Liquidating Assets

HERE I SIT IN MY local Starbucks, sipping an overpriced iced tea comprised of 50% ice. As I am prone to do, I���m observing the customers in line and what they���re ordering. Yeah, I���m that suspicious-looking old man in the corner with iPhone in hand.

What I observe is a line of young, really young people���like less than age 25. What I see is consistent with many other stores where I���ve loitered, that is, lingered.

I anecdotally conclude that a younger demographic is Starbucks���s target. In fact, 49% of Starbucks���s revenue comes from 25- to 40-year-olds, while 18- to 24-year-olds account for another 40%. Starbucks considers its core customer to have an average income of $90,000. I���m not so sure. Neither the average nor the median income for Americans under age 45 is anywhere near that.

I���m pretty sure a big chunk of Starbucks���s customers can���t afford what they spend on their drinks. Yeah, I said it, can���t afford. But, of course, they buy them anyway. They just don���t realize what they can���t afford. Maybe I should give them a break. After all, the under-25 crowd���s brains aren���t fully developed.

How people spend their money fascinates me, especially when I hear that 42% of Americans are struggling financially, that many can���t afford their prescription copays and that they���re unable to save for the future. The average American household spends some 18% of its net income on things like pets, hotels, eating out, equipment for their hobbies, and entertainment fees and admissions.

I���m convinced���using my fully developed and hopefully still sound brain���that at least 80% of households could have a better financial future if they changed their spending habits. In your 20s, it���s easy to conclude that $5 for a drink is affordable, but viewing spending and saving over a lifetime presents a different possibility. Problem is, who thinks that way in their 20s?

The most popular Starbucks drink seems to be the iced caramel macchiato, which on average costs $3.75 to $4.95. Just 80 or so of those Venti-sized drinks would allow the 40% of Americans who can���t come up with $400 to get back in the game. Imagine that: Forgoing the caramel macchiato may be the answer to a financially secure retirement.

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