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David Bach’s Latte Factor: The Key to Millions?
By Molly's Brother | August 26, 2006
I was reading the articles of The Dollar Stretcher earlier this week and came across Jeffrey Yeager’s “It’s Not The $3 Cup of Coffee.” In the article, Yeager argues that, by giving up the designer coffees each morning, you will not automatically find your path to wealth. And he’s correct. But what Yeager doesn’t recognize is the importance of changing spending habits, which in my opinion, is at the core of Bach’s Latte Factor. By starting small and scrimping on that $3 cup of coffee every morning, you develop a new relationship with money and with spending. After some time, you’ll soon apply this thinking to bigger ticket items and unnecessary monthly expenses that you may not be able to afford.
However, to make reap the financial rewards of giving up that morning coffee, make sure you take action.
Squirrel away the savings. In Yeager’s article, he mentions that the money saved on coffee will never see the inside of a bank vault. If you don’t squirrel away the savings, he’s right. But link up to online banking, that way you can make sure that the $3 gets deposited to your savings accounts. Soon, you’ll be able to see how much you’ve saved by eliminating this budgetary “trouble spot.” This way, too, you’ll make sure that the money you save on your morning coffee doesn’t get spent on lunch or after-dinner drinks with friends.
Reward yourself. Yeager accurately talks about the price of denial: if you deny yourself something, in time, you only grow to want it more. My response to this: Instead of eliminating the morning coffee–or whatever item it is for you–buy it once a week or once every two weeks. Not only will you have saved money, but I bet you’ll enjoy your splurge that much more.
Shower. Rinse. Repeat. Once you’ve successfully gained control over one area of spending, identify and eliminate other trouble spots. Make sure you set the money aside, though. That is a vital step. By eliminating spending, you’ll have freed up money to help destroy your debt or put towards savings and retirement accounts.
While Bach’s theory is not a simple “road to riches” plan, it is effective because it helps you radically change your spending behavior. And that’s what got you into debt in the first place.
Topics: Personal Finance |
August 27th, 2006 at 7:09 pm
Amen. You are right about that.