August 31, 2006


Latte Factor (LAT.ay fak.tur) n. Seemingly insignificant daily purchases that add up to a significant amount of money over time.

The Latte Factor® is perhaps a concept that isn't foreign to you. It was a concept coined by David Bach, author of The Automatic Millionaire. 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 (as opposed to the more common approach of trying to cut 'big' items from your life OR SIMPLY DOING NOTHING) . 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, [plug in whatever your "personal latte" is here] and so on, can really make a difference between accumulating wealth and living paycheck to paycheck.

If you take a closer look at your 'small spending,' you can quickly see the great cost of those small habits. Investing a small habit (such as $5/day, at historical rates of return, ~10%) would yield close to a million dollars in roughly 40 years!

What's your Latte Factor®? Take action!
To get started, identify what your Latte Factor® is. The most beneficial way to do this is to track your spending for a full day. I've provided some links below to assist in the process ... Once you know where your money is going and how much your Latte Factor® is costing you, use the calculator below to see just how much you could save in a few years. You'll be amazed at how much you could be saving.

Even if you make a lot of money, it doesn't necessarily mean you're building wealth. That's because the more we make, the more we tend to spend. I believe that an awareness of our personal Latte Factor® will only help down our paths to "Financial Success" ...

Useful Resources:
'Fix the Leak in your Wallet' (USA Today Article)
- Latte Factor® Calculator
- Latte Factor® Worksheet - What is your Latte Factor Worth?
- OFS Budgeting Resources
- Stop Buying Expensive Coffee and Save Calculator

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