Should I buy my daily latte? Yeah, probably

by Verve

Most mornings as we smoosh the sleep crystals from our eyes, we think about grabbing coffee — it’s a helluva drug… A daily ritual that provides a start line for our day and gets us out into the world.

But each morning, as we drool over that first cup, we face an existential question: Should I buy my daily latte and commit to a lifetime of financial frivolity? Or should I make a crap one at home and get serious about my financial future?

This painfully repetitive dichotomy hasn’t come from nowhere. A few years ago, millionaire property mogul Tim Gurner infamously told the Australian public young people were “absolutely” facing the prospect they wouldn’t own their first home — not “when you’re spending $40 a day on smashed avocado and coffees and not working.”

Similarly, celebrity financial experts like Suze Orman have likened buying a daily coffee to peeing $1 million down the drain.

It’s not a need, it’s a want! …You are really just wasting money! I wouldn’t buy a cup of coffee anywhere ever, because I would not insult myself by wasting money that way!” Orman exclaims in her videos.

Suze Orman isn’t alone, a plethora of financial celebrities point blame at the latte as one of the key reasons young people can be financially insecure, or may be more susceptible to financial insecurity in retirement.

It’s no wonder grabbing a morning coffee has become an existential issue — the defenceless latte (alongside smashed avocado) have become symbols for the intergenerational tensions between ‘financially responsible’ boomers and ‘frivolous’ millennials who enjoy the good life a little too much.

Should we just buy the latte?

Frugality and learning ways to cut back is of course a part of any savings plan as you work towards a financial goal. After all, that $4 latte is costing you $1,460 a year — or $1,642.50 if you drink Bonsoy.

Cutting out coffee might get you to Santorini each year, or if you invested your daily $4 coffee over a 30 year period, compounding at 9.4% it would be worth $215,000.

When you think about it like that, cutting out coffee makes a fair bit of sense — but the problem is, fixating on small discretionary habits like drinking coffee as ‘easy ways’ people can get ahead, ignores a bigger picture. Negative gearing, alongside an inflated and often unaffordable housing market, are key reasons young people are locked out of buying a home — not their coffee habits. So each morning when we’re deciding whether or not to spend our $4, we need to shift our attention back toward the systemic inequalities that women in particular experience.

Four reasons the latte is hardly to blame — for women

1. The 14% gender wage gap 

Resulting from a range of social and economic factors that coalesce to reduce women’s earning capacity over their lifetime. Here are some of the key forces driving the gender wage gap

– The conscious and unconscious discrimination and bias in hiring and pay decisionsFemale dominated industries attracting a lower wage (childcare is an excellent example

A lack of workplace flexibility to accommodate for caring and other responsibilities, especially in senior positions

– A high proportion of women work part-time often due to the gendered expectation that women will be the primary caregiver if they have children

– Women spend a greater time out of the workforce due to caring responsibilities which impacts their career progression and professional opportunities 

– Women do the bulk of the unpaid caring and domestic labour in a relationship

2. Women engage less and invest less on the stock market

Many of us have internalised this idea that we’re bad with money, so we often feel shame when it comes to money. Partly because women experience greater work insecurity than men do — women are taught to be careful with money, while men are taught to invest it.  

But evidence suggests, women are better investors than men. A study from Warwick Business School found women outperform men at investing by 1.8%. One key reason is that men are more likely to pick speculative stocks, while women take a more long-term perspective.

3. Domestic labour gap/ the mental load

The domestic labour gap is tied to the gender wage gap and it’s worth fleshing out further. Women do 67% of domestic work, 69% of care for adults, and 57% of volunteering. An Australian woman spends between 5-14 hours a week doing unpaid domestic housework, men do less than 5 hours a week.

And did we mention women do 72% of unpaid care work

We like to think women have come a long way since 1969 when women were granted the right to equal pay — but the bottom line is, until the domestic labour is dispersed more evenly and gendered expectations of both men and women dissipate — a latte is hardly going to tip the scales. It’s not what’s holding women back.

4. The pink tax and the gender beauty gap

These two factors combine to make it more expensive to perform as the female gender. The pink tax refers to the point that if you have two identical products, one marketed towards women and one towards men, the product for women will cost more. The gender beauty gap quantifies the hidden cost in being a woman — that financial burden that comes with the pressure for women to present “well.” Research indicates that during 2016 alone, Australian women spent $15 billion grooming themselves, compared to men, who spent just $7 billion. That’s not because women are ‘bad’ with money — it’s what’s expected of the gender. 

Let’s not pretend women exist in a vacuum. The demands placed on being a woman are intense, expensive and restrictive. Sure, spending less on flippant luxuries and bringing awareness to your spending using money trackers is an important way to help you achieve your financial goals. Engaging in your finances so you actually know where your money is going is vital in getting ahead.

But the patronising financial messaging berating people for buying their morning coffee needs to stop. Shaming the humble, delicious latte, one of the biggest reasons many of us have for getting out of bed – is misguided, naive financial advice. Let’s point the finger at the system — not the latte. 

This blog is published by Verve Superannuation Pty Ltd (ABN 65 628 675 169, AFS Representative No. 001268903), which is a Corporate Authorised Representative of True Oak Investments Ltd (ABN 81 002 558 956, AFSL 238184), as the Sub-Promoter of Verve Super. 

Verve Superannuation Pty Ltd and True Oak Investments Ltd are not licensed to provide personal financial advice. The information contained in this blog, including any financial guidance, is general in nature. You should consider seeking independent legal, financial, taxation or other advice to ensure that your financial decisions are suited to your unique circumstances.

You should read the Product Disclosure StatementAdditional Information BookletInsurance GuideTarget Market Determination and Financial Services Guide before making a decision to acquire, hold or continue to hold an interest in Verve Super. When considering financial returns, past performance is not indicative of future performance.

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