My thought on the latte factor

If you have read Start Late, Finish Rich by David Bach you would be very familiar with the term latte factor. Once the a famous if not the only money saving tip I get in the 2000’s. The idea is that the little latte you splurge today makes a fortune tomorrow. Basically that is saying the things we spend actually cost more than what we thought.

Could all the little habitual spending in your life would actually worth a fortune if you add them up and invest for long term? Historical data seems to validate that.

However, not everyone would agree with that, sometimes we believe that we should live the lifestyle and treat ourselves to the much-raved RM15 fried MARS bar. And I am part of the latter category, paying RM20 for Starbucks or other cafe doesn’t sound that bad to me. What is the point of having money but couldn't buy any happiness out of it?

But the problem is that many times the coffee disappoints me - like Starbucks. Once you try good coffee -- Starbucks taste much like blackish water. If you haven't, chances are you have not try real good coffee. As the habit accumulates in a year, my coffee disappointment in 2015 has cost me not RM20 but RM400+.

Many times we allow ourselves to spend just a little for something that we don't really want. But these little costs do add up over time. Finally, I learn to see latte factor from a different angle.

A latte (disappointment) splurged is a fortune erased.

What if Latte factor is not about depriving the awesome lattes to save some money but about finding our unnecessary and disappointing spending habits that take away other life opportunities.

Drinks are one of the Latte factors for most of us. Many times I buy drinking water outside the street just because I am lazy or forgetful to bring bottled water from home. Many test on bottled water shows that the water is full of contamination, like the Fuji water (yes, the one that 5 star hotel serve). Plus, a bottle of plain mineral water is 200 times pricier than filling up a bottle at home - the cost of lack of self-discipline.

Or like the RM6.90-7.90 milk tea drinks and cheap ice cream that you take when walking aimlessly in a shopping center. These foods do not give you nutrient, the shop don't even provide you chairs to sit and drinking sugared drinks makes you fatigue in the long run.

To find out your latte factor, take a critical look at your daily and other seasonal expenses - big and small that is not meeting your expectations nor contributing to your life goals and see if there are steps to exchange them for more meaningful things.