The ‘Latte Factor’…

cafe3I have to give full credit to David Bach of the Automatic Millionaire series of books for this, but in a nutshell he explains in depth what he calls the latté factor.  It’s the notion that an individual can save even for retirement if they even cut out some of the luxury habits we have like buying a latté coffee every morning. If we were to save that money every day, let’s say $3.50 for our example, that adds up to about about $18.00 in a given work week.  That’s $72.00 a month and $864.00 per year.  If you put that in an investment that returns even 10% per annum, that can lead to over $50,000 over the life of that 20 year investment period!  Makes you think twice about ordering that latté every morning now doesn’t it?

 

It’s not just for latté either, it’s for all the little habits that we have and if we learn to invest that money properly can make us a small fortune down the road.  Let’s look at some other examples.  How about little vices that people depend on like cigarettes?  If each box costs us 4.00 / pack and we smoke a pack a day (based on a normal week) that is $28.00 per week and over $1,400.00 per year!  If you continue on this path, you are literally burning in smoke over $29,000 dollars over 20 years.  What if we took that money and invested it in a good investment that yields 10% per annum?  In 20 years, we could have over $80,000 towards our nest egg or even a wealth builder!  That is the power of compounding and Future Value (FV) of money when invested in something that gives a return %. 

 

Friend, what I would like to ask you is to simply ask yourself this week when tempted to spend on little habits, say, “Do I really need this or can I invest this?”.  Remember our examples above and you’ll definitely start toward a life of abundance because you will know that little money can lead to big money over time.  I have kept this post short on purpose in order for you to have maximum retention on this valuable subject of building money over time.  A little money as you can see from the above example, can add up to big money over time.   Get on the Financial Freedom road map!

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Category: Financial Abundance, Financially Elite Blog