More than one in three American people spend more coffee in 2017 than they invested
More than one in three Americans spent more on coffee last year than they invested, according to a survey of 3,000 adults ages 18-44 by money app Acorns — likely because about one in four of us has an $11 or higher per week coffee habit.
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More than 45% of 18 to 23-year-olds have spent more on coffee than investing in their retirement, and 35% of 24 to 35-year-olds have done the same, according to a survey from microinvesting app Acorns, an app which links credit cards to the app and invests spare change. What’s more, 44% say they spent more on holiday gifts than they invested, and 37% spend more on vacationing.
The survey of 1900 millenials was done through SurveyMonkey and shows that millennials are struggling when it comes to understanding and managing their finances.
Over 50% of millennials said they don’t feel “savvy” when it comes to investing. That could be because, over half of the older millennials (24-35) said they didn’t receive enough training about how to manage finances in school, while 42% of younger Millennials agreed.
And as millennials age, the lack of preparedness is starting to weigh heavily on their minds, with 41% of older Millennials (24-35) worried that they won’t financially be able to retire until after 65.
It doesn’t meang that people don’t know they should invest, but they often don’t think of it in the moment of spending their money, says Noah Kerner, CEO of Acorns. “In our modern culture we are addicted to spending,” he says. We will buy a cup of coffee almost automatically — and without thinking about what that $4 could mean if we invested it.
The problem is, $4 could mean a lot for us — credited to the magic of compound interest. Here’s an example to show you how compund interest works : Let’s say you’re spending $20 per week for coffee, it means $1040 per year. If instead of buying cups of coffee, you invested that $1040 each year from your 25 until retirement at 65, you’d end up with more than $170,000, assuming a 6% rate of return. If instead, you spent $1040 on coffee each year for the next 40 years, you’ll have spent $41,600 on coffee — with nothing to show for it except a bit of a buzz each morning.
Of course, while we know we “should” invest, many of us still have no idea how much to sock away in our 401(k)s or other accounts. Here’s what the experts say.
If you’re just starting out in your career with young age, “just start saving something, compound interest works majorly in your favor when you start saving at a young age. He recommends that you put at least up to what your employer matches in your retirement account. “That is free money, it’s a great deal.”
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