If I had to sum up the #1 rule for personal finance it would be this: “Think about the stuff you buy.” I mean seriously stop, pause, take a deep breath, count to ten, slow your heart rate down and then think carefully about whatever it is you want to spend your hard earned money on, because in our day to day lives many of us spend without giving it much thought.

The Latte Factor

Lots of people have been stomping on the notion of the Latte Factor. Oh my goodness, why did David Bach choose to write about lattes of all things? Some have described his particular beverage choice as inherently sexist. Others have gotten into an uproar about the compounding numbers used in his examples. A third group is outraged that a middle class man wrote about a millennial female persona who needs to be schooled by an older, wiser male character.

I understand why you might have issues with the story Bach used as well as his math. He implies, (okay he outright states), that cutting back on small expenses will make you a millionaire. And plenty of folks have proven that the world renowned author has overinflated all of those imaginary bank accounts.

Dislike the messenger if you will for distorting the message, but don’t entirely ignore the financial advice. While the message may be muddled, it should not distract us from the importance of saving even small amounts.

Income Isn’t Everything

Some critics believe cutting back on small expenses won’t help your overall financial picture. They argue that larger incomes are required to achieve greater wealth. There is no denying the fact a high income can shorten your time line to financial independence. There is also no denying the fact that many people will never earn six figure salaries.

Income is extremely important, no doubt about it, but sometimes our potential earning power is not entirely under our control. Perhaps you are passed up for a promotion. Maybe you work in a field that will never pay more than a moderate income. It’s possible that you’ve recently been laid off from your job.

When we start from this point of view it’s easy to feel defeated and broken. If I cannot earn more what’s the point of saving anything at all?


That’s where I think the importance of controlling discretionary income comes in to play. If you are new to personal finance it is an excellent place to start.

Many of us, (certainly not all), have some form of “extra” money available. And it is up to each and every one of us to determine where that money should be spent.

In order to be financially successful we need to feel in control of our finances. Do you believe in fate and destiny? Do you think your life is predetermined or that you have some role in the direction of your future?

If you believe you have a role, (which I most definitely think you do), then you need to weigh each and every purchase. Even the super small ones.


If you want to achieve your goals you have to define them first. What do you want to do in the short term? Today, tomorrow, five years from now? How about farther out in the future? Ten years, twenty, maybe even thirty or forty years from now?

It’s such a simple concept but so easy to ignore. Money saved today can be utilized for a future goal.

I think we need to reframe the financial question. We should not be asking ourselves what do we spend money on today, but rather what would we prefer to spend money on in the future? Or perhaps what is important to you?

When we spend money mindlessly on one thing we deny ourselves the opportunity to spend it on something else we truly value.

Opportunity Cost

I’ve met people in my life who dream of traveling around the world. They set their sights on setting foot on every continent, yet they haven’t left the country. Why? In part, because they don’t take control of their discretionary income.

Yes, those small amounts are slow to add up, but they do accumulate over time. Okay, I know what you are going to say. Can skipping a cup of coffee get me all the way around the globe? You know maybe it will and maybe it won’t, but it doesn’t have to be all or nothing.

Choose the first continent you wish to visit and set that as your goal. If you reach the first then set a goal for the second. Sometimes when we reach too far we end up getting no where at all. So step back and reset your goals to something that’s more easily achievable.

Let’s get something straight. No one should judge you or shame you for buying a cup of coffee. As I said before you get to choose how to spend your money.

The question is not whether or not you should buy a cup, but rather is that cup of coffee really so important, special, unique or necessary that you are willing to forgo a future goal to buy it?

You might not become a millionaire if you refrain from buying one, but you will be definitely be able to save money towards a greater goal.


Let’s say you absolutely love coffee. Imagine you are a coffee fanatic who dreams of the smell of freshly roasted beans. If you drool at the thought of a barista pouring you a warm beverage then by all means then spend your hard earned dollars on that latte.

But perhaps you don’t dream of coffee. What do you dream of? Do you know? When was the last time you stopped to ask yourself the question?

I think the FIRE movement gets a bad wrap. Outsiders, and even some folks within the community, say you have to scrimp and save for the purpose of amassing a fortune.

Live like a miser they say. Skip that cup of coffee, bring your lunch to work every day, never go out to eat, buy crappy cars and drive them for decades. You’ve heard all of the advice many times before, but I think they are missing an important piece of the puzzle.

You don’t have to cut out all unnecessary expenses. Instead you should define which expenses bring meaning to your life.


Maybe you skip that cup of coffee so you can spend your money at happy hour laughing with your friends. Perhaps you bring your lunch to work so you can buy expensive ingredients and cook an extravagant meal for your family. Maybe you decrease all of your discretionary expenses for a year so you can take a cruise with your aging parents.

The question is not whether or not you should be allowed to buy a latte without feeling guilty about it. The question is whether or not your discretionary expenses align with your values and goals.

Take the time to dream. The next time you pass by Starbucks you may choose to forgo that cup of coffee for a more important and meaningful purchase.

If you still want that cup of coffee by all means buy it. Just make certain you mindfully make the decision to do so.