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July 22, 2021

Is your 'latte factor' worth worrying about?

Unless you really don’t pay any attention at all to how much you spend, you’ve probably heard of the ‘latte factor’, a phrase coined by David Bach, the author of The Automatic Millionaire.

He says that too many of us ignore seemingly insignificant purchases (like the jolt that you pick up each morning before you head to work) even though they really add up.

If you spend $4 on a latte every day, for instance, your habit adds up to $20 a week, excluding weekends. That’s the equivalent of a wide screen TV every year.

Click here to see just how easily those little expenses add up. By entering how many times a week (or month) you purchase certain products or services, you’ll come up with a running total that may just surprise you.

The question is, how can you stop this cycle, reverse it, and start getting ahead on your current income, without living in a cave or completely depriving yourself of the rewards you've earned?

The point of the exercise is not to drain all the fun out of your life but to get you to change your thinking about your money. At this stage, you’re really just quibbling over dimes when you should really be looking at the dollars. But it is a start. 

Of course, the real success of this strategy depends on the money you save finding its way into your retirement fund. But that’s another story.

So ... what’s your Latte Factor? Bottled water? Starbucks? Fast food? A gym membership you never use?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...