The Easy Trick That Can Help You Save Money When Buying Coffee

For many Americans, stopping by Starbucks, Dunkin', or the quaint café around the corner to buy a morning boost is a vital part of their daily routine. However, because 70% of consumers prefer to use credit cards for payment over cash, according to a study by Forbes, it's easy to swipe and forget that $5 or more is being added to your monthly bill each time you opt for a caffeinated treat.

According to a study by saving app Acorns (via Security Bank & Trust Co.), Americans spend an average of $1,097 on takeout coffee each year. While considerable, this is nothing compared to the average spent by millennials (who are being crushed by money-phobia today, by the way). Research by Empower found that 62% of this generation is willingly spending $7 daily — or $2,520 a year — on takeout coffee.

Reid Litman, global consulting director of Ogilvy and a millennial/Gen Z expert, explained to Newsweek that this population is the most likely to feel deserving of a "little treat," despite the high price point. "They're unsure about the future," he said. "And in our race to find some semblance of health and happiness amid instability and seeming less time, we're buying moments of joy to get through the now."

With this said, while Americans' coffee cravings won't be dampened anytime soon, there is a trick that can at least help them keep better track of their spending, and ultimately save money, too.

When ordering your daily dose of energy, it's easy to simply whip out a credit card or, in the case of large chains like Dunkin' and Starbucks (which is cheaper?), pay digitally through an app. It's quick and convenient, but makes it hard to track just how much one is spending until they receive their next statement. To remedy this situation, coffee lovers can pay for their brews with good, old-fashioned cash.

While money is still being spent, paying with actual bills allows the customer to physically see the funds leaving their wallet, which may make them think twice before splurging on a $7 latte each day. Plus, paying with cash (speaking of which, what is U.S. cash actually made out of?) makes it easier to budget. For example, rather than unintentionally dropping upward of $50 a week on those "little treats," one could set aside $20 in cash as their coffee allowance for the week. This would force them to either opt for more cost-friendly orders, or limit any specialty-drink splurges to one or two days a week.

In addition to being financially beneficial for the customer, cash payments are also helpful for coffee shops, especially those that are small and independently owned. Ben Johnston, chief operating officer at financing provider Kapitus, told U.S. News & World Report, "Paying in cash typically saves the small business owner between 2% and 3% of the transaction price in interchange fees."

In our current digital age, it's understandable that many people no longer feel the need to carry any cash. A 2022 study by the Pew Research Center found that 41% of Americans don't use cash for any purchases in a typical week. Rather, they prefer the convenience of credit or debit cards, or a digital wallet like Apple Pay.

Even if one isn't racking up their credit card bill with pricey coffee purchases, these other payment options can also land them in serious financial trouble. The Pew Center on the States found that one in five people experience overdrafts on their bank accounts because they use their debit card to spend more than they have. This, in turn, can result in their bank charging an overdraft fee, which costs about $35 for each transaction. Therefore, though it's extra work to ensure there's always cash on hand, it's financially worth it.

Still, if someone is truly against cash but wants to monitor their coffee spending, there's always the financially responsible option to make it at home. A 40-count flavored variety pack of Keurig pods from the official website costs $34.99, or approximately $320 annually if you're using one each day. As for the Keurig machine, this can range from $50 to over $200 depending on the style. Though it's a larger one-time purchase, the overall cost is a fraction of that annual $2,520 that millennials are spending.