This is a new series I am starting on this blog. It is called Live A Little, and it is not about how to save more by cutting expenses and living frugal. It is not about a debt snowflake or solo 401K rules. It is all about spending. Don’t you frown already! We spend money on something almost every day. Some of those expenses make us feel guilty because we think that we make frivolous and unjustified spending choices. I am here for you to say “Stop feeling guilty. Live a little. It is okay to spend.” Life is not all about money.
We have all heard about “the latte factor“: spending on small thoughtless purchases that add up to a humongous amount of money in the long-term. What it means for you and I is that the money we spend on coffee, cigarettes, candies and what not, fritter away our financial future. If you are thinking like this, then you are missing a major point:
The latte factor is not about how much money you are spending. It is about how much money you chose to keep.
Why I Spend On A Latte
I love my morning latte. I love the way it tastes: hot, steamy, bitter (I drink it strong with no sugar added). I love the way it makes me feel in the morning – awake.
It is not cheap. Let’s say I pay about $4 for a medium size. If I buy my latte once a week (I try to be good and do it once a week), I spend $208 a year. On coffee. A year. It is quite a frivolous choice in many people’s eyes.
What People Say
Horror! Why not to invest $208 you spend on your morning latte annually, and in 25 years you might have over 10,000 dollars in your retirement, assuming a 5% return? Take into account the compound interest and see for yourself how much money you, silly girl, are throwing away.
What I Say
Assuming you live long enough to make it to retirement, do you want to live your life for the next 15, 20 or 30 years hoping that when you retire you will finally splurge on all these lattes you were dreaming about for the last 15, 20, 30 years? Do you want to watch people passing by, lattes in hand, and try to suppress the sneaky thought that they don’t give a shit about their retirement, and maybe that’s why they look so happy sipping their damned lattes?
Go ahead, get yourself a latte. It does not mean that you are financially irresponsible, careless and a selfish spender. It means that you chose a balanced (please note that’s the key word here) approach to your life and your finances.
How to Spend Money on Your Morning (or afternoon) Coffee And Not Feel Guilty
Budget for it. I have an allowance that covers my lunches and my lattes. If I go over it, I stop spending (it is not easy but it works) and wait till the next allowance.
Or give yourself a gift card with an allotted monthly amount to be spent on coffee. It works as well as an allowance.
Support your local coffee shops and not big corporations. Local first!
Exercise moderation if not in the name of money and your financial future, than in the name of calories. Don’t go overboard with your lattes.
You made a personal choice, embrace it. Don’t let others shame you into feeling guilty.
Keep doing all the good, smart and responsible things you’ve been doing with your finances. It will make you feel good and you will forget about your lattes that presumably are robbing you of your retirement.
Seriously, 10,000 dollars extra in my retirement account will not make or break my retirement lifestyle.