A few years ago I was reading a book by David Bach titled, “The Automatic Millionaire“. In this book, the author refers to something called “The Latte Factor”. This means that most individuals are more concerned about how much they make and not on how much they spend. If you cut out one thing in your life that you find yourself always purchasing, a latte for example, then you will be able to save enough money each month to ensure you are not living paycheck to paycheck.
The more I thought about this whole concept, the less I really liked it. The one thing that most of us pick out would probably be the thing that really makes us happy. Maybe for you it’s stopping at the local coffee shop in the morning or it’s treating yourself to a smoothie after a workout. If you cut that out of your life, you have also reduced your happiness.
What I would suggest instead is to minimize how often you purchase your “Latte Factor” and find something else to cut back. Instead of stopping at the coffee shop every morning on the way to work, stop only three mornings each week. If you really want to cut back, then you can stop on Fridays and make it your special treat to end the week. By doing this you will not only save money, but you will also continue to allow yourself to enjoy your guilty pleasure.
I realize that $10 is not a lot of money, but this is more about principal. You don’t need to give up something you love. All you need to do is minimize how much you indulge in it and find something else to cut your spending on.
What is your Latte Factor?
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