Graduated Learning: Life after College

I got my degree, I got a job…now what?

My thoughts on The Latte Factor February 19, 2019

Filed under: Personal Finance — Stephanie @ 2:59 pm
Tags: , ,

By now, you’ve probably heard of the personal finance idea of The Latte Factor. It’s the idea that your small expenses add up over time, and instead of spending your money on daily fancy coffees (or other splurges), you could be saving (and investing) that money and come out much richer.

I’ve seen this theory used as a way to shame people (“you’re poor because you buy yourself a treat/lack willpower”) and it frustrates and angers me. As Helaine Olen discussed in her book, Pound Foolish (and in plenty of other places like her blog post here), the real expenses keeping many of us from building wealth aren’t the $3 coffees, but the $300 doctor appointments or the $3000 monthly rent or mortgage payments. The huge cost of education, housing, childcare, and healthcare are almost unavoidable (and seemingly always increasing, and increasing faster than wages are growing).

I’ve also seen plenty of people take the positive spin: that cutting out an expense (of something they don’t need anyway) can help them reach a goal for something they really do want.

I’m somewhat in both schools of thought at the moment. As I discussed in my previous post, our monthly expenses are quite high. We’re paying a lot on our mortgage every month, and even more on childcare! So, cutting out a small daily luxury (or a larger luxury or two) seems insignificant by comparison.

But I also mentioned in that post how I am going to look for ways to save money, including trying to buy fewer lunches at the cafeteria.

And guess what? I did! My new rule for myself is that I can buy lunch once a week (which gives me wiggle room) but that the rest of the week I’m bringing leftovers or sandwiches. I’m not just saving on lunches, but I’m also earning a bit more money this way. Eating lunch I brought from home is quicker since I don’t have to go all the way to the cafeteria and then wait for my food to be prepared. So I’m able to get back to work sooner, and with my current schedule, that means I’m back “on the clock” earning money and getting things done!

How do the “savings” look? Assuming a lunch in the cafeteria is $9, and if I were to buy every day for 50 weeks every year (assuming holidays/and some full days off), bringing lunch every day instead I’d save $2,250 a year. Which is pretty great! But I’m also still spending on lunch foods to bring in, just not as much.

It still seems like a great amount…until I realize that’s less than one month of childcare (cost for both kids combined). Yeah. Ouch.

Still. I like doing it. I like knowing I can just eat quickly and get back to work. I like being able to control something, even if it’s small compared to everything else. It’s the same reason I get a big rush out of using cash back websites or coupons at my favorite stores, even if it saves me “only” a few dollars. It feels good.

I know I’m fortunate enough that I don’t have to count every penny. And I do like the idea of finding ways to save money. The concept is fine for encouraging people to think about a new way to save. I just don’t like when it’s used as a way to blame and shame people.

How do you feel about the latte factor? Have you changed your spending habits? What did that change in consumption do for you?


5 Responses to “My thoughts on The Latte Factor”

  1. jovermyer1 Says:

    When I looked back and saw that I spent $3,600 one year on golf, or nearly $4,000 on restaurants, I knew it was a real thing. Fortunately right now I’m in a similar position, where I can take a short lunch break and end up with a bit of overtime by the end of the day, resulting in covering my lunch 2-3 times over… Or if the past week has been any indication, no lunch break at all and extra OT on top of it! Hopefully grabbing a lunch break tomorrow!

    Liked by 1 person

  2. I for sure believe in the latte factor. But for me…it was shoes! I stopped counting once I got past 200, and then I started selling them. I was really lucky in the sense that I didn’t go into any debt over all the little leaks (OK, fine, some were HUGE!), but I am so frustrated with myself that the first year we were married, we basically spent everything we earned. I added an extra income to my/our savings account…and had nothing to show for it. ::facepalm::

    Liked by 1 person

  3. Ugh. Childcare. It’s only temporary. It’s only temporary. And I have to really watch myself on the mini expenses because they add up pretty significantly when there are a lot of them.

    Liked by 1 person

  4. scienceman11 Says:

    ‪Our biggest expenses are housing and childcare too. But we’ve found not insignificant ways to save on everyday expenses too. I don’t think of the latte factor as an either-or. There’s truth in it but its neither David Bach or Helaine Olen.‬

    Liked by 1 person

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