Will Lattes and Avocado Toast Really Destroy Your Financial Future?

Is cutting out lattes and avocado toast (and other small pleasures) really the key to long-term wealth and prosperity? Or can you have a good financial future and eat your toast too?

Yeah, I know I’m late to the party. All the things have already been said about the way avocado toast is ruining millennials chances at a fulfilling life and how brewing your own coffee at home will make you a millionaire in a hundred years.

But as I put together my financial plan earlier this year and thought about what makes life worth living, I realized that your financial future isn’t about what you buy or don’t buy. Instead, it’s about how you view money — and whether you have an idea of what you want.

Your Financial Future Starts with the End in Mind

One of the best pieces of financial advice you’ll ever hear comes from my friend (and former co-host on the Money Tree Investing Podcast) Joe Saul-Sehy: Start with the end in mind.

Your financial future won’t be doomed if you have a latte from the coffee shop each day. It will, however, suffer if you spend your money on lattes without thinking about your end result.

Take the time to sit down and think about what you want your life to look like now and in the future. Nine years ago, I lived in a house (with a mortgage) I wasn’t sure I wanted. I wished I could travel more. And I wished I wasn’t working 65 – 70 hours a week writing for 30 different blogs.

Today, I work much less after raising my rates as a freelancer, have interesting podcast projects, participate in local politics, and travel several times a year for business and for pleasure. When I look at what I want my life to be like 10, 15, 20 years from now, I honestly hope it looks a lot like it does today.

Getting from that point to today required planning and work. And, more importantly, it required vision. I had to clarify what I wanted my life to look like. Once I visualized the end result, I was able to work backward and take steps to come closer to that goal.

How I Began Moving Toward Financial Happiness — While Visiting the Coffee Shop

I’m a firm believer that, once your basic needs are taken care of, a lot of the unhappiness related to money comes from the reality that you probably aren’t spending it in ways that reflect your values and priorities.

Eight years ago, I thought about what I wanted my life to be. I also knew I didn’t want to give up some of life’s simple pleasures. I’ll be honest. For me, it wasn’t about lattes. I liked going to the coffee shop and getting a small hot chocolate with all the extras, and maybe a biscotti for dipping.

It’s the same difference. I didn’t do it every day, but it was a pleasure I enjoyed once every week or so. Other things I liked included buying books (now I just push a button on my Kindle), and putting on a good fireworks show in July.

However, I didn’t get to use my money for the “big things” I wanted to do, like travel, increase my retirement savings, and boost what I was putting into my son’s 529.

Some well-meaning folks told me that I could put more toward retirement if just stopped spending $30 a month on books, or $10 a week on my trip to my coffee shop. But I’d lived that way already — and didn’t want to go back. I remembered being a poor, newly-married college student, counting every penny at the grocery store and being ecstatic if we could afford to go to Wendy’s once a month.

Instead of giving up the books and the coffee shop, I thought: “How can I earn more money without working even more?”

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Earn more

The first step was to raise my freelance rates. As new clients inquired, I quoted them higher rates. As I earned more, I dropped lower-paying clients. Ghostwriting books also became a great money-maker — as did charging a premium for other ghostwriting work.

Over the years, I’ve expanded the types of projects I do, diversifying my income a bit and trying new things so that I’m not overly reliant on one source of income.

It didn’t happen immediately. Some weeks I worked 80 hours as I struggled to meet previous obligations while doing new work. As some projects were completed and I let go of some clients, the workload eventually decreased.

It took a few years — and a breakdown — to arrange matters in a more pleasing way that allowed me to work less while earning more.

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Spend less on unimportant things

Finally, I looked at where my money was going. Yes, I wanted to keep the trips to the coffee shop and books. But what about some of the other costs? The little figurine bought on a whim? The expensive souvenirs when I went on a (rare) trip? The kitchen appliances I thought would be so useful but weren’t?

None of that stuff was helping me get to where I wanted to be. Or adding anything substantial to my life.

I took stock of what I was spending my money on. I wanted my spending to fall into at least one of four categories:

1. Items that need to be taken care of (housing, food, bills, etc.)
2. Things that help me achieve my financial goals (retirement, helping my son with college, etc.)
3. Expenditures that will help others (charity, causes, extracurriculars for my son, etc.)
4. Things that help me enjoy life right now or that enrich others’ lives (including charitable contributions).

I started looking at all my spending decisions and evaluating them according to those criteria.

If an expenditure didn’t fit into one of those categories, I tried not to make it. Over time, as I evaluated where my money went, I discovered that it wasn’t hard to say “no” to some things. And as I said no to the unimportant things, I found that I had more money available to boost my monthly contribution to my son’s 529, max out my Roth IRA contributions, and even start a travel fund.

Today, I use Personal Capital to track my spending, look for patterns, and better allocate my resources so I can do more of what I want.

All without giving up buying books or going to the coffee shop.

I Will Enjoy My Avocado Toast, Thank You Very Much

My first experience with avocado toast = DELICIOUS. I immediately categorized it under #3. And, because I live in Idaho Falls, Idaho, I can enjoy it with little shrimps and a cup of soup for about $12. Not bad considering how some gurus bemoan the fact that $19 avocado toast is ruining all hope for millennial homeownership.

As I sat there, munching on my avocado toast, it occurred to me that part of the uproar is not so much about how a millennial is about to ruin their financial future. Instead, the whole situation really centers on how some millennials (and gen Xers, and even baby boomers) don’t care about the things they’ve been told to care about.

Do I really think that enjoying the occasional avocado toast will keep you from your dream of homeownership? Not if you are sure about that dream and you take practical steps to make it happen.

But what if you don’t want to buy a house? EVER. I’ve done the homeownership thing. I know it’s not for me. It amazes me how many people think I should buy a home now that I’m mostly settled in Idaho Falls. With my divorce more than four years behind me, of course I want to buy. Yeah, no.

That’s the path to a good financial future, right? Get good grades. Go to a “traditional” college. Get married. Buy a house. Have a child or two. Make sure you’re working a good job. Settle down. Spend your money in a reasonable manner. After you’ve done this for 20, 30, or 40 years, you can retire and start really enjoying yourself.

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What’s your avocado toast?

No, avocado toast is about living life NOW — and doing it on your own terms and according to your own priorities.

Your avocado toast may not really be avocado toast. Maybe it’s action figures. Perhaps it’s getting your nails done. Or is it hiking?

Whatever it is, the idea is to figure out if what you’re spending money on helps you enjoy your life today. And as long as it’s not taking away from your goals and as long as you’re meeting your needs, don’t let others tell you how you should spend your money.

I know what it’s like to be in a place where all you have is enough to pay the bills and get groceries (and maybe you’re not sure about doing both those things). I know what it’s like to be on public assistance. It’s not fun.

And I know that you don’t have to spend your money the way everyone tells you that you “should.” Figure out what you hope your life will look like, work backward to determine what you need to do in order to get there, and then take that first step.

What are your main priorities when you look at your financial future? And what’s your avocado toast (or latte)?