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latte factor

The Latte Factor. Why saving daily can really add up.

Every little bit helps. We hear it over and over again when it comes to saving our money. But how much can that ‘little bit’ actually amount to at the end of the day? The simple answer? A lot.

What’s the deal with the Latte Factor?

To illustrate how that little bit becomes a lot, David Bach introduced the concept of the Latte Factor in his book Finish Rich. The whole idea is that the trivial things we spend our money on everyday add up to a large amount over time.

How the Latte Factor can add up.

When you are pulling toonies and loonies out of your change purse or using your debit card for small purchases, it seems insignificant. But, if we take a look at buying a morning latte each day:

  • $5 per day, 5 days a week = $25
  • Over a month = $100
  • Over a year = $1200
  • At a 5% return, over 40 years = $231,282.00

Let’s say your Latte Factor is lunches out. If you eat out at work each day, you are most likely spending at least $10, if not more.

  • $10 per day, 5 days a week = $50
  • Over a month = $200
  • Over a year = $2400
  • At a 5% return, over let’s say 30 years to retirement, that’s $462,965.

It looks really good on paper, but, cutting out those ‘little things’ can be tough.

So don’t go cold turkey. Little pleasures, once in a while, are necessary to keep you on track. Be selective. Ask yourself what you can live with and what you can live without.

Here are few ideas to trim the fat:

  • Cancel that gym membership you haven’t used in months.
  • Scale back the data plan on your phone – especially if you can do that surfing at home on wifi or public free wifi.
  • Bank fees are a big one. Look for a free chequing account (hint, hint, we can help with that) or use only the ding free ATMs associated with your financial institution.
  • Be more selective with that cable package on your television – if you are only watching a few channels out of the hundreds that you have that could be a big savings. And there’s always cheaper streaming options like Netflix.

Set some goals and make it happen.

It is about sitting down, taking a good look at what you are spending your money on and setting realistic, manageable goals. We can help too. Make an appointment and commit to pairing your daily spending down. Because every little bit does count.


The stuff we have to say.
Coast Capital Savings Federal Credit Union provides advice and service related to deposit, loan and mortgage products. Coast Capital Wealth Management Ltd provides investment and financial planning services. Coast Capital Financial Management Ltd. provides advice and service related to segregated funds, annuities and life insurance products. Worldsource Financial Management Inc. provides advice and service relating to mutual funds. Mutual fund values change frequently and past performance may not be repeated. Commissions, trailing commissions, management fees and expenses may all be related with mutual fund investments. Important information about mutual funds is contained in the relevant fund facts and simplified prospectus. Please read the fund facts carefully before investing. Only deposits held in Canadian currency, having a term of five years or less and payable in Canada are eligible to be insured under the Canada Deposit Insurance Corporation Act.

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