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How to Enjoy Your Fancy Coffee and Still Save Enough to Retire

We’ve all read those articles that explain, “by making your morning coffee at home you can save $4.00 a day, and that equals blah blah blah a month and blah blah blah money you could be saving for retirement!” We don’t dispute the idea or the math, but we really like fancy coffee, and saving for a rainy day shouldn’t have to mean not fully enjoying the sunny ones. Smart, consistent saving (investing, contributing to a 401K, etc.) from an early age is absolutely one strategy for affording to grow old comfortably, but it’s merely a part of a responsible Big Picture financial plan. 

Luckily, there is a variety of budgeting options that allow you to have your cake and eat it, too (and be able to afford some high-end caffeine to wash it all down). 


A great place to start is first knowing where your money is already going, then you can make a plan for where you really want it to go. According to Nerdwallet, the 50/30/20 budget is the perfect tool to get there. We’ll start with the most important number, which is ironicaly the last number, 20. This stands for 20%, and it’s the amount you need to dedicate to savings. You can accomplish this in several ways, such as participating in an employer-sponsored retirement plan or a monthly savings transfer. Remember, it’s key to have this automated so that you can’t cheat or put off a month or two when you want to splurge.  

The rest of the 50/30/20 budget tool is divided up as the 50% of necessities that you can’t avoid, like housing, food, transportation, childcare and insurance. The remaining 30% is devoted to things that you enjoy, like travel, entertainment, dining out (and that morning latte). 

Zero-Base Budgeting 

If you need more structure, then zero-based budgeting may be your best option, as your entire income is accounted for by assigning a single purpose to each dollar every month. In this method, no money goes into or out of your bank account without a plan. First, calculate all of your take home income from your primary job and any side hustles, residual income, etc. Basically, you need to account for every penny that enters your bank account each month.  

Then, add up all of the bills that are due for that month, including housing, credit card payments, phone, charities, etc. It’s important to adjust this every month as obligations can fluctuate. Now, consider what unexpected bills seem to pop up, like car repairs, a leaking pipe or gifts for friends. Then plan how much you want to save. If you’re not having much left at the end of the month to save, then consider an expense you can do without.  

Two of the most important aspects of zero-based budgeting are: 

  1. Write down every single thing you spend money on. You get a soda out of a vending machine? Record it. Stop in for a midday coffee and snack? Record it.  

  2. At the end of every month, start over. You can review where you may have overspent the month before and where you can find ways to save. It might take a few months to get into the groove, but soon you’ll know where all of your money is going, how much to plan for expenses, and how much to put aside for retirement.  

Envelope Budgeting 

For those who are more hands-on (or not so good with spreadsheets or online budgeting tools), envelope budgeting may be perfect for you! Before you start with the envelopes, you need to figure out how much you have left after all of your bills are paid and how much you want to save. Then decide on a budget. While this can be daunting for some, use this handy budget guide to divide up your spending by item, like groceries, clothing, fun, etc. If it’s too difficult to predict, take a look at recent receipts or your list of spending activity in credit/debit card app. 

Now comes the fun part! Get a box of envelopes and write the name of each category on an envelope. If you’re creative, make them colorful or draw images on them. Then, go to the bank and withdrawal all of the cash that’s earmarked for those categories and stuff those envelopes. When you run out of money in that category, you’ve spent that month’s allotment and will have to wait until the next month. (No borrowing from another envelope either.) Any leftover money goes into your savings account.  

Line Budgeting 

While line budgeting may sound complicated (and more popular for small businesses), it’s actually quite adaptable for personal finances. First, take a look at where your money went last year, accounting for every penny (or as much as possible) and divide it into groups … retirement, housing, food, insurance, repairs, charities, etc. Basically, everything you spent your money on. This might be harder for the first year, but it’ll get easier in the second year after you’re paying closer attention to your spending.  Now, create a spreadsheet with all of those categories, labeling the column “past year” and log the totals from last year. Now make a column called “present year” and track all current expenses, updating each month with what you’ve spent. You’ll be able to stay on track by being diligent in your tracking and comparing your past and current expenses.  While all of these methods help you budget, they may not address the reasons you currently spend and save (or don’t save). If you don’t uncover your motives for spending, these 5 tips from Investopedia may help you realize why you spend the way you do.  

  1. Access Your Situation — Use a “happiness barometer” to analyze your way of life. Are you happy with your current lifestyle, paying your bills on time, and saving enough? Basically, if you’re not living your best life, then ask yourself what needs to change.  

  2. Set New Goals — If your current lifestyle isn’t matching up with your retirement plans, then something needs to change. Make a list of the things you don’t want to change, like leisure activities and hobbies, compared with now much you need to maintain that lifestyle in retirement. 

  3. Create a Plan — Once you’ve figured out what’s most important, set goals for how to live like that without cutting out necessities. No matter what, your retirement goals can’t be compromised.  

  4. Monitor & Reassess — Even the best of plans may need adjustment. Set a time frame, like three months, to evaluate and make sure everything is on track. It’s key that you’re happy with living that way or your plan won’t succeed. 

  5. Lifestyle Goals — No matter how much you make, or what you spend it on, determine if all of your activities and plans meet your objectives for your quality of life. If you’re not happy with it, decide what can be changed, but maintain your retirement plans.  

This is by no means an exhaustive list of budgeting options that allow you to live for today while making sure you can do the same tomorrow, and the day after that, and the day after that, until you’re ready to retire. Apps and online tools abound, so do some exploring and no matter which tool or option you choose, stay the course and hell yes, order that mochalattefrapespressachino with an extra shot. And whipped cream! 

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