The latte factor

In the article 'The 10% rule' I already talked about financial awareness. That article was about larger expenses that can prevent you from investing money. Now I'm going to focus on the smaller expenses that you make which you are not aware of how much money they cost you on an annual basis.

This is from the book "The Automatic Millionaire" by David Bach. In this book he goes deeper into how you can save money so that your money will work for you to create financial freedom. A real must read! It will change your vision about making money just like the book "Rich dad, poor dad" by Robert Kiyosaki.

The latte factor

Suppose you take the train to work every day. At the station you buy a cup of coffee and a croissant because you didn't have enough time to have breakfast at home. Once at work you have lunch at the company canteen and once a week you have lunch outside with colleagues. On Friday you go for drinks with your colleagues and in the evening you go out for dinner with your friends.

Sounds pretty normal right? Let's add up what this costs you per month:

Expenses Costs

20 days of a black coffee at Starbucks €71

12 days a croissant at the Kiosk € 18

16 days lunch company canteen € 43.20

4 days of lunching out €40

4 days of drinks with colleagues € 100

Eating out 2 times a month €200

Total €472.20

It's a shock how much money you spend on autopilot! I'm not saying that you should stop spending altogether, but make sure that the frequency is reduced. That way, those moments become more special and you appreciate them more. It's more about being aware of your spending and how much room you actually have to invest. And thus earn money instead of spending it.

For example, a cup of coffee at home with a Starbucks nespresso capsule will cost you €0.47 instead of €3.55 on location. A saving of €3.08 per cup of coffee!

Now let's do a calculation without denying yourself everything, but with a much lower frequency:

Expenses Costs

8 days of black coffee at Starbucks €28.40

8 days a croissant at the Kiosk € 12

8 days lunch company canteen € 21.60

2 days of lunch outside €20

2 days of drinks with colleagues €50

Eating out once a month €100

Total €232

Without denying yourself anything you save €240 per month! Of course you still have to deduct the costs for groceries because you now do more at home, but for the sake of convenience let's assume that you have €200 per month left.

And how much do you actually spend per month on streaming services that you don't watch? And that gym membership that has been gathering dust for months? Or that TV subscription while you actually always watch Netflix?

If you look critically, you will realize how much money you spend on things you don't use.

Investing this money doesn't really change your situation because you were already spending that money. How you invest it is up to you. Are you adventurous and do you invest it in stocks or crypto? Or do you put it in an investment account?

Below is an example of how your money can grow without you having to do anything. This is purely for illustration purposes and means that the results mentioned do not guarantee results in the future.

This is an example of an investment account that you lock in for 20 years. Seems like a long time, 20 years, but if you are now thirty and you get €70k paid out when you are fifty, that is nice! And you have earned €20k with money that you were already spending without having to do anything for it!

Please note that this amount per month is fixed for 20 years. So you should always be able to miss this regardless of your personal situation!!

All forms of investing involve risks, so only invest what you can afford to lose and use your common sense. I am not a financial advisor, but I am simply showing what is possible if you are more aware of your money.

Conclusion

Investing is possible for everyone. It just requires that you take a critical look at your expenses and what you are willing to give up for a financially free future.

Did you like this article? Do you have any questions? Leave a like or comment below. And share this article with your friends using the social media buttons!