The Latte Factor: How small expenses can cost you big

august 6, 2025

Images: Shutterstock 

The Latte Factor, a term coined by American financial author David Bach, is a concept that highlights how saving a small amount daily can add up and have a huge impact over time. 

Say, a cup of coffee costs you ₹250 on average, and you have it for 25 days, you are essentially spending ₹6,250 on coffee in a month. 

Coffee runs

This amount can be equivalent to the total you spend on your groceries, or something more necessary. Prioritising and building discipline can help you control impulsive spending. 

Discipline

Emotional spending

This psychology stems from emotional spending. A small treat may feel like a reward for a tough day, but it can become a hindrance to your financial management in the long run. 

Brands capitalise on our emotions by offering discounts or giving the option of ‘Buy now, Pay later’, but once you start being more aware of where you spend, you start to see the gaps. 

Consumerism

Shifting your mindset doesn’t mean giving up everything you enjoy. It’s about being mindful and making informed choices by limiting your impulsive purchases. 

Making changes

You can start by making a daily budget, tracking all your expenses, automating your savings and following the 24-hour rule to rethink a purchase and delaying your impulse. 

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