Insurance Blog

The LATTE factor

We’ve discussed quite a lot about conscious spending and smart shopping in the last few posts, and today we’ve decided to create awareness about a lesser known minimalist concept called as ‘The Latte Effect.’

When it comes to making large purchases, we are calculative and try to be as smart with our choice as possible. However, when it comes to the tiny everyday things, we’re all unconscious spenders.


The theory behind the Latte Factor is this. Imagine you go to a café every evening and you spend around 500 INR a week. Before you shrug your shoulders and say, ‘Hey, I don’t drink coffee’ or that ‘Hey, just  saving up my coffee money isn’t going to make me a millionaire yet, Missy!’ and slowly sneak out of the guilt and repentance – stop!!

The Latte Factor, is not necessarily a caffeine related or a solid investment phenomenon.

It’s a Financial Metaphor.

And, it covers more than just Lattes. It could be a that snack you buy whenever you feel bored, or the expensive cigarettes (because apparently being cynical is much easier than quitting bad habits) or the several times you book movie tickets and then cancel them, or the several unnecessary miles you travel or even your obsession with shoes!

The trick in mastering the Latte Factor is to identify your latte factor. It could be an addiction, an obsession or an unconscious expense that you make every day – without even realising it.


Let’s take the 500 rupees expense you spend on Coffee every week. That’s around 2000 INR a month, which adds up to 24,000 INR a year. Let’s assume that you invested that 24,000 at 5% p.a., compounded monthly for around 40 years. You’ll now have 1,07,224 INR, simply because you cut down one little luxury – of having coffee at an expensive Café every day.  

Once you track down all of your financial expenses for a month, you’ll be surprised at how your love for those little luxuries is the culprit that hinders your saving gaols and stops you from leading a more financially intelligent life!