Will Cutting Out Your Daily Coffee Really Make You a Millionaire?

It might make you less jittery -- but will it really impact your finances all that much?

Coffee. It's the thing many of us look forward to in the morning (or, ahem, throughout the day). And it's something that tends to get a bad rap as a major budget-buster. That's because a lot of us have a habit of purchasing store-bought coffee rather than making it ourselves for what could be pennies.

In fact, you'll often hear that if you were to cut out store-bought coffee, you'd wind up a millionaire. But is that really the case?

Your coffee isn't killing your dreams

Let's be clear -- if you're deep in debt and have credit card balances you're months or years away from paying off, then you probably shouldn't be indulging in store-bought coffee until your financial picture improves. But if you're doing reasonably well financially -- you have a decent chunk of money in your savings account and you're making progress on your retirement savings -- then you don't necessarily need to rush to deprive yourself of that treat.

In fact, contrary to what you may have heard, skipping your store-bought coffee probably won't result in you being a millionaire. Let's imagine you buy coffee three days a week at $3 a pop, for a total of $468 a year. Even if you were to invest that money at a 10% average yearly return (which is around the stock market's average), in 40 years, you'd have about $207,000.

Now that's clearly a lot of money. But it's not $1 million.

Now, let's say you buy a $3 coffee seven days a week, for a total of $1,092 a year. Even then, you'll be looking at $483,000 in 40 years' time if your investments deliver a 10% average annual return. Again -- a lot of money, but not $1 million.

And also, these large numbers should be taken with a grain of salt. A lot needs to go right for your portfolio to deliver an average return of 10% over time, and that return is by no means guaranteed. So the wealth-building ability skipping your store-bought coffee gives you may actually be more limited than you'd think.

A better way to build wealth

Saving and investing requires some amount of sacrifice. After all, you'll have to not spend every dollar you earn if you want the option to sock some money away in a brokerage account or IRA.

But if coffee is one of those things that brings consistent enjoyment to your life, you shouldn't give it up. Instead, consider limiting your spending in other areas. Maybe don't buy the fanciest car and save yourself $300 a month that way. If you invest $300 a month over 40 years at an average annual 10% return, you'll end up with nearly $1.6 million -- without having to deny yourself your daily caffeine.

Ultimately, you may decide that it's time to stop indulging in store-bought coffee when you can make your own at a much lower price point. But don't pull the plug on those coffees because you're convinced you'll never meet your financial goals otherwise.

There are other routes you can take to becoming a millionaire. And on the flipside, skipping your store-bought coffees for the rest of your life might help you grow a lot of wealth, but even that probably won't be enough to help you reach millionaire status.