A Penny Saved

Before saying you have no money to save, check out the “Latte Factor.”

This may be a savings strategy you’ve overlooked when looking for ways to save money. What is the “Latte Factor”? 

Let’s make up an example. Tom is a 23 year old, working in an office somewhere, and not getting paid a whole lot. He knows he should be investing for his future, but he’s living paycheck-to-paycheck and just scraping by. Let’s take a closer look at an average day with Tom. 

Every morning he wakes up and, like a lot of us, needs his morning coffee. So he makes a quick pit stop at the local Starbucks on his way to work. His favorite is a $3.50 café latte, but he always gets a $2.00 muffin to go with it. That’s $5.50. 

Upon further review, it turns out Tom also habitually has an afternoon $1.50 protein shake at the local juice bar. Actually it doesn’t stop there either. He also purchases sodas or potato chips and other little snacks throughout the day. All told, that’s about $10.00 in miscellaneous costs. 

Now say Tom can cut out some of these treats and save $7.00 a day. That’s $210 a month, or $2,520 a year. If Tom invested that money and earned a 10% hypothetical growth rate, he could potentially have over $1 million waiting for him upon his retirement. 

This is only a hypothetical example and we might not all spend $10.00 a day on snacks, but we all have our Latte Factor. Check your own unnoticed spending habits. You may find that extra money you need to begin saving for your future. There are always ways to save money!

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