Why Do Financial Experts Hate Coffee?

If there's anything I learned throughout my time working in the world of business news, it's that “power players” – a ragtag group of financial celebrities encompassing billionaire executives like Tesla CEO Elon Musk and Amazon founder/space cowboy, Jeff Bezos as well as TV personalities like Suze Orman and basically anyone who has so much walked within 100 feet of the Shark Tank studio -- hate nothing quite as much as they hate coffee (or, well the SEC in the case of Musk).

With business news seeping into our broader pop culture lexicon, a testament to many business publications' decision to consider audiences beyond Wall Street insiders, the anti-coffee crusades have become an industry staple, with financial experts garnering media attention after loudly shaming young people for even thinking about taking a trip to the coffee shop – especially when that $3 could easily be invested. 

“I wouldn’t buy a cup of coffee anywhere, ever — and I can afford it — because I would not insult myself by wasting money that way,” Orman told CNBC's Make It vertical in 2018. “You need to think about it as: You are peeing $1 million down the drain as you are drinking that coffee,” she continued, referencing a theoretical scenario in which someone who spent $100 per month on coffee decided to invest that money into a Roth IRA over the course of 40 years. “Do you really want to do that? No.” 

Shark Tank star Kevin O'Leary agrees. “Do I pay $2.50 for a coffee? Never, never, never do I do that,” O’Leary explained in a 2017 interview with Make It. “That is such a waste of money for something that costs 20 cents. I never buy a frape-latte-blah-blah-blah-woof-woof-woof for $2.50.” So how, exactly does oracle O'Leary get his caffeine fix instead of buying every young person's favorite beverage, the dastardly, money-sucking frape-latte-blah-blah-blah-woof-woof-woof? “I drink coffee, one cup every morning,” he continued “It costs about 18 cents to make it, and I invest the rest.”

But it's not just boomers. Financial YouTuber and millionaire real estate investor Graham Stephan has taken his apparent disdain for store-bought bought coffee a step further than Orman and O'Leary. After gaining popularity online from his “Millionaire Reacts” video series, in which he regularly admonishes young people for committing the cardinal sin of going to Starbucks, Stephan has incorporated the anti-coffee crusade as an integral part of his digital identity. Aside from launching a podcast entitled The Iced Coffee Hour, Stephan recently founded his own coffee brand, allowing some of his 3.62 million subscribers to hop on the home-brew bandwagon (perhaps out of fear they, like the latte-loving subjects of his videos and his coffee beans, will get absolutely roasted). 

"Everybody sells merch," Stephan told Insider shortly after Bankroll Coffee launched last June. "I think what makes something really good is it can also stand on its own. If I decide to do something else, Bankroll Coffee can still exist without me. I really went into this thinking it could be its own coffee brand."

Even with this widespread java hatred, it seems store-bought coffee isn't the only item apparently infused with a mysterious magical elixr, condemning everyone who has ever dared to take a sip – or step foot into a Dunkin Donuts for that matter -- to financial ruin. First, it was coffee. Then, as most millennials and older zoomers probably remember, it was avocado toast (considering our boomer parents haven't shut up about it in nearly 5 years, it's pretty hard to forget).

In 2017, Melbourne, Australia-based real estate mogul Tim Gurner famously ridiculed aspiring young homeowners for buying the breakfast item, boldly stating it would undoubtedly nuke their chances at homeownership. “When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” Gurner told 60 Minutes Australia. “We’re at a point now where the expectations of younger people are very, very high." He even cited avocado toast as a reason why he says many young people may never own a home. “Absolutely, when you’re spending $40 a day on smashed avocados and coffees and not working. Of course," he continued. 

These financial boogeymen also exist beyond breakfast. O'Leary, in all his finger-pointing financial wisdom, has also rallied against a slew of purchases beyond his mortal enemy of the latte, scolding millennials for buying frivolous items like … everyday pants and shoes. “If you have more than three pairs of jeans — one black, one white and one jean original — you’re an idiot,” O'Leary told Make It, taking care to hit everyone who owns more than one pair of flip flops, a pair of gym shoes, and two pairs of dress shoes with the same insult. 

