The latte factor. If you take what you spend on a latte every day ($5) and invest it over the course of a life time, then in 40 years you would be a millionaire (assuming a 10% annual return). Would you rather have a fancy cup of coffee or a million dollars? What little things in life can you do without in order to put more money into long term savings? Sounds simple right???
Here is my problem with that philosophy. It doesn't take into consideration the value of enjoying the coffee and it incorrectly treats having a daily latte or newspaper as if you are simply throwing money out the window. There are tangible benefits to these things, such as happiness or knowledge. What if a young Howard Schultz had saved a few bucks by not buying those Italian cappuccinos. He might be a millionaire by now, but instead he started a small coffee house chain called Starbucks and is a billionaire. Warren Buffet "wastes" $5 a day on 4 different newspapers subscriptions. He's worth 20 billion. Think he misses that extra million? I didn't think so. Who knows, maybe neither of these men would be where they are if it wasn't for their spending habits.
Its not that you should totally discount the theory, but you need to keep in mind that it isn't a waste. It's a trade. It's $5 that is exchanged for something you consume or for a piece of a company. The key is maximizing your decision. Go to the coffee shop, buy a paper, drink the latte slowly, read the business section, and make an informed decision for your investment. That way you can enjoy today and still be taking care of tomorrow.
Thanks for the read.
I've included some fun latte art below. Cheers.
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