A while back, a man by the name of David Bach coined the phrase “The Latte Factor.” The Latte Factor is based on the idea that you can greatly increase your savings by paying attention to some of your smaller expenses and redirecting them for better use. Your personal Latte Factor can be anything from daily lunches out to your subscription to a local newspaper.
The Latte Factor Can be illustrated by the following calculations:
A Latte a Day = $3.50
A Latte a Day for a Month = $105.00
A Latte a Day for a Year = $1,260.00
A Latte a Day for a Decade = $12,600.00
As you can see, the Latte Factor does a good job of showing us how some of our smallest expenses can add up to enormous amount of money over time, but what does that mean for us as college students? I think that it illustrates the importance of tracking our expenses and understanding how much money we are spending on a weekly basis. Here are 4 tips to help prevent small expenses from adding up:
Create yourself a budget. Give yourself a weekly allowance for things like food/coffee/etc. and STICK TO THAT BUDGET. If you go over, stop spending (it’s not always easy but it definitely works).
Use a gift card. Using a gift card is another effective way to give yourself an allowance. Put an allotted monthly amount on the card and use it for all your expenditures.
Use moderation. College is an important time to start forming good habits that are going to stick with you for the rest of your life. Consider this saying “Good habits are hard to form and easy to live with. Bad habits are easy to form and hard to live with.” It’s going to take some personal discipline on your part, but I promise that it’s worth it!
Create an account on Mint.com. Mint.com is a FREE website that allows you to monitor your expenses and create personal budgets. I personally use this and it is a great tool if you are looking to get serious about your finances.
Ryan Ehart Peer Counselor I Powercat Financial Counseling www.k-state.edu/pfc