Aside from coffee, avocado toast, pants, and shoes, other purchases ranging from pet supplies to unnecessarily high student loan interest rates -- and, well, basically anything other than water and electricity – have more likely than not been demonized as financially reckless over the years. 

But even with their holier-than-thou attitudes, none of the aforementioned advice is innately bad. It's never advisable to call anyone an idiot for buying something as innocuous as coffee, especially without knowing their specific circumstances – except for maybe Funko Pops that are just going to end up in a landfill someday. But taking a hard look at your finances and cutting frivolous expenses – whether that be coffee, avocado toast, or 12 weekly gallons of milk – is never a bad idea. Regular small purchases add up over time. Identifying what is and is not a necessity can be one important step in getting a better grip on your finances, especially if you struggle with overspending or are facing a period of hardship. But considering that a nearly four-year-old survey from micro-investing app Acorns found that 41% of millennials claim to have spent more money on coffee in 2017 than they invested into their retirement accounts that same year, taking stock of where, exactly, your money goes if you haven't already is generally wise. 

But even with Orman, O'Leary, and Stephan's collective million-dollar anti-coffee confidence, telling struggling Americans that their Starbucks habit is an integral force hindering their success largely misses the point of how young people are actually struggling with money.

"After years of working almost exclusively with millennials, we noticed that the big theme is that millennials tend to spend a lot more on experiences rather material items compared to prior generations, which is a very positive thing as long as it falls within their means,", Asad Gourani, a financial planner at AG Wealth Management told Insider last spring. "Where the problem generally lies is with un-calculated spending habits and lack of planning especially around bigger-ticket items. Trust me, skipping on avocado toast and lattes won't make much of a difference on your finances."

The data also backs this idea. In early 2015, the Food Institute, a restaurant-industry publication, analyzed data from the Bureau of Labor Statistics and found that people between the ages of 25 and 34 spent an average of roughly $3,097 on dining out per year, totaling to $305 more than their elders between ages 55 and 64. But even if the younger age bracket followed in their parents' footsteps, refusing to eat anywhere but their own damn kitchen in a movement that would inevitably send a tear of pride down Mr. Wonderful's cheek, the financial benefits would be only slightly more than marginal. 

“The truth is, even if millennials assumed the eating-out habits of baby boomers, it would take around 113 years before they could afford a down payment on a home (assuming a 20 percent down payment on the median price for a home in the United States, $315,000 in March 2017, and a 1 percent yearly yield rate),” wrote New York Times reporters Linda Qiu and Daniel Victor in an article fact-checking Gurner's infamous anti-avo-toast rhetoric. 

So what exactly, if not takeaway coffee or avocado toast, is keeping young people from buying homes and acquiring wealth like older generations? In quarter three of 2021, people under age 40 held just 6.2% of the nation's wealth according to data from The Federal Reserve. Considering the same demographic owned more than double that percentage in quarter 3 of 1989, it seems the answer to this question is much, much bigger than an epidemic of millennials with “very, very high” expectations overspending at brunch – namely, an amalgamation of factors, including rising costs of housing and increasing student debt Insider dubbed “The Great American Affordability Crisis” back in 2019.

And in case you weren't fully convinced this trend wasn't a product of whiny young people being entitled, research has shown that both Millennials and Gen X-ers actually are worse off than their Boomer parents, largely in part due to rising student debt. In 2019, research nonprofit Employee Benefit Research Institute (ERBI) published a study showing that both Millennials and Gen X-ers were less likely to be homeowners or have plans for retirement in the early days of their careers than Boomers when they were in the stage, a trend that continued when comparing where Gen X-ers and Boomers were in the middle of their careers.

