The latte factor: Save five dollars a day

Getting rich is all about saving money, especially if have a low income. Saving has nothing to do with income, but everything to do with lifestyle. You have to change the way you spend money. One interesting concept of saving money every day is the latte factor. I came across this idea in David Bach’s book The Automatic Millionaire, where he points out, how important it is to save money every day by spending less on unimportant things you do not need. I recommend this book, because it is easy to read and pretty good for people who never came across the concept of saving money everyday. When you live paycheck to paycheck read this book, it will change your attitude to money.

The latte factor is based on the simple idea, that saving $5 a day will make you a millionaire. For example, it is Monday morning, you go to work and the first thing you do is checking in at Starbucks, because you need your daily coffee + muffin. From time to time you get a grand latte or whatever, so sometimes it is even more den $5. Let us assume you save $5 a day and invest them at a rate of 10%. First, let me point out, that this will save you $35/week or $150/month or $1,825/year. That is pretty nice, but it gets better. You will be millionaire in 41 years if you invest the money by an interest rate of 10%, save $10 a day and it will take you 34 years! Of course, this depends on your interest rate and savings, but remember it is just your latte money!

What if you really need your coffee every morning? Should you give up caffeine and sweets? That is a very good question, I know people who can not live without their daily latte. But why not bring it from home? Get a thermos flask and make your coffee at home. You like sweets or sandwiches for dinner? Buy your Snickers at the local supermarket in a family pack. This will cut costs at least by 50%. The same goes with water, snacks, fast food, cigarettes, magazines and so on. Just think about it! As I told you above, saving is an essential step on your way to become rich. Start today!