What a latte a day looks like for one month
We’ve all been there: we go to the ATM, and when we look at our balance we’re shocked— where the heck did all the money go? And why can’t we seem to save it at all?
According to David Bach, author of Smart Women Finish Rich, one of the greatest culprits is a phenomena he has coined The Latte Factor®. The Latte Factor’s®basic principle is that seemingly insignificant purchases can have a huge impact on how much money we have—obvious, right? That’s where we are wrong. Despite “small purchases can add up” being common knowledge, we still tend to underestimate just how much we’re actually spending over time.
This is especially true for us collegiettes™. Think about an average week: being the intelligent and informed HC reader that you are, you spend moderately, and make sure to budget and consider carefully big expenditures. But think again—there was that $5 cover the other night…and the late-night pizza…and the mountain dew from the vending machine at the library those one, two, three times…and don’t forget the Starbucks coffee on the way to class every morning. Although each of those purchases makes very little difference on a micro level, they actually do on a macro level.
As a result of all this spending without realizing, our concept of how much control we have over our money situation is warped. We’re not giving ourselves enough credit! According to Bach, if we can avoid the Latte Factor®by “putting aside as little as a few dollars a day for your future rather than spending it on little purchases such as lattes, bottled water, fast food, cigarettes, magazines and so on, [we] can really make a difference between accumulating wealth and living paycheck to paycheck.”
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As for saving money during college, it may seem impossible with our minimum wage jobs and active lifestyles. However, Bach believes that anyone, regardless of their income, can become wealthy over time if they are more cognizant of their purchases and save little by little.
Obviously, some items will be worth the cost (coffee addicts, don’t worry, I’m on your side). But being more aware can make a huge impact. Who knows, maybe next year that way-beyond-your-budget Spring Break trip in Puerto Vallarta could actually happen!
To see The Latte Factor® in effect, click here go to Bach’s website for a free cost calculator.
Sneaky ways to avoid the Latte Factor®:
Get the CVS chapstick—You know you’re going to lose it anyway, and after a while the chapstick will pay for itself with the difference in price. This applies to other items, which have generic brands, as well.
Make your own coffee—invest in a cheap coffee maker with a timer, so it automatically brews your coffee in the morning. You’ll never have to get your coffee on the go again!
Pick the cheapest option—If you can’t decide between two items on a menu, get the cheaper one.
Always order water, not sprite—Once again, this is an easy way to keep your bill down at restaurants and avoid refill charges. And it’s healthier too!