Living the latte factor- Saving money or a deposit with the Bank of Guilt?

By living the latte factor are you saving valuable money or just making a deposit into the Bank of Guilt. Let’s take a minute to discuss a travellers favourite topic- Money. We’re not going into detail on how to make money magically appear in your bank account for travel purposes. In a few days you’ll find that topic covered under Travel Tips & Tricks.

What is The Latte Factor?

The Latte Factor® is based on the simple idea that all you need to do to finish rich is to look at the small things you spend your money on every day and see whether you could redirect that spending to yourself. Putting aside as little as a few dollars a day for your future rather than spending it on little purchases such as lattes, bottled water, fast food, cigarettes, magazines and so on, can really make a difference between accumulating wealth and living pay check to pay check- David Bach (you can read more here if you want to. )

Latte love made by Sevenseeds Coffee Melbourne

Latte love made by Sevenseeds Coffee Melbourne

Generally speaking I do agree with David on the basic idea. If you want to save money for something- let’s say travel- then you need to evaluate and along the way re-evaluate what you are doing with your money.

To take a leaf out of the Snarky Nomad’s article The Problem with “how I afford to travel posts” the first thing you need to be doing is making money. You can’t set up an amazing savings account, stop going out and living your life and turn into a hermit while dreaming of all the great friends you’ll make travelling if you don’t have at least one job. It doesn’t matter how cheaply you travel and the things that you don’t choose to buy if you don’t have a job.

Our travel is paid for by us. Our hard work and creative ways to enjoy life and not feel guilty. Sometimes I think that this is so simple it can’t be such a huge hidden secret. When considering how you are going to save money for your travel, whether it be a short trip in a 5star hotel or a six month sabbatical from your family here is a brief overview of what we do. Based on the assumption that you have a semi-regular wage.

1- Set up an automatic savings account. With no card attached. Most financial institutions will love you for opening up one of these! Generally with “bonus” interest if you make regular deposit limits. A small portion of our wage goes into a savings account automatically. Many companies will allow you to divide your pay into a maximum of two accounts. This way we know a set $X goes aside before we even see it. Just as an FYI- this amount is about the same as what we would pay for a pub meal and drinks together. So not a crippling amount

2-Get yourself 2x money holding vessels. We use a money-tin for all our gold coins. At the end of a day wallet, purse and James secret stash, of goldies get relocated to the tin. Surprisingly we didn’t fill the last one before our Euro-trip but we had saved $400. Which allowed us to really enjoy the high-life in Prague for a weekend.

The second is a big jar which we put all the silver coins in which you can access at ease. Why? Well sometimes it’s easier to grab a few dollars in silver coins to pay for milk. It removes the temptation to buy more. Just before we go away we take this money into the bank and deposit it into our travel account. It usually doesn’t add up to a whole heap but hey it’s our money and we’re going to spend it.

3- Shop like a local. Every week we try to get to the local market and buy direct if possible. $60 of cash is allocated and taken out. This amount is all we set for meats (red, white and seafood), cheese, fruit, veges and bread. Household items we buy as needed. Also by not going into a main stream supermarket we aren’t tempted by things we don’t need. So with a maximum budget of $60/week we easily feed two adults (normally a few more along the way) and two dogs (not can food).

Fresh fruit & vege- Barcelona.

Fresh fruit & vege- Barcelona.

4-Drink your coffee and enjoy it! I have a coffee everyday. It’s a bad habit or so I’m told. Some days I make my own, at a cost of around $1.75 for a large (coffee beans, milk, water, electricity costs. Rough estimate) Other days I’m too lazy and splurge on the $4. And I don’t feel guilty about this at all. Why? Because I’m a social butterfly and like to spend time with other people. Even if it is just the barista at my local café for 2mins a morning.

Here we come back to the elusive Latte Factor. If I didn’t spend my money on this coffee I could, in theory, save $20 a week. Or $1040 a year. IF I put away $4/day. On the other side I wouldn’t be happy. I like my coffee. By spending this small amount on a coffee or two I can easily enjoy the company of my friends in a café for a few hours. That’s pretty darn good value.

Honestly would I really put away $4/day and not ever buy a latte for an entire year? No. I know my limits and this is one of them. Instead of enforcing this rule onto myself and feeling guilty every time I do buy a latte I manage our money more efficiently. I try and limit myself to one paid latte and not to indulge in the muffin/croissant/doughnut that teases me so. If you follow on Instagram you may notice that this doesn’t happen that often.

You need to be able to make your financial decisions based not on how other people save, but on how you spend.

Here are some great sites on saving $$$ for travel.
Nomadwallet.com
Calculatedtraveller.com

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