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.
SO, WHAT IS IT?
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
Factor, is not necessarily a caffeine related or a solid investment phenomenon.
It’s a Financial
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
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!
WRITTEN BY: BALAKARTHIGA.M