THE LATTE FACTOR

I was in LAS VEGAS and watching hundreds of people loosing money has lead me to this post. Author David Bach coined the phrase "the latte factor". The Latte Factor® is a idea that for all that extra money we spend daily on non essentials such as candy, bottled water, doughnuts, soda, cigarettes, newspapers, and yes, lattes is going to make us millionaires. He coined the term to reference the inordinate amount of money people waste on a daily basis, and when saved could 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 financially independent. Watching these gamblers describes to me how consumers fall into the trap of wasteful spending.

Your own Latte Factor— can be anything — daily lunches or dinners out, weekly manicures, even unneeded cable and Internet services, or excessive use of utilities. By trimming the “fat,” people can sock away money in more easily digestible chunks. You should decide a percentage of each pay check to save, say 10%. Bach first recognized the Latte Factor® when advising a woman who felt that she could not afford to save money. After doing a daily assessment of her spending habits, he determined that her Latte Factor® was costing her hundreds of dollars a year. Let's do your daily assessment!

Calculating the Latte Factor— is simple: $5 US Dollars (USD) per day, multiplied by seven days a week adds up to $35 USD. Multiply that weekly, which adds up to $150 USD per month (based on 30 days). That adds up to $1,855 USD per year, which, although a nice chunk of change, is relatively unimpressive. Now, if you invest that same $5 USD per day at an average 10% return, you will have saved $948,611 USD in 40 years. If you start in your twenties, by retirement, you will have a nice nest egg stashed away.

David Bach has built an empire on advising normal people and there is nothing complicated or fancy about his advice, just simple, doable steps that anyone can take to improve their financial outlook. He has authored several bestsellers including The Automatic Millionaire Homeowner, Start Late Finish Rich, Smart Women Finish Rich and Smart Couples Finish Rich. I encourage you to read some of his works!

Let us also look at what we waste in purchases of items we don't need or impulsively purchase. Do we need new, can we buy items used? What about recycling old unwanted items....have a garage sale, equals cash! Change your financial out look by planning. Plan for your savings and work your plan! The road to wealth is really in how you spend your earnings! 

What is your "Latte Factor"??