Claim 2 of 22
Small spending: cut the daily coffee
Is the daily coffee where the money goes?
Verdict
Weak diagnosis
The arithmetic of small purchases is correct, and a daily 5 is between 2.3 and 5.2 per cent of the average spending in the three sources, while housing and transport take between 31.7 and 50.4 per cent, far larger shares than the coffee in all three sources.
The cost, from the book's own figures. Giving up a daily 5 for a whole year frees 1,825, which is 4.6 per cent of average US spending on housing and transport ($39,584), and on the BLS average a 5 per cent fall in housing cost ($1,313) frees about as much as skipping the purchase on all 260 working days ($1,300).
Made by: Bach, and Robin and Dominguez. Argued against by: Sethi, Olen.
Test it on your own numbers
- United States: Consumer Financial Protection Bureau, Your Money, Your Goals toolkit (consumerfinance.gov/consumer-tools/educator-tools/your-money-your-goals/toolkit), to fill in its cash flow budget worksheet and spending tracker.
- United Kingdom: MoneyHelper budget planner (moneyhelper.org.uk/en/everyday-money/budgeting/budget-planner), to record your income and spending by category.
- Australia: Moneysmart budget planner (moneysmart.gov.au/budgeting/budget-planner), to see where your money goes and whether income covers it.
The full test, with every figure dated and sourced, is in chapter 2 of the book.