Posts tagged ‘budget’

March 24, 2014

The Latte Factor.

I first read about David Bach’s ‘The Latte Factor‘ through Guy Kawasaki on Twitter (who, incidentally, you should follow, he shares great stuff) and I’ve spent the weekend thinking it over.

The Latte Factor, for those of you who don’t know, is a financial theory that basically says we’re all spending money on lattes or other small, daily things, without them really adding value to our lives and if we put that money into a savings account instead, over time it would make us rich. ¬†Whilst I’m not sure of the whole ‘Finish Rich’ element of this (does it just mean I get the fanciest coffin in the graveyard?) I am pretty convinced that I do spend money on small things without really thinking about them. Perhaps at the expense of my real financial or life goals.

In the past couple of months, because of big changes that are happening around here, I’ve been using YNAB to track all my expenses and pretty soon I shall have a really clear record of where my money is going each month. I already know that there will be a few areas that I need to focus on, and cut down, in order to achieve what I really want for the year. I’ve really enjoyed using YNAB, and genuinely think it’s worth the financial investment as it’s making me focus on my spending and saving far more than all my other methods have ever done. I can reconcile it against my current account and the smug feeling of knowing where every last penny is makes me feel so much more in control. It’s a good feeling. They do a month’s free trial if you fancy giving it a go.

Anyway, back to those lattes…

For me, it really boils down to mindful expenditure. Often, a cup of coffee represents time spent with friends and in that case, it’s absolutely worth the money, and a lot more besides. But the coffee I buy every time I wait for my daughter to finish ballet class is purely bought out of habit. I could wait for an hour without one and it would be just the same. So those are the times I could put ¬£2.50 towards my real financial goals for the year. It may not be much, but it will all add up.

To note, and so I don’t back out of them, this year’s plans include: spoon making workshop, circus trip, Amsterdam, floristry, a new DSLR, taking the kids to the seaside in the summer, a myriad of short trips and a horticultural course at college. And that’s before I start on the blog plans and worrying about my ancient little car breaking down! So, those lattes could pay for a lot more than an hour’s wait at ballet class…

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