How a Daily Latte Might Mess Up Your Future... or Not

Have you heard of the latte factor?  It's the idea that your daily coffee habit (or any small, unconsidered purchase) is sabotaging your financial future.

It's true that seemingly insignificant purchases can really add up.  A daily $5 latte comes to $1,825 in a year.  Not so insignificant after all, is it?

Is Starbucks really the problem?

We all know that making your coffee at home is cheaper than buying it at Starbucks.  Cooking at home is cheaper than eating out.  Home haircuts, DIY lawn care, and washing your own car all save money.

But it's possible that morning latte isn't just a convenience – after all, you probably wait in a long line to get it.  Maybe your daily treat is satisfying an emotional need.  It's a little indulgence that makes you feel pampered because you know it's unnecessary.  It's a harmless pick-me-up, and if you're not living on the financial edge, it may be something you can easily afford.

Don't get me wrong.  I enjoy visiting my favorite coffee shop, and I like sipping a barista-made latte with beautiful foam art.  But I need to be aware of the trade-offs, and not simply succumb to:

• the impulse buy, when my emotions get the better of my logic and I give in to a clever enticement

• the master mindset, when I'd rather have someone serve me than do for myself (such as grocery shopping, dog walking, or doing a manicure)

• the collector's view, when "there's always room for one more" seems to make sense, even if the result is just another dust-catcher

The real issue isn't the latte.  The real problem is the habit of making extraneous purchases that may add to your clutter, debt, or waistline while stealing a significant chunk of your wealth.  One small indulgence might not be enough to derail your finances, but add up all of the extras, and it might be more serious than you realize.  Perhaps you:

• get takeout three or four times a week
• take a taxi or an Uber around the city instead of walking or riding the bus/subway
• pay to get in the "A" boarding group when you book a flight on Southwest
• hire a dog groomer instead of washing and brushing your pet yourself
• receive a subscription box every month
• pay for ultra-high speed home internet
• refresh your décor and your wardrobe with new pieces each season

The list goes on.  A few dollars here, a few dollars there, a few extra bills every month, and before you know it, you may be spending a five-figure sum on convenience, luxury, and "treat yo'self."

The key is balance.  You don't need to be a joyless miser.  But pay attention to what you spend money on – even extra dollar store or tag sale purchases – and ask yourself why you're spending and whether there's a less expensive alternative.  If the cheaper choice is satisfactory, then it's probably the smarter option.  If that morning latte buoys you up and jumpstarts your day, then enjoy it!  But if it's just caffeine you're after, give Starbucks a pass and save your funds for something that matters more.

By identifying what's unnecessary and making conscious choices, you can free up money for your important goals.

The mindset that matters

Minimalism is not about deprivation, and intentional spending is about more than the money you save.  It's a worldview that helps you make the most of all of your resources.

Bypassing a daily latte or any other small luxury helps you break impulsive spending habits.  It rejects shallow status symbols.  It makes the occasional indulgence more special.  It shows patience, consistency, and discipline – all of which are needed to accomplish any goal.

Most importantly, it reminds you that you don't need to buy something to make yourself happy.  This understanding is so significant I'll say it again:  You don't need a purchase to improve your life.  That's the opposite message you'll hear from every store, influencer, and advertisement, but it's the truth we've somehow forgotten in our materialistic world.

When you realize that you can soothe your soul and boost your joy by walking through the park, laughing with a friend, dancing to your favorite tune, cuddling your cat, or re-watching your favorite rom-com or action flick, you've gained a powerful, personal means of pampering yourself.

Will a daily latte ruin your financial health?  The answer is different for each of us, but the question is so important.  Instead of acting on auto-pilot, take the time to answer.

P. S. I was recently interviewed by Dana Rubio for her blog The Psych Chronicles.  We talked about why I became interested in minimalism, my simple practical tips for anyone else getting started with minimalism, connections between mental health and minimalism, and more.  Read Dana's content here.