The Latte Factor is not a myth
Lately, there’s been some pushback on the idea that cutting fancy coffee out of our budget actually matters. The consensus among our fellow millennials is, when we aren’t making or saving enough money, indulging in simple pleasures or conveniences—like the odd latte or Lyft ride—really won’t make a difference in our long-term financial health.
And I get it. On the one hand, you have seemingly out-of-touch financial experts telling you that sustained, long-term investments are the thing that will set you on the path to financial freedom. And that even $5 per day (or $1,825 per year) invested at a compounded 7% return will make a difference.
On the other hand, you are just a normal person trying give yourself a little bit of pleasure while you’re already on your no-buy. You feel that $5 per day couldn’t possibly make a dent in your already measly retirement savings.
Then you have your peers—weather-worn millennials like yourself—who are beaten down by the economic realities before them. They remind you that a simple latte is necessary in the name of self-care. Not to mention the innumerable other systemic financial challenges facing millennials, women, and people of color.
The last thing you need is one of your own preaching to cut out your one tiny bit of happiness. An iced latte or macchiato or dirty chai makes your morning or afternoon just a little bit more bearable. Especially when you already have a spending problem! But…I’m here to tell you to do just that.
Frugality is a muscle
Much has been said of Mr. Money Mustache and his ilk, the Gen X early-retirees who landed cushy engineering jobs at the turn of the century, worked their tails off to save money and invest, and have shared their knowledge with us for the past decade.
Regardless of whether you find his story relatable today, there are some important takeaways from his success. The most important takeaway? Frugality is a muscle.
The idea here is that, for spendthrifts especially, consumer culture has become incredibly ingrained in our lives. Thus, our ability to be frugal is hidden beneath a lifetime of shopaholic “fat.”
In order to truly stop shopping, we have to regularly take our frugality “to the gym.” Aka, we need to strengthen our frugality muscles.
So the reason why cutting out lattes—or any other regular, unnecessary expense—actually matters has less to do with the $5-$7 per day that you save. While investing an additional $1,000-$2,000 per year is certainly helpful, the act of cutting out lattes matters for your budget because you are working on controlling your impulse to shop, every single day, and training yourself not to give in to your every whim.
Thus, your impulse to shop becomes weaker and weaker, as your resolve to save money becomes stronger and stronger.
As you work on your impulse-control with daily coffee purchases, this transfers to your impulse-control with SHOPPING!
There’s a transfer effect here. The less you allow yourself to succumb to daily, relatively inexpensive, luxuries like lattes, the more you are able to resist the real money-suckers: makeup, clothing, fancy candles, etc. And if you’re reading this blog, your biggest money-suckers are those bigger-ticket items!
Cutting out lattes is an easy win. When you do it consistently, you prove to yourself that you can do this. You, confessed shopaholic that you are, can actually resist the urge to buy things you like! And the more you control your impulses, the better you will feel, and the more inspired you will be to keep going.
Think of it this way: let’s say you decide to start cutting out fancy coffee in July or August. You work diligently at this every day, resisting the urge to buy that delicious latte, while carrying your subpar, homemade coffee. It’s fine, it gets the job done, but you really miss “the good stuff.” Still, you know what you are doing is right, deep down.
Three or four months later? You are met head-on with crazy holiday sales. It’s November, and you’re desperate to avoid Black Friday deals, or just the Sephora VIB sale. What better way to prepare for controlling your impulses when they are at their strongest, than by practicing with a relatively easy goal?
Cutting out Starbucks or craft coffee is like a light “No Buy.”
Have you been thinking about trying a No Buy to stop shopping and save money, but are unsure whether you’re ready to take the plunge? Another reason why cutting out lattes actually matters for your budget is because it’s a simple introduction to a life with less shopping.
So if you are the type of person who feels uncomfortable diving head-first into a difficult project, a way to get your toes wet in anti-consumerism is simply cutting out your daily coffee habit.
Once you start seeing results with your own badass impulse-control, you will feel inspired to do MORE! When you want to stop spending and start saving, it really is all about momentum. What better way to do it than with a simple, decisive action? No more lattes.
At bottom, that’s what all this talk about “cutting out lattes” is really about. It’s not meant to be patronizing, ignorant, or dismissive. It’s about taking control of what you can in your financial life, and running with it.
Listen: I obviously cannot solve the fallout of the Great Recession, the fact that wages haven’t kept up with inflation, or that women still make 70 cents on the dollar. All I can do is be realistic: work within the framework we all are in, try to take decisive action to make my life more financially stable, and inspire you to do the same.
One way to do that? Cut out lattes, start working on your impulse-control, and begin to see results.
I hope this inspires you to start toning up your financial muscles!