The Latte Factor

It’s All About the Budgeting

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The Controversial Latte

Half of the personal finance pundits rail against it. It is the evil of our generation. It is the reason why so many are in debt. In fact, its the main reason why so many people have so much debt, have so little savings and will either retire to live on their social security checks or work until they die. 

The other half of the personal finance pundits take great offense to this. They point out the other large money issues that people face. It’s not the lattes they cry! It is the student loan debts, the sky-high cost of healthcare, housing and daycare. It’s the fact that wages have remained stagnant for years and minimum wage is not a livable wage. Drink your latte, they urge, drink and enjoy! It will make you feel good as you drudge through your bleak days.

The Latte Factor

My opinion?

It's not about the Lattes. Its about the BUDGETING. Click To Tweet


First of all, what it your goal?

If your goal is to become RICH, then cutting out lattes (or other spending) is not going to do it for you. Jeff Bezos didn’t become RICH by cutting out lattes. Neither did Bill Gates or Warren Buffet. There may be news articles written about how Bill Gates never spends money or how Warren Buffet has a flip phone but if you take even 2 seconds to think about it you know that those articles are total click bait. they became rich because of a combination of a great, innovative idea or product, luck, and circumstances. and chances are, (yes, statistically speaking) you will never be really RICH.


So what does building wealth mean?

It means having financial security on a smaller level. It means a house (paid for), it means a car (modest and paid for), it means a comfortable retirement. 

But getting there doesn’t happen only by cutting out lattes or take-out. it takes savings and no debt.

No Debt


You can’t build wealth while you are also acquiring debt. Besides for a mortgage, consumer debt is usually a crippling liability that just grows and grows in size each passing day. if you add to that debt, even by a small amount, you are increasing the load that is holding you back. Your future money can’t go into savings, it has to go to paying that large and growing monster. it’s very easy to look at small amounts and think that they don’t add up. but they do. add to that a 23.3% interest rate and it adds up real quick!



This is the clincher. you have to save  and invest money in order to build wealth. in order to do that, you have to have money to save and invest. Where do you get said money? Well for some people its from their parents or an inheritance, in which case you’re lucky. But for everyone else, you get a paycheck. part of that paycheck has to go to savings and investments if you want to build the wealth that we are talking about. How much? That is where the latte factor comes into play. You see, its not the $3 coffee or even the $20 purchase. its the amounts of money that you delegate to things in your life. if you pay yourself first in savings and pay off your essential bills then you only have a certain amount of money left to “play with”. You can choose to spend that money how you see fit. AS LONG AS YOU DON’T SPEND MORE. I mean, you could spend more, its your money, but then you will be choosing to either go into debt or to not build wealth. your choice to make.

The Latte Factor

And that is where the Latte Factor comes into play. are your lattes (and obviously lattes are a symbol of frivolous purchases) a mindful splurge that is coming from your budgeted money? or is that latte coming from your savings or even worse, adding to your debt?

Creating and STICKING to a budget is the key to building wealth. its the key to getting and staying out of debt. If the lattes are part of the budget, then the Latte Factor doesn’t apply to you. But if the Lattes are not part of the budget, then the Latte Factor most definitely applies to you.

Mindful spending of money bring joy, comfort, and security. Mindlessly spending money brings negativity, guilt and instability. 

Want to read some of those “Latte Factor” positions?

A Family on Fire gave up Lattes and saved $960 a year! Read here how Ms. Fire Mum felt about it. 

On the other hand, Actuary on Fire thinks it may all be overhyped, especially since the assumption on the rate of return may be overinflated. 


Do I practice what I preach? I actually do! My husband and I stick to a budget and we are grateful that we do. Read How Budgeting Saved my Marriage.




A Dime Saved

Hi! I am a millennial mom with a passion for personal finance. I have my MBA and I have been studying Personal Finance on my own for as long as I can remember. I have always been “into” personal finance but got inspired to start my blog after a period of extended unemployment. That experience really changed the way I viewed my relationship with money and the importance of accessible personal finance education.

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