“Generation X and Millennial families are faced with the growing challenge of balancing debt and expenses while also needing to save for retirement,”  report author and EBRI Senior Research Associate Craig Copeland told Forbes. “These generations may need to take significant actions, including working longer, saving more, and paying down debt, just to gain parity with previous generations.”

Even with these broad factors making it harder for young people to succeed, financial responsibility is still important. But just like everything in life, there is a happy medium. No matter how aggressively power players may present their approach to money as the hard and fast rules to success, there is no single one-size-fits-all secret to money management. There are general best practices – save, invest, budget effectively -- but everyone has different financial needs, making blanket statements reductive.

If your daily coffee habit, your taste for avocado toast, or hell, your love of Funko Pops is affordable and brings you joy, you can absolutely account for it responsibly, whether that means rearranging your budget, using an investing app that rounds up your purchases to investment, or cutting down on other unnecessary expenses, a financial philosophy some power players have recognized, including entrepreneur Ramit Sethi, who penned the New York Times bestseller, I Will Teach You to Be Rich.

“Everywhere you turn, you hear people telling you what you can’t do with your money: No lattes, no jeans, no vacations,” Sethi told Make It. “One day, when you’re 2,000 years old, you can feel great — who wants to live like that?” he said, adding that “life isn’t simply about cutting back.” 

But it's not just Sethi. Stephan, Orman, and O'Leary all seemingly understand this concept on some level. Despite his strong sentiment against store-bought coffee, Stephan has acknowledged just how overblown the “don't buy coffee advice” advice can be sometimes, admitting that "a $5 coffee every now and then is not gonna make you poor,” in a 2019 video ironically called “Why Buying Coffee Will Make You Poor." 

"It isn't gonna make a big difference in your budget, and it's not going to prevent you from going and buying a property,” he continued, adding that his specific gripe against buying coffee was “the cumulation of many small purchases throughout your entire budget spread throughout the entire day that you don't even realize you make that can really wreak havoc on your budget.”

“I find it very interesting that nearly every single self-made multi-millionaire financial gurus all say the same thing – that buying coffee is a waste of money and you should avoid it," he explained. But even with his disdain for small, mindless purchases, Stephan recently dropped $45,000 on a fish tank for his Las Vegas home, an investment that due to the involvement of living animals, will likely require regular – perhaps daily – investments to maintain. Even so, Stephan seemingly has no regrets, telling Make It he plans on continually adding to the tank. 

“The level of enjoyment I get from the aquarium is just unparalleled to any other experience that I would be able to buy,” Stephan said, describing the purchase as being “purely an expense." With his $6.1 million yearly income, he says the five-figure cost isn't much of a concern. “This is something that I’ve always wanted,” he explained. “I don’t even look at the cost of this aquarium.”

When he's not calling young people “idiots” for owning more than three pairs of pants and four pairs of shoes, O'Leary is actually a covert fashionista. “I invest in looking great all the time, and the way I do it is great clothing, great shoes and a haircut every 10 days,” he said. This investment apparently entails dropping $80 dollars on his aforementioned 10-day haircuts in an attempt to forge "a personal relationship with every hair,” and spending $120 on luxury underwear from Zimmerli of Switzerland. “They’re made from Egyptian cotton,” he added. “I love them.”

Although Orman has remained relatively tight-lipped about her personal indulgences, she has acknowledged this balance. “I'll never stop saying that the ultimate indulgence is building a financially secure life,” Orman wrote in an article for Oprah's website. “But if you can be mindful, sensible, and smart about it, you have my blessing to treat yourself.”

We may not be able to afford five-figure fish tanks or Egyptian cotton underwear, but hell, so long as you can responsibly afford it, you have full permission to tell Orman, O'Leary, Stephan, and every other anti-coffee crusader that they'll have to pry your daily latte from your cold, dead hands. Now if you'll excuse me, I'll be GrubHub-ing some overpriced – and carefully budgeted for – avocado toast. 

Top Image: David Shankbone/CNBC/MarkSweep

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