How to Find Your Latte Factor

 

What is the latte factor? You can read the excellent book called The Automatic Millionaire for the background on the idea. Here’s my quick version. I had heard of the latte factor before but just read the book the few days ago.

 

The latte factor started out as the idea that if you stop spending on daily coffee and investing that money instead, you could dramatically charge your life’s financial trajectory. Yes, even saving just a few pounds a day can really add up over the long term.

 

What you may be thinking is that you don’t drink coffee every day. In fact, you may hate the taste of coffee. That’s fine. That’s not the point. The point of course is to find something you spend money on and cut it out. Use that money instead to invest. Over the long-term, you’ll become a millionaire for it.

 

So the most important part of this equation is the beginning. How will you find your latte factor… Where might you be wasting a small portion of money on a daily basis… Let’s start at the beginning of your day and work our way to the evening. I’m sure there’s something you’re spending money on which you shouldn’t. And you know what the best part about this is… once you begin diverting the money into investments, you won’t even miss it. I promise. That’s because finding your latte factor isn’t about making life miserable. It’s about taking something you don’t really care to spend money on and stopping it.

 

You wake up. You pour yourself a nice bowl of the expensive cereal and organic milk. Stop. Do you really need the expensive name-brand cereal? Have you at least tried the generic? Switching to the generic can save you quite a lot in the long haul. You should at least try switching. And why are you drinking organic milk? Because it feels like the right thing to do? Have you actually researched as to whether or not it’s healthier? Do a little research. You may be surprised by your findings.

 

You rush out the door. You jump in your 3-series BMW. Stop. Why again do you drive a BMW? Unless you love the car, it’s time to drive something cheaper. And let’s stop again. Why are you driving? Couldn’t you take public transit for less money? Or ride a bicycle? Switching from a BMW to a bicycle will save you thousands in commuting costs each and every year. That’s a massive positive swing in your net worth!

 

You arrive at the office. You’re still hungry. Cereal isn’t much of a breakfast. You hit up the vending machine. Stop. Why are you eating out of a vending machine? The stuff inside is seriously expensive. Instead, pack a snack from home. It’ll be cheaper – not to mention healthier. If you think it’s too much of a bother, get real. It takes two seconds to put a muffin in a sack.

 

Let me pause for a moment. The idea here isn’t to make your life miserable. If you like organic milk or shaking the vending machine at work, by all means. But do find something you can cut out of your daily spending. I’m sure there is something you won’t miss.

 

Do you always eat out over lunch? That may be the biggest out of pocket expense you have all day. Consider bringing lunch to work. Hang out with colleagues over the lunch hour instead of driving somewhere else. If you feel the desire to escape the office every day, it may be time to rethink your career.

 

After work, what do you do? Do you go to a gym? Why not workout at home instead? Saving money on gym membership will mean a much healthier retirement portfolio. What do you say? Can you work out at home instead? It’s more convenient, that’s for sure. You can pull up YouTube and watch one of those fitness gurus. Or you can pop on an audio book on your computer and work out in the (relative) comfort of your own home. Home exercise is nearly free. If you feel the pressure to buy expensive exercise equipment, forget about it. A person can get strong using bodyweight only exercises. Think about it. How many pushups can you do? If you can’t do 200 in a row, why are you wanting to buy weights? You can’t even lift the weight of yourself!

 

Do you watch television at night because that’s what you’ve always done? Have you considered cutting the cost? That may be wise. That can be your latte factor. You’ll save big money over the course of your life by not having a television subscription. If you still want to watch the tele, that’s understandable. So instead, get your computer to interface with your TV. Watch some of the billions hours of content for free on YouTube.

 

What is your latte factor? How much is it costing you per day? How will you eliminate it?

Again, the purpose isn’t to make your life miserable. It’s just about identifying how to improve your life by redirecting your money into a more meaningful purpose. In the long-term, you’ll be much happier!

 

Bio:

Will Lipovsky is a personal finance freelance writer and internet marketer. His most embarrassing moment has been saying to a Microsoft executive, “I’ll just Google it.” You can get in touch with Will at FirstQuarterFinance.com.