I admit I was sucked into the Starbucks life while studying. I’d get bored of being in deathly quiet environments, like the typical library, and would need a change of scenery, and some matcha… I’d go through phases where I’d be getting matcha frappuccino’s every day. Those frappuccino’s today cost just south of $7.

After I passed my last actuarial exam and received my FSA my wife got me a matcha starter kit as a present. This included a matcha mixing bowl and a whisk, and of course some matcha from the matcha cafe. At first I was only using it for regular tea, nothing fancy, and I noticed the quality was really quite excellent. I then thought maybe I could make the frappuccinos myself. I found some recipes and started experimenting.

Since I’ve started making the frappuccinos myself I’ve noticed a couple of things. I spend a lot less money, both in the actual frappuccino cost and the gas that I was spending every morning driving to and from Starbucks, and the quality is much better. Some of you may be rolling your eyes and saying, “well duh dude.”

Sometimes we get caught up in habits, and I originally got sucked in because Starbucks was the only place I knew that had matcha, and they’re hard to break. Sometimes we need an outside force, like a matcha starter kit, to generate a change in mindset. This did get me thinking though, how much money is this change in habit worth to me today?

For this analysis I’m assuming I’m saving $7 each day from going to Starbucks but need to pay the following over time to make my own frappuccinos (these are estimates as I haven’t been doing this for long). I’m also assuming all costs go up 7% each year:

My question is what is this habit worth over say a five-year period?

Cash flow:

Cumulative cash flow:

If we were to discount these cash flows back to today at 7% the net present value would be $7,036 and if you think I should be discounting at a higher rate, say 15%, the net present value would be $5,900. Regardless this is a lot of money. I did exclude blender costs and the savings in gas but I would guess for me that would only cause those estimates to increase.

This change in habit is worth a lot to me today! The IRR is out of this world, albeit on relatively small amounts. In fact I feel so much richer that I may go put 5k into something useful, maybe a course or two:)

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