latte in red cup on blue plate

The Latte Factor: One way to get your finances on track in 2021

How often do you find yourself saying, “I can’t afford that?” Whether it’s about an unplanned expense or something that you want to buy. David Bach, author of The Latte Factor, says that’s usually just a lie we tell ourselves.


In his book, The Latte Factor, Bach lays out several key points in his book that can be summed up thusly: Small amounts of money spent on a regular basis cost us far more than we can imagine.


The Latte Factor came about after a class Bach had taught some years ago. One of his students said she couldn’t afford to save, but she was drinking a latte at the time (and most every day in his class.) He ran the numbers and showed her that, if she skipped the latte, she would save $5 a day.


What does $5 a day mean to you? Let’s do the math. Not spending $5 a day would save $1,825 in a year. That translates to $18,250 over 10 years. But what if we went one step further and invested the money and got a 10% return. Over that 10-year period, you could turn $18,250 to $47,335.


As you head into the new year, vow to stop saying “I can’t afford that” and take a second look at your finances. You don’t have to starve yourself of enjoying everything life has to offer. Instead, pick one thing you know you spend money on that you might be able to do without. Is it your morning latte, eating out for lunch every day?


If you want to get serious about your finances this year, here are a few recommendations:


  1. Buy The Latte Factor and read about how Zoey turned her morning latte into the words “I CAN afford this.” It’s a quick read.
  2. Figure out what your “latte” is. Use an online spending tracker, like our Money Desktop tool in mobile banking, to see where you’re overspending. Then, start cutting down on those expenses.
  3. Save on monthly payments. Take a look at how much you’re spending every month—and more importantly, over the long term—on your loan and credit card payments. Ask about refinancing and see what you could save.
  4. Ask us! Sierra’s FSR are happy to go through your financial situation and recommend ways to save.


What’s your “latte”? What are you ready to start saving for? We’d love to see your thoughts in the comments.