Sep 29, 2019

Interactive: How much money would you save if you brewed that coffee yourself?

Hat tip to Jessica for finding this resource which allows students to tweak variables to find out how much they can save through D-I-Y coffee. It also provides opportunities to discuss investing as one of the variables is "investment return." 

Here are the variables (the dark rectangles are calculated fields while the white rectangles are user-generated: 

For those students who don't drink coffee, they can identify something they might buy several times a week (e.g. snacks) and

  1. Put in $0.01 for the bag (retail value) 
  2. Input the cost of that item purchased in the cup (retail value)
  3. Input number of times purchased per week in the cup(s)/week

I thought I would work through this using inputs that I derive from my own coffee drinking research. 

  1. Find my favorite coffee: Peet's Coffee Major Dickason's Blend Deep Roast, Whole Bean (32 oz.) costs $25 on Amazon
  2. A cup of coffee purchased at a coffee shop for me would be about $2.50; I never order specialty drinks
  3. Drinking habits: 2 cups/day and assume I go 100% cups vs. purchasing specialty drinks
  4. Investment return of 7% and inflation of 2.5% over 30 years. 

In case you were wondering...my savings in today's dollar amounted to....a piping hot $62,000. Making my own coffee saves me about 75% compared to purchasing at a store. Of course, that doesn't include my labor, but you know I'm multi-tasking while the coffee is brewing looking for that next Question of the Day:)

Questions for students:

  • Using your own personal experience, either work through the simulation as a coffee drinker or choosing another item that you buy on a weekly basis. What did you choose?
  • What did you assume for your investment return? What do you think will help you earn that return? savings account? CD? stocks? bonds? 
  • Research inflation rates over the past 70 years and then come up with your projection for inflation in the simulation? 
  • What were your total savings? savings in today's dollars? Explain the difference between these two numbers. 
  • Will this impact how you think about that regular purchase that you are currently making? Explain. 

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Check out our Interactive Library and our Arcade for more engaging interactives and games. 

 

 

 

 

 

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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