)

Caffeine sourceCost$ / 100 mg
Latte (tall)$2.75$1.83
Red bull$1.42$1.77
Coke zero$0.41$1.20
5-Hour Energy$2.21$1.10
Americano (Tall)$2.45$1.09
Nespresso pod$0.60$0.48
Earl Grey at home$0.13$0.26
Cold brew at home$0.4$0.26
Burger King $5/month subscription$0.17$0.17
Hot brew at home$0.2$0.13
Maxwell House$0.03$0.05
NoDoz (1/2 pill)$0.03$0.03

* A 1 lb bag of ground coffee beans will make about 40 cups of brewed coffee (2 Tbsp per) or 20 cups of cold brew.

The coffee I’m currently drinking cost about $1. It’s from one of those local coffee shops, the small ones where they roast the beans in the store. (Actual price 40 TWD = $1.33 USD, but between the regular Buy 4 Get 1 Free offer and a Buy 10 Get 1 Free stamp card I pay $0.97.)

A typical day costs ~$1 — 1 or 2 cups of home brewed coffee, maybe a can of Coke Zero, an occasional cup of Earl Grey. Hot. I could spend less if we always used the french press or converted to Maxwell House.

I know the big drinks with lots of whipped cream, sugar, and artificial flavor cost big bucks, so maybe that is where the $5 is going? Future health care should probably also be included in the price.

The ultra-frugal might be better served by Maxwell House or chasing down a NoDoz with some tap water or taking a short nap.

Or if not ultra-frugal, chase a NoDoz down with a super-sized milkshake:

“Free” Coffee for Life

The notion that a caffeine free existence will somehow result in a $1 million retirement slush fund uses some dubious math.

A more reasonable mathematician might just ask, “How much Starbucks stock do I need to buy for my SBUX dividends to buy me coffee for life?”

At present, Starbuck’s stock pays a ~2% dividend. Why not buy some and let Starbucks buy your Starbucks?

A $18,250 purchase of SBUX will yield $1/day ($365/year.)

If you are a believer in the 4% rule (as I am) then you would need less than $10k. That is a far cry from a million bucks. (Multiply those numbers by 5 ($91,250) to yield a $5/day cream and sugar habit.)

Alas, if we are only contributing our coffee budget to the coffee-for-life fund, at a 7% real rate of return it takes nearly 22 years without caffeine to reach our goal. Or 50 years with zero real growth.

So much for coffee avoidance paying for retirement.

So the money needs to come from somewhere else… The route we took was to save $20,000 on rent/car/restaurants, and then put that into the free coffee, free rent, free life fund. (All while under the influence of caffeine.)

Related: The Joy of A Car Free Lifestyle

Alternatively, Novartis (the maker of NoDoz) currently has a dividend yield of 6.2%. A yearly supply of that stuff costs only $11 which can be “free for life” with only a ~$175 purchase of NVS stock. (Careful – a friend in high school took an unknown quantity of NoDoz and almost died.)

Starbucks Hacks

I don’t visit Starbucks often, but here are a few things I’ve done or seen people do that are pretty savvy:

  • Order the large and share with a spouse (get an extra cup)
  • Order the “short” version – 8 oz vs the 12 oz “tall” – not on the menu but they serve it (a tall is too much caffeine for a single sitting)
  • Order the espresso and use the free milk instead of ordering a latte
  • Order the espresso and add free hot water instead of ordering the more expensive Americano
  • Free refills – order anything and then get a free coffee (even cold brew!) or tea
    • bring it home in your thermal cup
    • US stores only (I believe)
  • Buy gift cards at a discount — ($5 off your first gift card purchase.)
  • Bring coffee from home for 1/10th the price (when gathering with less frugal friends)
  • Ask for a free Babyccino (frothed milk) – great for the kids (not free in every store)
  • Learn to love drip coffee – coffee is an acquired taste anyway. I love the drip!


Avoiding coffee or caffeine for 50+ years is unlikely to lead to retirement riches, but cost conscious caffeine consumption can definitely lead to higher savings.

Coffee at home is as low as 1% of the price.

Putting those savings into income producing assets can then lead to a lifetime of Starbucks paid for by Starbucks.

A $20,000 investment into Starbucks stock (or an index fund) with a 2% dividend yield will pay out $1/day.

“Free” coffee for life!

Do you practice cost conscious caffeine consumption?

Addendum (Feb 20, 2020): after writing this, I asked myself, “What is it that I have to be focused and alert for, anyway?” So I quit caffeine cold-turkey for a TBD length of time.

It’s been 5 1/2 days… except for a minor headache in day 2 and an increased fondness for naps, I haven’t really noticed.
(I’ll still drink coffee for special occasions like doing my taxes.)