I Love my Coffee! But I Love me More!
Let me confess something, I am a coffee-holic! And, no, I have not decided to give it up. However, I have learned to conquer my latte factor!
I realized I had a problem about 10 years ago. One day, I got a shiny GOLD membership card from Starbucks in the mail. They enrolled me in their rewards system before I even knew what that was. I had spend so much $$ with them that past month they made me an honorary member, pretty cool right? I wondered why, then looked at my bank account. This was before we “had an app for that,” and before I realized how much I didn’t know about finances and how money works. I was putting less than $50 a month into my 401k at work, but spending hundreds on my morning latte fix. Thank the stars for our DIY movement that was just around the corner!
We’ve all heard some say that giving up that trip to the coffee shop or not going out to dinner one extra night a week could save you $100-300 a month. Potentially MILLIONS in the long run. When we look at our budgets we get frustrated trying to balance enjoining life today with paying our bills and trying to save something for our future selves. After all, I am pretty certain I don’t want to have to work when I’m 80. I’ll still work in some way cause I love some of the things I’ve been blessed to do that people call “work,” but having to is a different story. I also do not want to give up all my little happy coffee moments in life.
It’s Not Just Coffee Folks!
And please, if you don’t have a dangerously-frequent coffee habit like me, enter whatever word fits for your personal spending addiction. For some, it is those gourmet smoothies, or grabbing snacks at the gas station, or just fast food in general. If it’s not food, look at your iTunes or Google wallet account. My partner spent $100 a month on add-ons for apps and mobi-games when he was in the military. Many of us spend a few hundred a year on subscriptions and memberships we forgot we had or never use. If you are super amazing with your money and don’t have any frivolous spending habits, GREAT! Maybe your time could be directed to better fulfill your ideal future. Hours wasted today are virtually invaluable later on. We can always make more money, but time passed is lost forever.
Enter, The Latte Factor®…
So we’ve established none of us want to drudge away at work for years and years and never spend a dime on frivolous treats. But, what if we could save a little by not spending as much, rather that not spending at all? Instead of paying $6 for one afternoon of coffee bliss, you could buy the ingredients to make it yourself for a fraction of the price. Still enjoying our beverage rituals, but trading convenience for compounding interest?
There is a great book by David Bach, “The Latte Factor”, which I recommend everyone to read. It delves into simple facts about finances that we all can benefit from implementing and using for our advantage. Focusing on the impact of small purchases like what your daily latte costs today, but also what it REALLY costs you later financially. The earlier we learn these simple truths the better, so pass it on to your teenage children when your done reading it!
The basic concept is this: you don’t get rich overnight, but consistent small savings over time will create riches. David’s premise is that we all could become rich if we cut out our morning latte (or whatever small spending habit we have that sucks money from us almost unconsciously). He explains how those hundreds and thousands of dollars add up in a given year. How rich you could be if you would stop buying lattes and put that money in an investment account?
The Real Cost of that “Latte”
“If you spend $6.00 on an unnecessary product or service every day, over the course of 40 years you will end up spending $87,552.00.
If you were to instead choose to invest the $6.00 every day rather than spend it on an unnecessary product or service, you could earn $1,065,960.12 in interest.
This would bring the real price-tag of what you are spending your money on to $1,153,512.12.
So the question you should ask yourself is this: Is what I am periodically spending my money on worth the $1,065,960.12 interest earnings that I am passing up in the process?https://financialmentor.com/calculator/latte-factor-calculator
“But, What if…”, The Eternal Critics
Right away there were two major objections people had to this theory. First, people thought he was being pretentious and assuming people who were poor bought $6+ lattes every day. Understandably, someone making minimum wage probably isn’t going to Starbucks daily. Secondly, they claimed that he used too high of a return % in his calculations. Historically, with the crash of 2008 still in our rear-view, the stock market growth is 8-10% over time.
So I can understand that, yes, the extreme examples he is throwing out there claiming we can all be millionaires may seem untouchable. Many of us are trying to live day to day and don’t have an extra $300 a month laying around to try out in the market. You also may have noticed that for your average person handling their own investments, returns are closer to 2-4%, or worse, facing losses like we had in 2008. So his “average” of 10-11% noted in his book may be far fetched to some critics.
