Latte Factor

After preaching in the morning service, I bought a short hot latte from Starbucks. While sipping and enjoying the hot latte in my office, I remembered a principle I read in the book entitled “Automatic Millionaire”. It’s the principle of the latte factor.
According to author and financial consultant David Bach,
“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, magazines and so on, can really make a difference between accumulating wealth and living paycheck to paycheck.”
In other words the “Latte Factor” is the unnecessary “little” expenditures that can drain our hard-earned money without realizing that they can add up to a huge amount. It’s the little foxes that destroy the vine. It’s a small stone that killed Goliath. If we are not conscious of our spending, chances are there are a lot of little wastages that occur with our money which can be redirected to a savings fund.
I remember when Starbucks newly opened, there was a week when I spent P1,000 worth of coffee. Now that’s about 9-10 cups of coffee but if I continue doing that, it will amount to P52,000 a year. That’s a potentially good savings if put in a sound investment portfolio or mutual fund. I decided to cut down on my coffee purchase. Please don’t get me wrong. I’m not against buying Starbucks coffee. In fact, I love it! What I am saying is to identify your latte factor (whether donuts, chocolates, soda, clothes, shoes, etc.) and start working on it in your savings.
An important principle to bear in mind is:
The best way to save is to spend less than you earn over a long period of time.
The problem is not how much we earn. . .it’s how much we spend! Most of us are natural born consumers.
Many times, people who receive an increase in income still cannot save because there are always things that they think they need when the increase comes. If we don’t radically change our mindset on handling finances, we’ll always be living from paycheck to paycheck.
Prov. 13:11  Dishonest money dwindles away, but he who gathers money little by little makes it grow.


Source: Finances