HUGH CULVER

How drinking tea earned me $650,000

Updated to Habits, Life on December 19, 2022.

When I was a young river guide I drank coffee like water.

The blacker the better; the more the better. It was how I got jacked up for another morning hauling around obscenely heavy equipment, stayed awake on long drives to the river and fuelled all-nighters around the campfire entertaining guests with wildly exaggerated tales from past trips.

For fun, I would make “cowboy coffee” by swinging a boiling pot of coffee straight off the fire with an outstretched arm like I was painting a big brown ‘O’.

I carried my coffee habit with me through every job, shared apartment, girlfriend, and remote adventure. It was normal—I didn’t think about it.

And then I visited a financial planner.

My homework

I was shocked at how something that only costs $2-$3 could add up.

It was time – I had a young family, steady income (not much of it, but it was steady) and I wanted to start planning my financial future. My homework was to record everything I spent money on for two weeks – everything.

Every time I pulled into a gas station, picked up groceries, or went out for dinner, out came my notepad and I recording my spending. After two weeks I carefully separated and summarized my spending – going through every receipt and notation, looking for a clue to improve my spending habits. And one item stood out:

Coffee.

I was shocked at how something that only costs $2-$3 (remember, these are prices from 17 years ago) could add up. But add up it did.

Here’s how the numbers worked out:

Four take-out cups at a conservative price of $3 each, in pre-tax dollars, is about $15 a day. Multiply that over the week, with less spending on weekends, and pretty quickly you hit just under $4,800 per year!

As much as I’m talking about coffee and saving a few bucks here and there, this article is really about something much bigger – discipline.

A lesson in discipline

Whenever I ran into cash flow trouble, my first thought was to go out and earn more money.

You see, I had no discipline around money (I had serious discipline deficits in other areas of my life, but that’s for another post.)

As a young man I worked for my brother building an entrepreneurial business and eventually was rewarded with a small windfall when we sold the business. In the following three years I repeated that same cycle: build a profitable business, buying whatever I needed to grow that company (including over $1million on airplanes) and then get a windfall when I sold the business.

Whenever I ran into cash flow troubles, my first thought was to go out and earn more money. In my mind, you saved money by going out to get more.

I never looked at costs.

But, there I was, back in that financial planner’s office, staring at how much I spent on coffee. And because I was basically on a fixed income, my options were limited.

So I decided to go cold turkey.

Going Cold Turkey

Within one year, I was saving almost $4,500 with my new tea drinking habit.

The next day I skipped the morning brew, mid-morning refill, afternoon espresso pick-me-up and commute home take-out.

Instead I drank tea and I made my own (not bought in a café).

On the surface, it seems trivial.

After all, we spend big money on gas, insurance for our cars, mortgage payments, our kids’ education, travel, and appliances. Yes, all of those are there, but most are not variables. Just like in business; you have fixed costs and variable costs.

I was looking at my variable costs.

Within one year, I was saving almost $4,500 (calculated in pre-tax dollars) with my new tea drinking habit. Not a bad start.

I knew I could do better, so I invested that amount in blue-chip stocks.

The stock market made me nervous—I like to invest in things I can touch. So, after only a year, I used that small amount and a bit of savings for a down payment on a rental house. A year later, I sold and bought another rental. Fast forward 17 years and I own a mortgage-free rental house valued at $650,000 with rental income (before taxes) of $26,400 per year.

And it all started with one decision and some discipline.

Small Savings into a Big Future

The second “trick” is to have the savings plan also become automatic.

If you are wondering if you could create the same results with your spending, start with everyday expenses – the kind that are easy to ignore – and track your spending for two weeks. It could be last-minute grabs on the way to the Costco check-out, an online subscription for a service or TV channel you rarely use or money spent on dry cleaning. It adds up, but you won’t know how much until you do a bit of homework.

I know this sounds like advice from your parents: watch your pennies and your future will take care of itself.

But, it works. And not just with money.

Imagine what would happen if every morning you wrote one paragraph of your next book, meditated for 10 minutes or wrote three things you’re grateful for? Just like me investing my tiny daily saving from drinking tea, you would be investing in you and your future.

In a small way every day would be better than the one before.

The trick (if there is one) is to allow one small action to become a habit. Drinking tea became a habit and because I didn’t have to think about it the results became almost automatic. And from that simple habit I gained a new understanding of what was possible in my life.

Where I used to force results with big, exhausting efforts (which often failed to create any lasting change), now I look for small habits I can stack onto existing habits and still get the results I want.

Like:

  • drinking water after waking up,
  • walking my dog after my morning writing,
  • start dialing the next prospect immediately after finishing the last call,
  • moving commitments to action plan after meetings, and
  • clearing off my desk before finishing work for the day.

I started this post writing all about money. But, really it’s about human nature, procrastination and how hard it is to create meaningful results in our busy lives of distraction. The good news is that it can all change with one question:

What is one action, that if you made it a habit it would change everything for the better?

I want to know! Tell me in the comments below what the one thing is for you and I’ll write back!

For more articles about money and building wealth:

Why $100,000 a year won’t make you rich

How drinking tea can make you rich (and build willpower)

How to make money NOW as an expert