Personal Development, Finance, and Investing For Filipinos
An investment in knowledge always pays the best interest. Financial Education is your best investment.
The cost of your morning, afternoon, and evening cup.
First of all, please don't think badly of me. Coffee is a very important part of our culture, allowing millions of people worldwide to start their day off right. Coffee is so delicious, specially brewed coffee. Even I am also guilty and fond of coffee.
David Bach popularized the term Latte Factor in his book 'The Automatic Millionaire' to symbolize the high cost of small, periodic spending.
Honestly, it’s just not only applicable to coffee. It can be applied to other things. The idea is simple the small trivial things we spend every day can add up to a large amount over time. It could be with other foods, things we don't need, or subscriptions to services that we sometimes don't use.
But for now, let's stick to Latte as an example. Below are sample figures only.
How does Latte Factor Calculator work?
This is how it works, if you decide not to buy that one expensive coffee five days a week for a year and save at 5% compound interest, you will have saved more than PHP 39,971.76 after a year. Only by not buying that one coffee a day.
And with a daily saving of PHP 150 by making some small adjustments to your spending pattern, five days a week times fifty-two weeks a year, deposited in a savings account with an annual interest rate of 5 percent over forty years, you save more than PHP 4,977,928.18!
I will say again, it is not bad to spend on this thing because you also need to reward yourself. Yes, it's okay to reward yourself. What I mean is, "Everything must be balanced." Rewarding yourself regularly is fantastic motivation to earn more.
My Tip: Set aside your "Enjoyment or Happy Fund."
This fund is for your wants. It could be eating in a favorite restaurant or going on a vacation. Plan and budget your trips according to what you can afford.
Shift from YOLO (You Only Live Once) to
You can download my free Latte Factor Calculator template here.
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ABOUT THE BLOGGER
Hi, I'm Ralph Gregore Masalihit!
An RFP Graduate (Registered Financial Planner Institute - Philippines).
A Personal Finance Advocate. An I.T. by Profession. An Investor. Business Minded. An Introvert. A Photography Enthusiast. A Travel and Personal Finance Blogger (Lakbay Diwa and Kuripot Pinoy).
Currently, I'm working my way toward time and financial freedom.