As I mentioned last week, I’ve increased my spending on things I don’t really value – mainly food from Speedway and Tim Horton’s. These types of purchases show the latte factor in action. The latte factor is the effect that small, insignificant purchases have on your finances. They don’t actually have to be lattes, but that’s a term many people can identify with.
These small expenses of course add up over time. $3 for coffee every day during the work week is $15. Every month, that’s $60 down the drain – or more accurately, the throat. This isn’t to say that you shouldn’t spend money on coffee (or whatever your “latte” is), but you have to ask yourself if you’re really getting the value out of it that you think you are. You might find that you honestly do want to keep that expense in your life because you vaelue it. For me, I decided that I’d rather work on getting my emergency fund where I want it and saving up for something I really want to do – travel. Below are some ways you can “fight” your latte factor if you decide it’s not an expense you want in your life.
1 – Simple Self Control
As you drive past the coffee house or wherever, don’t pull in. This is painfully obvious, but it’s clearly not easy to follow. Otherwise, people wouldn’t be pissing away large amounts of money when they have huge credit card balances and student loan payments. You have to fight the urge of “I can afford it, so I should buy it”.
2 – Change the Route
Consider taking a different way to work or school every day. Try to avoid driving near your latte factor’s location. Don’t drive too far out of your way of course – you may end up spending more in gas (and frustration) than you would by just buying your latte!
3 – Reduce, Don’t Eliminate
If the thought of never (or rarely) making your purchase seems a bit too much like deprivation, consider reducing your spending. Instead of everyday, maybe you get coffee once a week. You’ll save money, but still have a special day every week.
4 – Give Every Cent a Purpose
Make a monthly budget and account for every cent that will be spent. Don’t allocate any money for your latte. Perhaps you increase your Roth IRA contribution or save up for that killer vacation you’ve always wanted to take. If you do this, then you won’t feel like you’re missing out on anything. You’re simply spending your money the way you said you would.
5 – Take Advantage of What You Already Have
Most of you reading this own a coffee maker. Make sure it gets used. Homemade coffee will be cheaper than Starbucks. Way cheaper. Bring your own snack, like a bag of chips, to work instead of hitting the vending machine for that mid-afternoon candy bar.
Final note: I’m really not against buying something if you really want it and value it. Everyone spends money differently and there’s no single “right way” to control spending.
