Sunday, February 03, 2008

Become a millionaire with the Latte Factor

That small sum you spend each day in small pleasures of life, such as complementing your lunch with a beverage, or snacks and latte in the evening, or even calls on your cellphone is what tends to snowball into a huge amount that gets torn out of your savings each month.

Consider, for instance, the following representative figures:

Latte at the coffee-shop: Rs 30
A cold drink: Rs 20
Mobile phone usage: Rs 20
Samosas, biscuits, crisps or other snacks: Rs 40

This sum of Rs 110 a day amounts to Rs 3300 every month and in a year, about Rs 40,000.
And if one saves this Rs 110 every day, one could become a millionaire over the next 30 years.
The way to make that come true is to work on the Latte Factor.

The term, coined by David Bach, is named after the coffee which you buy at the neighbourhood cafe, instead of putting aside that money for a rainy day. Bach sums up in monetary terms the things people are addicted to, so you simply add up the cost of small expenses, such as lattes at a coffee shop, to see what they amount to.For more and more people, these small indulgences are becoming tantamount to an addiction. Psychologist Bhawna Bamr says, "It's addiction where we feel pride in possessing things which others don't have." She adds that shopping gives her that vicarious pleasure. The Latte Factor shows that we often have way more money than we think; it's just that bit by bit we spend it on a lot of small things. The way to combat this startling outflow is to keep track of small expenses.

"Maintain a daily diary on what all you have on today," says psychologist Vaid Jain. "That expenditure will soon lessen." A good thumb-rule is calculating small expenses sedulously. If it comes to more than 10 per cent of your salary, then it's time to crack the whip on your spending habits.

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Anonymous Anonymous said...

All said is very good... if someone can follow THIS logic and become a millionaire, then that person will be called GOD.

These are small things that we enjoy everyday and it is hard to leave these daily habits.

I am not sure if anybody spends 110 a day for coffee and snacks.

12:38 PM  
Blogger Karthick said...

well..if u don`t mind i have something to say here,whats the point in cutting down all our subtle pleasures in life to become a millionaire in some 30 years,when we never even know we would wake up next morning to enjoy what we have is`t the basic mantra should be live life to the fullest and not punish yourself today anticipating a better tomorrow.

8:03 PM  
Blogger Diva said...

Well, this kinda reminds me of a time when i was also discussing with a friend of mine that how incredibly amazing it wud be to just spare a 100 rupees you spend at CCD(for a coffee for two) and save it for a few days n then use that money to help somone who prolly needs it badly(I mean the under-priviledged and downtrodden ppl)....
But anyways, I agree with the person above me.. You never know wat will happen tmrw... So, why not enjoy today and spead happiness to others too, just for today???
Kya pata, Kal ho na ho :P

3:56 PM  
Blogger Sam said...

good stuff!! that means if i cut down on my mobile bills by half i'd save at least 25K a year...
cut down on the hangouts another 25K!! neat!!

11:43 AM  
Blogger Mayur said...

Nice post.....
Small things turn out to be biger someday.......
(I can't cut down at Coffee though to be a millionaire:D)
C ya @ Mumbai Bloggers meet.....

9:59 PM  

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