Today I will talk about a savings tip from David Bach ( and I strongly recommend you to buy at least one of his books), called “The Double Latte Factor”. What I liked about David, is that he gets down to math a lot, breaking every sum that he can, putting everything on a piece and paper and then coming up with a solution. For a tech guy like me, this kind of approach is the best. If I had to decide between Tony and David, I would choose David (but this is me).
A summary of all the articles till now, that remotely talk about savings:
The Double Latte Factor
What David advises is to motivate yourself to write every expense that you did in a day, and not just a day, extrapolate the thing to one week, one month, etc. and then put everything in a table ( which I will attach a bit later in the article).
Where does the idea come from? Well, we know that each one of us comes to a habit of buying one latte/coffee in town and a bagel and some sweets. Things that tend to pile up and at the end of the day you see that you spent 70% of that day’s net worth on things you didn’t need. Like lunch in town, every day instead of taking a cooked meal from home (which is also healthier).
One of David’s inspirations, that I am fond of, is that your wealth does not depend on your income and it depends more on what you do with the money once you get it.
But why called it a Double Latte Factor? The Latte Factor, according to mr. Bach is a concept that looks into the small things you spend on, every day. Some expenses we can live without (like premium cable, designer coffee, etc.). The example given is that if you can save 1100USD a month, that is 2.7 million USD in 30 years. The double Factor power comes from the fact that maybe you are starting late, so you have to double the savings. This means looking at ALL your expenses (weekly, monthly, yearly).
This is the table presented in the “Latte Factor” book.
How would we complete it
Two years ago when I first heard about this table, I did one for us. Shame on me that I stopped using it and I can’t find it in the archive ( I modified my excel spreadsheets a lot since then). But I will use the same examples as in the last article to complete it.
And after filling the table, we are close to the same result as yesterday. Just a bit more, because, well, it may be possible my math failed me.
So what about this method guys? Which one do you prefer more?
I think that the method from David is a bit more cleaner in the spreadsheet, but I actually enjoyed putting an emotional price on each spending. It could help you identify unessential spendings, instead of trying to cut a bit from everything. You could end up saying everything under 6 has to go.
See you next time when I find an interesting method, or if you have some, don’t hesitate to contact us! Stay safe.
Disclaimer: I am not a financial consultant, all the information you find here are my decisions, I taken at that moment, on my own analysis. I am open to any type of discussion about money. If you want to replicate my portfolio take into consideration that it is your money.