If you’ve ever read anything about day-to-day money-saving strategies, you’ve probably heard some version of the “latte factor.”
The latte factor is ditching your daily coffee habit to save money.
While it’s absolutely true that $5 spent on Starbucks every day can add up to some considerable cash ($1,825 a year to be exact), it’s important to recognize the latte factor extends far beyond coffee.
It’s a metaphor for the daily, weekly, monthly and even annual life luxuries we treat ourselves to without much consideration for the cumulative cost.
Here are few versions of the latte factor you may be indulging in:
1. Movie nights
The cost of a movie ticket these days is outrageously expensive. Add in a 3-D experience and a soft drink and you are looking at more than $20 per person.
If you indulge in the movie experience just twice a month, at $20 each time, that’s a movie factor of $480 a year per person.
2. Weekend ragers
I get that the weekend is a time to cut loose and relax, but not at the expense of your financial future.
If you estimate you have five drinks for the week (be they on the weekend or a weekday) at $7 each, plus a tip, that’s an annual alcohol factor of $2,080.
This does not even include any additional expenses like bar covers, transportation, parking and food.
If the health risks weren’t bad enough, consider that smoking one pack of cigarettes per week in New York City adds up to an annual cigarette factor of $624.
If you smoke a pack of cigarettes per day, you will see that number jump to more than $4,380 a year.
A haircut every six weeks at $60 per haircut and a tip will cost you around $650 a year.
If you add in coloring, you’ll more than double your hair factor.
According to American Express, the projected cost of attending one wedding in 2013 was $539, broken down between travel, attire and gifts.
By the time you add up the cost of attending your high school reunion, two weddings, three birthday parties and Thanksgiving at your parents’ house, you could be looking at an annual event factor in the thousands of dollars.
These are just a few examples of the many versions of the latte factor that exist in our day-to-day lives.
Once you identify what yours are and what they are costing you, you will be able to decide if they are really worth the cumulative price tag.
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