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The Latte Factor

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For the first time ever I'm reviewing a novel.

Latte Factor is a short story  - around 120 pages - and is equal parts of inspirational story and financial education. The combination of the two is quite rare, and done quite nicely.


The story is about Zoey Daniels, associate editor for a travel magazine. Although she's never been outside the USA  - "a travel editor who's never travelled". She struggles with money and is considering a higher-paying job at the company her friend Jessica works for. The job would provide more income, but would also be more stressful and demanding. She already has a nightmare about being on an increasingly-fast treadmill that she struggles to stay on.

Her current boss Barbara - aware only of the money situation - suggests she talk to Henry at the coffee shop. This peculiar suggestion is where Zoey's life begins to turn a corner.

Spoiler Alert

Being a book of fiction, I don't want to spoil the story for you. It's a book you can easily read in a day or an evening. The contents, and the appendix, can be life-changing. But I'm about to discuss some the contents of the plot.

The Latte Factor?

Henry tells Zoey she's richer than she thinks. She wants to buy a $1200 item but thinks she can't afford it. He points out that her daily $5 coffee adds up to more than $1200 in a year.

This is the latte factor - repeated small spending slowly erodes our ability to do the things we want.

Later in the book, Zoey calculates she spends $30 per workday on takeaway food. If that amount was invested over a 40 year working life, it could become 4 million dollars (at 10 per cent). Even at 7 percent it could end up being $1.7 million.

Henry outlines to Zoey a three step plan.

1. Pay yourself first

Put a portion of your savings away before you start spending anything. Otherwise savings usually doesn't happen. We find something to spend the money on. There are some astounding figures in the book and the appendix on just how much $5 a day can turn into when invested

2. Make it Automatic

Willpower is a limited resource. We can make budgets but often don't stick to them. Setting up an automatic transfer for saving for investments means we don't spend it - because we never see it.

3. Live Rich Now

Long term savings are great for retirement, but what about now? Discovering what's truly important to us means we can prioritise spending on that.

In the book Zoey wanted to do a $600 photography course, but never had the money. She created an account for it and setup automatic transfers to make it happen. It might have meant missing some takeaway coffees - but she achieved her passion of becoming a better photographer. That's living rich.

In short

This book is an easy read and can be potentially life-changing. The information in the appendix is astounding. It really drives home the point that extra income isn't what makes people rich (how many lottery winners have ended up broke?) but saving and investing is the key.

Whilst some of the information is US-centric, the overall concept translates internationally.

Grab a copy from your local library. What you save on the purchase price might just start your own savings nest egg.

Related reading

$200k for a coffee and a sandwich?

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