by Arlavinda Rezqita
"Latte Factor"
Are you the type of girl who likes to stop by in a coffee house for morning coffee before going to university or work because you are too extremely busy?
If you are, I urge you to think about it. You and most people need morning coffee, otherwise you would probably look “not 100% fine” a whole day. However, do you really need to buy it from the coffee house every single morning, instead of preparing by yourself at home or at office which is even free?
A cup of espresso, cappucino, coffee latte, name it… let's say costs 3 EUR. 3 EUR doesn't seem much, right? But if you sum it up, it will cost you 90 EUR/month and 1080 EUR/year! Oh maan, you can buy a ticket to… Machu Picchu! or taking 6 months trip in our beloved country from Sabang sampai Merauke! Or spending it for something more “important” for you.
What I am trying to say is that most people like spending their money without noticing it. That's called Latte Factor. I learned by heart from the book Smart Women Finish Rich, written by David Bach.
The motivation behind purchasing this secondhand book from Housing Works Bookstore Cafe was that I had almost zero knowledge about finance. Don't get me wrong. My parents of course told me some core financial lessons, like "don't spend more than you earn, don't buy anything you can't afford" kind of stuff, which are mostly what other parents said to their kids.
Now, the question… is the book worthwhile to read? Especially for women. Let’s figure out. The book starts with a brief introduction about why individuals should get the basic of personal finance. It doesn’t matter if you are a student, a working woman or a home-stay Mom.
Because anyway, as a woman, we should be able to manage our money or family money later on. Afterwards, Bach wrote several steps for achieving the financial security. In my opinion, not all of them can be easily applied to every individuals. However, here I list some fundamental and easily applied points. Based on my experience, small steps yet sustainable are more likely to stick, compared to a big and crazy idea.
Ok, so here we go. First, put your money where your values are. Value means what is important to you? It’s different for each individual for sure. Make a list. For e.g : family, independence, education, security, freedom, confidence, charity, etc. Still too abstract? No problem.
Then now, you can define your goals which are in line with your values. Define specifically what your goals are, as specific as possible until they are measurable. For e.g: I would like to travel the world – where exactly? South Africa? China? Bali? and how long? Or I would like to buy a house – ok, which house? How much does it cost approximately? Or… errr, I would like to get married. Like when? (of course after you know whom you’re going to marry!). LOL.
Second, figure out where you stand and where you want to go. Get started now by being organized financially. You don’t need to make a complete financial plan for the rest of your life. That’s way too much. I mean if you have a debt, pay now! Basic rule is pay yourself first. Then you can save up for something else. You can make a plan for 6 months, a year, 3 years, as you want.
Third, use the power of Latte Factor. I make it more clear now. Latter factor is not only about a cup of coffee, but also any few small pieces which you can trim from your daily life and then you can save a huge amount of money overtime. So from now on, every time you want to go for impulsive shopping, ask yourself before going to cashier: “do you really need this stuff?”
The book goes on into more details about investment, retirement, etc. So if you are interested to be financially independent, reading this book is worthwhile. I would say, this book is not only aimed to women, but also for men. Now let me ask you, can you recall a person you know who seems to get whatever she/he wants? I mean someone around you. So, people like Prince Harry or Bill Gate doesn’t take into a count in this case.
Basically two things they have in common to realize their dreams: (1) They IDENTIFY specifically what their dreams are. (2) They create a PLAN to finance them. That may sound pretty obvious, but you know what? Most people never do it.
One question leaves, What's your Latte Factor?
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