Most of us have heard of the “latte factor” and how we can save a lot in the long run by spending a little less in the short run. While some bloggers love the latte rule and others think it is stupid, here are some ways to find the latte in your life to save big in the long run.
Cut The Latte
I will start with the obvious. If you go to Starbucks every day on the way to work, you are spending about $5 a day, or $25 per week, on coffee that you can probably get at your office for free. Over a year, that is $1,250, or nearly twice the median rent in the United States.
Now, assume you invest that $1,250 per year instead of spending it. Saving it without investing a cent at zero interest would net you $43,750 if you start at 30 years old and save $5 every weekday, 50 weeks per year, until you are 65. If you invest that at a modest 5% return, which is less than the average of the S&P 500, you would have $118,545 (assuming that you invest the $1,250 once per year). At a more aggressive 7%, you would have $184,892 when you retire.
Bring Your Lunch
Buying lunch every day costs $5-$10 on average. Lets say $7 to make it simple. Bringing your lunch costs money, but far less than the cost of eating out. If you spend $2 to make your lunch, you are saving the same $5 per day as you did on the latte. If you have both habits and invest, double the numbers above. All of a sudden, $$369,784 sounds pretty sweet.
I will admit, however, that I don't bring my lunch every day. I do find some value in the convenience of buying my lunch and the time out of the office if I go out to eat. Even if you are like me, just bringing your lunch 3 days a week can save $15 a week, or $750 per year, compared to buying it every day.
Save on Gas
I recently shared my 5 best mobile apps to save you money, and one of them can help you save on gas. GasBuddy gives you a crowd-sourced list of local gas stations and their prices. You can choose stations near home, work, or along your route to find the best prices.
Assuming you don't have to go far out of the way, you can easily save $2 to $5 per tank. If you fill up once a week like me, that is $100 per year on the conservative side. Over 35 years, that $100 a year can become almost $10,000.
Drink More Water
Do you order a Coke every time you go out to eat? Maybe a Diet Coke to save on calories (but add-on cancer)? Those drinks are also taking a big chunk of change from your money. At $2 each, even with free refills, the cost can add up over time.
Water costs nothing and has no calories. It is also kind of good for you. On the other hand, the average American drinks 15 ounces of pop per day. According to research by MSN, switching to water could save you $977 per year.
How Do You Save?
What small steps do you take to save big? Share your ideas and successes in the comments.
Originally written on November 8th, 2008. Updated December 19, 2012. Image by zoonabar / flickr.