Saving Money at Starbucks

Sep 8, 2012 by Adam C. Powell, Ph.D.

Many personal finance authors tell people they could be a millionaire if they only skipped their daily Starbucks and somehow managed to invest the money at 10% rate of return for thirty years. The CAGR of the S&P 500 between January 1st 2002 and 2012 was 2.87%. However, it was only 0.38% after adjusting for inflation. Perhaps, those coffees did not do as much damage to retirement portfolios as some may claim.

Just as achieving that sort of a return is unrealistic, skipping Starbucks for many people is unrealistic as well. Fortunately, these personal finance authors have overestimated the cost of a trip to Starbucks in the same way that they’ve overestimated realistic rates of return. While the most calorie-laden drinks will certainly cost north of $4, as the experts claim, a more frugal and healthful trip to Starbucks can be had for under $1.

There are three ways to reduce the cost of a visit to Starbucks. First, consider bringing your own thermos. Many locations charge under a dollar for a cup of coffee if it is not served in a Starbucks cup. Second, ask around about pricing, as the cost of a refill will vary depending on the owner of the Starbucks in question. Many locations are not owned by the corporation and have their own refill pricing. Check at different locations to determine the ones that are most reasonably priced. Finally, consider signing up for a Starbucks card. After drinking 5 drinks, card holders are entitled to free refills of basic drinks and flavor shots while they are within the store. Receiving free refills negates the benefit of buying anything but the smallest size drink. As a result, money can be saved by ordering the “tall” and then requesting refills as needed.