I have been thinking about this for a few months now since I heard of David Bach’s “Latte Factor“. The idea of it makes sense and is easy to grasp, and I’m sure he’s not the only person to do this or the first one to think of it.
The point of this concept is to give up little things in the present in order to let them accumulate to something substantial in the future.
For most people it’s about tackling the daily unconscious spending: daily coffee or eating out for lunch. Mindlessly getting into a habit that over time is just a plain waste of money without adding anything of value to their life. Sure, for some people, that daily Starbucks is life, or they must have it because that’s where they meet clients.
For me, that’s not the case. for me, mindless, unconscious spending is about the idea, waste and habit of throwing away money.
No point is depriving myself of a well made cappuccino or going out for lunch with coworkers, but overdoing it a waste of my little salary. Too much of a good thing is bad thing right?
I am bad for spending mindlessly on coffee, eating out, random clothes/shoes, and we all know about my Sephora problem.. so I thought I should give this concept a practical run. I had trouble figuring out HOW I am going to bank the savings. The point is to put the money in savings, not spend it on something else.
So how I think I am going to do this is base the amount I save on each day that I do not spend on Restaurants or Stuff, then I will add up the amount at the end of the week and transfer it to my savings.
To do this, I went into my last 4 months’ budgets and calculated the average for each category:
Example: Restaurants: January: 138.07+ February: 109.35+ March: 277.81+ April: 224.23= 749.46 divide by 4 months = 187.37/ month. Per Day: 6.04
So for each day I don’t eat out I will add it up and transfer to Savings.
I don’t see this going well if I just completely cut myself off, and that isn’t the point of this excessive. The point is discipline.
Each week I will allow myself to eat out once, and I’m also giving myself $50 Blow Money for the month. More on Blow Money later.
Something to help me stay motivated is putting a reward/goal in place. The item that I will be saving for is a makeup item and it costs $42.94:
At the end of the month, if I saved enough from not Eating out and Random things and staying within my allowed number, I will reward myself with this. I know that sounds like the opposite of what I said above: to not spend the money on something else, but this will act as the reason of why I will be forgoing not buying a pair of shoes in that specific moment. I hope that makes sense.
– In May I will only spend $50 on random stuff for myself and only eat out 4 times.
– Save the amount that would’ve gone to eating out and stuff. If I am successful, at the end of the month I will reward myself.
Please feel free to comment if you have any other suggestions or ideas of HOW I can “save the savings”,