But did you see that the cost of what you spend today is worth 40 years from now? To break it down simply, SAVING $87,000 instead of spending it equates to over $1 MILLION in the long run. We are living to our seventies and eighties nowadays people! So starting to save at 30 still has time to grow and grow for you!
A Win-Win for Today and Tomorrow!
While the first 2 arguments were basically fallacies and misdirection, the 3rd complaint with The Latte Factor® theory was that it took the fun out of life. Less dramatically, of course, but who wants to give up their favorite restaurant, or skip that sweet energy nectar, or never add more shoes to their fashion arsenal? We work hard, we should be able to reward ourselves. However, we need to reward ourselves for the long run also, not just for today.
So, I propose a compromise to conquer your latte factor. Enjoy life today with 25% of your discretionary income, and reward yourself tomorrow with the rest. With my clients it’s a much more in-depth plan, but for the most part we don’t recommend tightening your budget so far that your enjoyment is strangled. Instead, I typically coach a person toward allowing a specific small amount in your budget for your favorite indulgences, and invest the rest for your future goals and dreams.
Even Better than the Coffee Shop (cause it’s cheaper!)
So coming from a gal who had a $200 a month coffee-shop habit – I have set a strict coffee budget for myself for years now. I took it a step farther and not only drastically cut my coffee budget, but I also learned to make my favorite specialty drinks at home. Of course that also meant testing several recipes, methods, and blends until I found the best at home hacks! It helped that I also owned a coffee shop in GA for a while (wink wink).
While most ingredients are available at your grocery store, you may also want to order online at Amazon or Beverage Gourmet right here in Northern Colorado. Overall I can say for me, I prefer Ghirardelli sauces, and Torani or Da Vinci syrups, but there are so so many good ones out there! Get a small bag of xantham gum powder – this helps with thickening and keeping blended drinks together. Invest in a good blender, otherwise the blended drinks will never be as creamy and frothy as they should be! I don’t drink hot coffee unless is actively snowing outside, so I still have one of the industrial Vitamix blenders from my coffee shop!
These are some of my favorite summer time coffee shop inspired DIY drinks! Tell me about yours in the comments!
Simple Iced Mocha
This really is simple! I have found the best iced coffee at home comes from cold brewing overnight in a toddy system. However that can be time consuming and messy. So I buy the unsweetened unflavored cold brew and add my favorite creamer and ice.
No real recipe here, just fill the cup with ice add cold coffee and top off with flavored creamer! For me, that’s about 5 parts coffee to 1 part creamer to make it super yummy! There are even sugar free creamers so you can stay Keto-friendly!
Power Breakfast Smoothie!
Power up your morning with this spinach and protein based smoothie – complete with MCT oil and collagen! This can be modified to meet a low carb diet by subbing berries or peanut butter for the other fruits.
- 1 Cup Spinach (raw works best but you can use frozen)
- 1 Tbsp MCT Oil
- 1 Scoop Vanilla Collagen powder
- 1/2 FROZEN Banana
- 1/4 Cup Greek yogurt
- 1 Cup FROZEN fruits of your choice (strawberry, mango, and peaches are my faves)
- 1/2 cup to 1 cup water or fruit juice
Berry Energy Smoothie
This one is one of the best inventions to ever cross the cafe counter – an energy drink fix AND your fave fresh fruit smoothie in one!
- 1/2 can Sugar-Free energy drink of your choice (Zero Ultra or Sugar Free Rebel goes well)
- 1 cup FROZEN triple berry blend
- 1/2 cup peaches or mango
- Add ice to desired consistency
- A pinch (small small minuscule amount) of Xantham gum
And last but not least, (my favorite) the Classic Caramel Mocha Frappe, AKA the DreamMaker!
The photo above is actually from my coffee shop back in GA! If you like the chain shops foo-foo-frozen-barely-coffee drinks – you’ll love this one! You can make it with espresso from your home machine, or cold brew coffee concentrate works well too.
- 2 cooled shots of espresso (or 4 oz concentrate cold brew)
- 1/2 cup cold 2% milk
- ice until level with liquid
- 2 pumps Caramel sauce
- 2 pumps Dark Chocolate sauce
- 1 pinch Xantham gum
- Top with Whip cream and drizzle till your hearts content!