July 8, 2020
Today: The Latte Factor
The second in a three-part series by John Moakler, BMath, CFP, CLU, CSC
With many people out of work, or with their income drastically reduced, the pandemic is the time to manage cash flow more carefully than ever. And, with our opportunities to spend so drastically reduced, new spending habits are taking shape — so this is the perfect opportunity to think about making them permanent. Today, we consider The Latte Factor: the seemingly minor expenses that add up to a big difference.
It is absolutely amazing how much we actually spend on coffee at Starbucks, Tim Hortons, McDonalds or wherever else we get our java fix. Especially if we are buying $4 or $5 lattes. Then there is the money we spend on drinks and dinner, lunch whether for business or pleasure, etc. etc. The money just seems to magically disappear.
It’s something I call the Latte Factor. Here’s the super-simple way to beat it: over a three-week period, monitor what you’re buying. By tracking what you are spending on — surprise, surprise — you will have a better understanding of where your money actually goes.
Then, review the products and services you’re buying each month and ask yourself: “Do I still need to buy this stuff?” Often, we get into habits and continue to pay for services we no longer need, or we could reduce.
Also pinpoint at least one or two expenses you can slash right in half. That’s right: by a full 50%. Once you come to terms with how much money you’re actually spending on things that aren’t that important, you might be surprised how easy it is — and how satisfying it is — to cut back.
Then you can develop a monthly budget — and stick to it. And if you do, retirement will be within reach before you know it.
If you truly want to get a handle on your expenses during the pandemic — or at any time, for that matter —seek the advice of a professional Certified Financial Planner (CFP) or Chartered Life Underwriter (CLU), two crucial certifications I have earned. Get help with developing a monthly budget. Most financial planners have developed their own tools or templates to help you with the budgeting process.
BMath, CFP, CLU, CSC
President and Senior Executive Financial Planner
Moakler Wealth Management Inc.
1 416 840 8544