Tim Herrera* says that despite what some financial advice seems to suggest, skipping your morning caffeine boost will not make you a millionaire.
Photo: Kevin Menajang
I’m calling it right now: This is the year of bad personal finance advice.
An industry of experts exists to advise us on how to spend our money.
Some of those experts are truly on your side and sincerely want to help you be better with money.
Some of those experts are … not exactly on your side and are perhaps more interested in riling us up about our spending.
It can be difficult to tell them apart, and it makes our already-fraught relationship with money even worse.
Last month CNBC generated an outrage cycle about money advice by tweeting a story in which the personal finance professional Suze Orman claimed that buying coffee means “you are peeing $1 million down the drain as you are drinking that coffee”.
Earlier, USA Today generated a similar negative buzz when it published an article from the money website The Motley Fool that claimed Americans waste an average of $18,000 a year on “nonessential items,” which they said included personal grooming, gym memberships, restaurants, coffee and lunch.
These are all on top of similarly shaming articles that tell us we’re not rich because we sleep in and travel; because we buy shoes and jeans; and, of course, because we buy too much coffee.
While it is true that every one of us can and should be smarter about spending, these small, sometimes necessary purchases are a just a sliver of a much wider story about our struggles with money.
So, no, your coffee habit is not the reason you aren’t a millionaire, nor are the haircuts you get or the gym membership you have.
But how can we improve our financial situation when we’re being shamed for enjoying a latte?
Who can we trust?
Is the advice we’re reading truly advice or is it meant to sell us something?
It’s a mess!
To get some answers, I talked to an actual expert who is on our side: Tara Siegel Bernard, a personal finance reporter for The Times and one of the sharpest minds working in this space.
I started the question we’re all wondering: Will skipping coffee make me a millionaire?
“The short answer: no,” Siegel Bernard said.
“It’s silly. It’s a superficial way to get at the ‘needs versus wants’ question, but it’s not a particularly smart one.”
“Or maybe it’s just easier to blame people for overspending on coffee because it’s a lot more difficult to give advice on the many things they cannot control: wages not keeping pace with the cost of living, the high cost of health insurance, housing, child care, etc.”
“All of that said, we should try to be thoughtful about spending.”
“We’re constantly making choices and trade-offs that affect our financial and emotional wellbeing.”
“Those types of financial decisions — how much house to buy, for example, or buying a more economical car — will go a lot further than agonising over lattes.”
Clearing away all the clutter, very simply: What are a few things average people could do today or this week to improve their overall financial wellbeing?
“It has become much easier to be an unconscious spender,” Siegel Bernard said.
“Within a relatively short period, subscription-based businesses are everywhere, and they’re probably betting that most of us will forget to turn off these services when we don’t need them anymore.”
“Unsubscribing to something is a quick little win.”
“It’s not going to make you a millionaire, but you can comfortably buy a cup of coffee with the proceeds.”
“It’s also worthwhile to take a deep dive into your finances once every three to five years to get a better grasp on where your money is going and how it’s working for you.”
“I’m a fan of getting advice from a professional, even if it’s only occasionally, to help hold you accountable.”
(Just be sure the adviser promises to act as a fiduciary, which means your interests are always put first.)
* Tim Herrera is the founding editor of Smarter Living. He tweets at @TimHerrera. His website is timherrera.substack.com.
This article first appeared at www.nytimes.com.
