Financial Freedom Series: The Cappuccino Challenge (Part 7)

A cappuccino at your local coffee bar costs around R40, including a generous tip. 

How much would you save up over the long term if you invested the equivalent of your favorite cup of coffee every day?  

I want to challenge you to take up the CAPPUCCINO CHALLENGE! 

If you set up a strategy to save regularly, you can build up a serious wealth portfolio over time. A simple habit of investing regularly can become a way of life and, over time, help you build up a small fortune. You may even be able to buy your own coffee shop or coffee plantation over time.   

Today, I challenge you to take up the cappuccino challenge and form a good financial habit of saving an extra portion of your income daily. 

So many people I encounter are not investing enough in their wealth portfolio, have a poor saving culture, and are getting deeper into debt. As debts climb, it becomes even more challenging to start savings.

Why Don’t People Save?

Many people will tell you that they do not save because they do not earn enough. 

I don’t see it this way! You need to form good habits. 

If you cannot save 10c in every R1, how will you ever be able to save R100 in every R1000 that you earn?  

Many people do not save due to a bad financial habit of not prioritizing saving.

But let us drill deeper. Why don’t people save?

• A lack of vision
• Not building savings into their budget
• Too many debts – many cannot afford to save
• A lack of discipline
• Bad habits
• Poor priorities
• A lack of planning

Saving Must Become a Habit!

We need to start creating a habit of saving instead of a habit of debt.

In many cases, the difference between building a wealth portfolio and staying broke can depend on the order in which one saves and spends money. 

WEALTHY PEOPLE SAVE FIRST AND SPEND WHAT IS LEFT OVER!

This way, they always build wealth first! 

POOR PEOPLE HAVE GOOD INTENTIONS TO SAVE TOO, BUT THEY SPEND FIRST.

When you spend first, there will always be another item to buy or an expense to pay that will prevent you from saving. Nothing will be left over to save if you spend before they save. 

You will never build a wealth portfolio if you don’t save before you spend.

Are Your Money Priorities Out of Sync?

I want to encourage you to get your priorities in the correct order. Put first things first. 

“Where there is no vision, the people perish.” (Proverb 29:18)

It is time to dream big dreams and to plan to reach these dreams. 

“Hope deferred makes the heart sick, but when dreams come true, there is life and joy.”  (Proverbs 13:12)

What are your dreams, hopes, and aspirations? 

How do you see your dreams come to fruition? 

How do you develop a habit of saving? 

Dare to dream.

Set goals. 

Formulate a plan. 

Get advice.

Start investing.

Automate your plan.

Above all, you need to stick to the plan. 

“Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.” (Proverbs 21:5)

The Cappuccino Challenge!

Now, I want to encourage you to start a new financial habit of saving. Today, I challenge you to invest at least the equivalent of the cost of a cappuccino each day. You may need to give up your daily coffee or cut back on other expenses, but get into a habit of saving at least the cost of a cappuccino each day.

Currently, R40 is equivalent to a cappuccino at your favorite coffee bar, with a generous tip included.

If you start investing R40 per day within a Balanced or Equity ETF or Unit Trust Fund, you should generate at least 10% p.a. growth over the longer term. (By the way, many Balanced Funds have achieved returns of 12-15% p.a. over the longer term)

If you invested R40 per day for 30 days each month, you would invest R1,200 per month. If you kept investing this over time and increased your savings by inflation each year, your capital would grow as follows:

• After 5 years, you would have over R104,000
• After 10 years, you would have over R306,000
• After 20 years, you would have over R1,340,000
• After 30 years, you would have over R4,460,000
• After 40 years, you would have over R14,340,000

*Assuming a 10% p.a. return and a 6% p.a. inflation rate 

By investing regularly over the long term, you can build towards a brighter future! 

“He who gathers money little by little makes it grow.” (Proverbs 13:11)

Start forming good financial habits. 

Start investing. 

Make it a routine. 

Make it a way of life!

I challenge you to form a habit of investing regularly over the longer term, where you will benefit from the power of compounding. 

I challenge you to save before you spend. I challenge you to take up THE CAPPUCCINO CHALLENGE. 

Start dreaming. 

Have a vision for your future. 

Set up an investment plan. 

Determine how much you will regularly set aside to reach your goals. 

Build savings into your budget.  

Automate it by setting up a regular debit order to come off your account at the start of every month before you spend money. This way, you will start building your Wealth Portfolio. 

Stick to your plan.

You can set yourself up for a brighter financial future! 

Have a blessed week.

God bless you,

Clinton