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How much is your morning latte really costing you?


Show of hands if your work commute includes a stop at your local cafe. No biggie, right?

Actually, wrong.

Those perfectly poured lattes might be costing you more than you think.  Thanks to financial commentator David Bach’s theory, The Latte Factor, the spotlight is on incidental spending – those small, seemingly innocuous purchases for things like coffee, magazines, bottled water and fast food – and financial experts are urging you to reign it in if you want to achieve financial freedom.

You see, these discretionary expenses add up to big numbers over time. Here are four reasons why you should slow down on the small stuff.

1. Compounding interest

Choosing to invest instead of spend that $5 a day could mean the difference between a comfortable retirement or not. It really is that profound.  Why? Because of compounding.

Here are the stats according to Bach’s Latte Factor Calculator: if you invested $5 a day at 6% interest, that adds up to a staggering $71,161.73 in 20 years.  That’s a huge boost to your retirement nest egg, isn’t it? Remember that next time you place your coffee order.

2.  The gift of time

The earlier these discretionary expenses are saved the better, thanks to the gift of time. If, at 20 years old, you choose to make your own coffee, pack your own lunch or park just that extra distance away to save the parking metre, you’re doing your future self an amazing favour.

Take the above example.  An extra 10 years of investing $5 a day at 6% interest would take your $71, 161.73 to an impressive $152,938.06. Our point: start today!

3. Conscious spending

Consciously choosing how you spend your money rather than just flitting it away is one of the most powerful ways you can gain financial control.  You vote with your dollar, so really thinking about how and why you’re spending before making that purchase is critical to your overall well-being.

Could reading a book give you the same satisfaction as your morning coffee?  Are there other things in your ‘small spending arsenal’ you could forgo?  Are you seeking instant gratification and can that need to fulfilled in a different (free) way? Consciously considering every purchase you make is a guaranteed way to ensure satisfaction with your purchases, so choose wisely.

4.  You are in control of your future

Perhaps one of the most exciting elements of The Latte Factor is that it returns the control of finances back to you, the spender.  You suddenly become accountable for every little dollar you spend, armed with the knowledge that small amounts do add up to something of value over time. So next time you feel like you ‘don’t have enough money’ remember that, if you choose to, you can make even $1 a day work harder for you.


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Our response to limit the spread of COVID-19

  • As COVID-19 continues to spread, we would like to take a moment to let you know what Financial Spectrum is doing to respond.

    While we haven’t been directly affected with any confirmed cases, we are taking all reasonable precautions to remain safe.Our priorities are:

    1. Keep our staff and clients safe
    2. Stay fully operational in our service delivery and continuing to manage your financial affairs
    3. Play our part in minimising the impact on our community against the spread of COVID-19

    Financial Spectrum has the technology, infrastructure and systems to continue business as usual remotely and our staff will now be working from home.

  • You should notice no change to our service, with the exception that we are encouraging our clients to meet via video call, rather than face to face, unless requested. We will be contacting all clients with meetings booked over the next two weeks with instructions for a video call.This is an evolving situation and we will continue to monitor developments. We will keep you informed of any material changes to our approach.

    These are unprecedented times and we understand that many of you will be feeling unsettled about your finances. We would like to assure you that we are open for business and are here to help you. If you don’t have a meeting booked but would like one, or if you have questions, please contact us at info@financialspectrum.com.au or on
    02 8238 0888

Brenton Tong

Managing Director

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