You may have heard of “The Latte Factor®” a trademarked phrase by author and financial guru David Bach, which asserts that if you spend small amounts daily, those small expenditures would be better saved for your future.  Bach has recently re-introduced his successful theory in a new book, Start Over, Finish Rich and even has a Latte Factor® Challenge on his website, and a Facebook page and new iPod app.
Bach describes The Latte Factor® as being based on the practical, simple idea that all you need to do to be comfortable in the future is to really examine your small everyday expenditures and see whether you could save that money instead. Putting aside as little as a few dollars a day for your future rather than spending it on little purchases such as coffee, lunch, bottled water, cigarettes or magazines he asserts, can make the difference between making a living or living paycheque to paycheque.

I took the challenge at finishrich.com/lattefactor.  You’re presented with a variety of expenditure categories, like “Drinks” or “Transportation.”  I selected ATM fees and chose $2.  The chart that popped up wasn’t rocket science, but did clearly illustrated what amounts could be saved at a variety of percentages over time.  So according to his chart, if I saved just one of my ATM fees of $2 a week, at say 2% interest, I’d have $552.04 or ½ of a mortgage/rent payment.

The theory is great, it’s just how do you actually save $2 a week?  My answer is through online banking.  If you set up an automatic transfer of $10 a month from your checking into a high interest savings account of even 1.5% interest, you’ll have about $609.00 after five years.  To then really save that $2 outflow from ATM fees, ask your bank for a checking plan that saves ATM fees and make an effort to use their branded machines to save third party bank ATM fees, too.  Every transaction with a teller is more costly for the bank, so they’ll be happy to reward you for banking mostly online or through their branded ATM machines.

So enjoy that latte once in a while, I say.  Small perks now, combined with even small savings and cutting fees/expenses where you can, will help keep a positive outlook now as you build a more secure financial future.