The Latte Factor

The Latte Factor was a book written by David Bach that teaches readers how small purchases can add up to large sums of money over long periods of time.

When that book was first written, a latte at a local coffee shop was around $5. Suppose you were to drink one every day, that adds up to over $1,500 a year. You were drinking drip coffee every day at the office, and saving trips to the coffee shop to once a week would cut your costs down substantially. You could also purchase a "fancy" coffee maker that would allow you to make inexpensive lattes at home. The fancy coffee maker may initially cost you $500, but it will save you $1500 after a year of use.

This money logic works with all kinds of purchases; buying coffee at the coffee shop is a great example. The same premise can be used with clothes, video games, streaming services, etc.

If I went to the coffee shop every day, my drink would cost $7.50, for a week, that is $52.50 before taxes. That is over $2,700 in coffee for a year, more than $10,000 in 5 years! For my family, that fancy coffee maker was a good purchase. I still get a coffee on the weekend when I take my dog to get her cup of whipped cream. Saving money is not a zero-sum game; every little bit helps. If you can drink drip at the office a few days for free, great, great, a fancy coffee maker great, not drink coffee at all a few days great! Now put those savings to work for you!