What is the Latte Factor®?
The Latte Factor® is a euphemistic label for all that extra money we spend daily on nonessentials such as candy, bottled water, doughnuts, muffins, soda, cigarettes, magazines, newspapers, and yes, lattes. Author and financial advisor David Bach coined the term to reference the inordinate amount of money people waste on a daily basis, that when saved can literally make you a millionaire. The Latte Factor® came out of observing a majority of Americans who live paycheck to paycheck, who are wasting their opportunity to become self made millionaires. The phrase “latte factor®” has become part of the American lexicon to describe how consumers fall into the trap of wasteful spending. Your own Latte Factor— can be anything — daily lunches out, weekly manicures, even unneeded cable services. By trimming the “fat,” people can sock away money in more easily digestible chunks. Bach first recognized the Latte Factor® when advising a woman who felt that she couldn’t afford to save money. after doi
document.write(”); The Latte Factor® is based on the simple idea that all you need to do to finish rich is to look at the small things you spend your money on every day and see whether you could redirect that spending to yourself. Putting aside as little as a few dollars a day for your future rather than spending it on little purchases such as lattes, fancy coffees, bottled water, fast food, cigarettes, magazines and so on, can really make a difference between accumulating wealth and living paycheck to paycheck. We don’t even realize how much we’re actually spending on these little purchases. If we did think about it and change our habits just a little, we could actually change our destiny. Still not convinced? Consider this: $5 per day (the average cost of a latte and a muffin) x 7 days = $35 per week $35/week = $150/month $150 per month invested at a rate of 10% annual return = 1 year = $1,885 2 years = $3,967 5 years =$11,616 10 years = $30,727 15 years = $62,171 30 years = $339,07
