Why I don’t Believe in Saving Four Dollars on Lattes

Published by Thomas on

When you stroll across the internet there is one piece of financial advice that keeps coming back everywhere. According to some, it is the holy grail to financial freedom.

It is the ultimate financial advice. The advice itself is rather simple… Stop spending your money on small comforts, and especially those that come in the form of a triple caramel latte macchiato.

The advice is so wide spread that the phenomenon even has its own name: the Latte Factor. The latte factor is quite simple. If you have a financial goal like achieving financial freedom or getting out of debt then you should start cutting out small comforts.

A lot of people tend to stop by the coffee store on their way to work or during a work break. Not a single workday passes by without them and their triple caramel latte. Apparently, if you work towards a financial goal you should start by cutting the lattes out of your life and use the money you’d otherwise spend for your financial goal.

The first time I read this advice, I ignored it. But then I saw it popping up somewhere again and again.

So I started doing the math and came to the obvious conclusion. Just cutting lattes out of your life is not going to get you financially free anytime in the next century.

So what is it with the latte factor? Is there a meaningful idea behind it?  Or is it just a bunch of self-righteous frugalists being condescending towards you for spending your money on overpriced coffee?

The idea behind the latte factor

There’s no way around it. The latte factor sells well. It immediately grabs your attention because it sounds too good to be true and because the word latte sounds fancy as fuck.

Nevertheless, when you do the math you come to the conclusion that cutting out your daily latte will save you a considerable amount of money, but by far not enough to reach financial freedom.

What many fail to explain you is where the actual latte advice comes from. The meaning of the advice goes much deeper than just four dollars, cream and coffee tipped with caramel sauce.

The meaning lies in our lifestyle and something we call consumerism.

What many people who preach the latte factor assume, is this: if you willingly spend your money on an overpriced cup of coffee it is very likely that you are not money conscious enough to manage your finances well whatsoever. People assume that you throw around money like Nicolas Cage.

Lattes are a perfect example of spending generalization because coffee is generally cheap as hell and mostly provided for free in workplaces too.  So, if you get out of your workplace to spend four dollars on a latte, you must be a financial mess.

Chances are that next to lattes there are many small comforts you indulge in. Take out food, an occasional Dunkin Donut, eating out etcetera.

If you invest the money one spends on all the small comforts you’ll have a considerable nest-egg.

The bullshit in most of the latte advice

If you want to achieve a goal like financial freedom, it never hurts to have an objective look at how you spend your money.

If, amongst lattes, you spend every penny you earn like Nicolas Cage then your financial goals might never be reached. On the other side, you might just as well be very money conscious but also a huge fan of latte macchiato’s.

Perhaps god created you with a specific goal to make you indulge in lattes every day. Who am I to tell you that you should stop spending your money on those goddamn lattes.. right?

Another bullshit part of the latte advice is that it is often built on a complete generalization about one’s expenses. The assumption is that if you spend money on overpriced coffee your finances must be a complete mess.

The advice often comes from frugalists who use it as a means to display their financial superiority.

So, most people who preach the latte factor are actually trying to convince their selves of their own righteousness rather than trying to convince you that spending your money on overpriced coffee is bad.

Financial freedom is about much more than lattes

If saying yes or no to lattes becomes a serious thing in your life, then there is something seriously wrong. And then I don’t talk about the effect that the sugar intake has on your potential to develop diabetes.

If lattes are making you poor then you should probably not look at your expenses but at the other side of the balance sheet. Chances are that your income could use some significant growth.

Shaming someone who lives paycheck to paycheck about a few lattes doesn’t help their situation. At worst, it even deviates them from it. Growing their income is what they should be doing but instead they are over analyzing whether or not they should buy that latte.

Let alone that there are many other more significant expenses that deserve one’s attention. Focusing your energy on how to save money on big expenses like that new car, the maintenance of your home or the utility bills first will potentially save you much more money than cutting four dollar lattes out of your life.

Focusing on small expenses like lattes for many people is a form of denial for many people. If you just zoom in enough on the lattes in your expenses sheet then the other crap will eventually get so blurry that you can ignore it all together.

The too expensive car, your wife’s thousand dollar Gucci handbags, your collection of watches and so on..

Throughout my life I’ve met so many people who spend their money lavishly on luxuries and then out of the blue tell me that they are cutting back on the lattes because they want to save money.

While they are finishing their story about how much money they save on cutting 20 lattes each month, my inner economist has calculated that the brand new car they bought recently will devaluate by approximately 2000 lattes the upcoming year.

Achieving financial freedom is about so many things more than overpriced coffee.

It is about prioritizing, being honest with yourself and most of all; making a good and workable plan for yourself. If your mum gave birth to you inside a Starbucks and lattes is the only thing you live for, then I’ll be the last one to tell you to cut lattes out of your life.

Read through the lines and don’t let people who preach the latte factor mess with your head.

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