The Latte Factor

"A latte spurned is a fortune earned"

~ People Magazine

What's a latte factor?! I first came across with this term while reading "The Automatic Millionaire" by David Bach. Every one's latte factor varies, it can be lotto ticket, Starbucks coffee, cigarettes etc. It's something than we invest in, on a regular basis; and yet, we don't realize the large amount we end up putting into it. Why?? It simply because we feel like it's costing nearly nothing when we spend on the purchase!

Lotto tickets? $8 a week. A cup of Starbucks latte? Oh well, it's only $5 a day. But do the math:

Lotto ticket
One week: $8
One month: $32
One year: $416
Ten years: $4,160!

Coffee

One week: $35

One month: $140

One year: $1,820

Ten years: $18,200!

It turns out to be a staggering number! Let's save up this amount and see what happens...

Assuming 3% interest per annum, compounded monthly over 10 years. Using the monthly compound interest formula, you'll end up with a value of more than $700 (lotto ticket) and $3,000 (coffee) from the interest alone! Well, perhaps you're not convinced... you question about inflation: what's the point of saving up? At the end of the day, it may not mean much after all.... And I don't mean to boycott the Lotto 6/49 or Starbucks, the message I'm trying to get across is to identify your latte factor and realize how much you can do by avoiding it!

Think about this: the above example is merely a 3% interest p.a., if you invest that amount in something that has a higher return rate, i.e. mutual funds, stock market etc., you're looking at a return of double or even triple of the above figures. Please bear in mind that lotto ticket or coffee is just an insignificant expenditure in our daily life. Imagine how big an impact would be when you sum up all your latte factors over the years... It's a stunning figure, I can assure you!

Then you may ask: why are we making life so difficult by saving up? Shouldn't we enjoy life while we can? Well, it's important to enjoy life, but do it in a responsible way and sensible manner. Do you know that 18,000 children die everyday because of hunger and malnutrition and 850 million of people go to bed every night with empty stomachs (Statistics from the United Nations, 2007)? We could have used that money to benefit others and spread the love of God!

To be rich, it's not about how much you earn; but how much you save and how much you're willing to give. I always admire those who live a joyful and contented live. They may not have the best thing in the world and a lavish lifestyle, but they're able to savour the goodness of life by avoiding the spendthrift attitude. It's never too early to start saving for old age, or any financial crisis down the road. Better still, if we can share it with people who are in need.

Money is not the root of all evil, but the love of money is.

"For the love of money is root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs."

~ 1 Timothy 6:10 (NIV)

It's never easy to cultivate a desciplined life, especially when it involves finance. It's just like teaching a newborn child, it requires lots of efforts and patience. Once the child is disciplined, the temperament is going to stay for good for the rest of his/her days. Likewise, we shall make an impact on our future and change the world, as the calling is within us, if you ever pay attention to the small voice deep down the soul...