Is This Necessary? Evaluating Your Everyday “Latte” Purchases to Save Money

During World War II, when there was a nationwide program of gasoline rationing, there were signs posted along highways saying, “Is This Trip Necessary?” reminding people to not waste fuel. As we begin to get control over our finances, maybe a good sign to carry with us is one that says in bold letters, “Is This Purchase Necessary?”

In his book, The Automatic Millionaire, David Bach coined the phrase “The Latte Factor” to help us look at our spending habits with new eyes. You see, if you don’t currently have a habit of saving regularly and paying off your credit cards in full each month, Bach points out that it’s rarely the fault of you not earning enough money. Where the fault lies is in your unconscious or automatic spending habits.

To get you thinking about the ways you spend your money, Bach named this unconscious spending “The Latte Factor” because so many people can relate to spending significant amounts of money each day on their morning (and mid-morning, and afternoon, and on-the-way-home) coffee-drink fix.

A $300 Per Month Hole In My Pocket?

When I first read about this “Latte Factor”, I thought it was silly. Hey, I deserve this one little luxury, don’t I? I work hard each day, so having a little coffee treat – and maybe an over-priced pastry – once or twice a day is my right. But then I started doing the math. What I discovered was that between my wife and I, we were dropping about $300 a month at the little mermaid coffee stand each month, or roughly $10 a day!

Wouldn’t I rather be spending that $300 a month on paying off debt or saving it for retirement or college for my kids? It was an eye-opener for me. And it was surprisingly easy to break the habit – especially when I had other things that I really wanted to use that money for. I still enjoy my morning coffee, but now I buy just the premium coffee beans and brew my own at home in my fancy stainless steel drip machine. My wife discovered oodles of flavored creamers in the grocery stores, so neither of us really miss our old barista buddies, especially knowing we’ve got an extra $300 a month to use now.

What are your Latte Factors?

What are your Latte Factors? Even if you don’t drink coffee, you have some. As gasoline prices continue to rise and the American public is demanding congressional action, I couldn’t help but laugh out loud the other day while I was pumping $72 of liquid into my car. There next to the pump, was a stack of bottled-water cases – on sale for a special price. I did a quick calculation and realized that the bottled water – on sale – was roughly 50% more expensive per gallon than the over-priced gasoline I was so furious about.

And the water-bottler didn’t have to go into a hostile part of the world, construct a multi-million dollar drilling platform, ship the black crude to refineries, create the gasoline to conform with 50 different states’ fuel standards, and then ship the fuel across the country to the pumps. They just had to put water in a plastic bottle. Remember where we used to get water (the tap)? We can still get it there, for roughly a million-times cheaper than those little plastic bottles. Silly? No Big Deal??? Hmmm…

Any Of These On Your List Today?

• Car Wash (Go home and use a bucket and hose)
• Cigarettes (Do you know what this does to your wallet AND to your health?)
• Fast Food (See Cigarettes)
• Overeating (See Fast Food)
• Soda from a Vending Machine (Hmm… equivalent to $30+ a case, or purchase $5 a case in a grocery store and place them in your refrigerator. And don’t forget what soda does to you … yup, see Overeating!)
• Beauty Parlor Shampoo (Skip the pricey salon potions and lotions – get ‘em at your discount grocery store. Yes they do work just as well. Yes they do! Don’t argue with me!)

These are just a few of hundreds of things you are likely wasting your money on. None of them are evil or bad, but we’ve become so used to these conveniences that we actually forget we have choices that are not only cheaper but probably healthier for us too.

Give Yourself More Money Now!

So right now, before you click over to another article, decide to act. Identify one “Latte Factor” you can eliminate. Shoot for something that could save maybe $10 a week. And then eliminate it. You’ll be shocked how easy it is and feel great about yourself knowing you just gave yourself a $300 a month raise!

Related Articles:

• I’ll Start Saving, Just As Soon As…
• Your Financial Bucket List
• The Half-n-Half Way to Improve Your Finances
• Are YOU Spending Wisely, or Emotionally?
• The Cost of Whistles – Living Successfully