The alarm clock goes off; I roll out of bed and head to the kitchen to pour my first cup of coffee for the day. I love the aroma and taste of coffee. I start everyday with a cup and then more cups to kick things into high gear.
As with many coffee drinkers, I enjoy a trip to the local coffee shop to get a nice fresh cup of gourmet coffee from time to time. While I don’t do this on a daily basis I sometimes make a few trips per week. I don’t purchase the fancy drinks such as the latte, mocha, etc. Rather, I’m happy with a pour of the coffee of the day.
Budget buster?
Can a few trips to the coffee shop bust my budget each month? Some would say even a few dollars each day wouldn’t impact your budget, or get you in trouble with over spending. Others would say these expenses add up and across an entire month or a year the total could become frightening.
Even a popular financial guru, David Bach, trademarked something called the Latte Factor.
The Latte Factor® is based on the simple idea that all you need to do to finish rich is to look at the small things you spend your money on every day and see whether you could redirect that spending to yourself. Putting aside as little as a few dollars a day for your future rather than spending it on little purchases such as lattes, fancy coffees, bottled water, fast food, cigarettes, magazines and so on, can really make a difference between accumulating wealth and living paycheck to paycheck.
Little pleasures in life
Whereas I completely agree with what David says, there are simply some little pleasures in life that we shouldn’t deny ourselves in the monthly budget. Yes, it all depends on your situation. If you’re drowning in debt you have to make some sacrifices to turn things around. However, if you’re on track towards your financial goals and perhaps have a plan in place to get out of debt in which you’re consistently following each month, couldn’t you just have a little bit of fun money? Even if it means spending $5 per week on a few cups of coffee; would that be okay?
I think David’s Latte Factor is a little bit on the extreme side. And rightly so! Many people and families are living on the extreme with little pleasures in life and mismanagement of money. But to have some sanity in your everyday living, I think it’s okay to make a place in the budget for some fun, or sometimes called “blow” money.
Dependent on your financial situation
Again, it’s dependent on your financial situation and I in no way want to encourage someone who can’t stop using credit cards to purchase coffee or some other pleasure each day of the week. My wife and I have found it helpful to pay each other a small blow money allowance each month. This money can be used to do whatever it is we please. Some months the money is used for extra clothes and sometimes for a book. And if one of us wants to stop off at the local coffee shop to have a nice cup of java on the way to work, well okay!
The key is to make a place for this blow money in your budget. Name the dollars that will be used for it each month and live by the rule: when it’s gone, it’s gone.
What are your thoughts on the blow money allowance?
