When was the last time you had a desire to do something but convinced yourself that you couldn’t afford it? All of these things need money, time, and energy that the majority of us don’t have, whether it be taking that dream vacation or learning to play your favorite instrument.
But what if having the resources to realize your goals and save enough cash for retirement were actually more simpler than you anticipated? So let’s meet Zoey, a fictional character who experiences many of the same issues as we do. She puts a lot of effort into her well-paying career, but she can’t seem to break the cycle of never having enough money to accomplish her ambitions.
Authors David Bach and John David Mann examine the tale of Zoey’s escape from the financial cage of her own construction with the aid of a wise old man named Henry in their book The Latte Factor: Why You Don’t Have to Be Rich to Live Rich.
The book center on Zoey, a 27-year-old Brooklynite who works for a travel publication. Although she has a good profession, living in New York City is expensive. She also has credit card debt and student loan debt to pay off. Even though she leads a modest lifestyle, she still struggles to save any money at the end of each month.
Additionally, her life has become a constant theme about her inability to pay for things: whether it’s a photography course she wants to attend or her aspirations to tour the world, the response is always the same: “I can’t afford it.”
During Zoey’s Monday morning commute three years prior, the narrative is picked up. She went to her neighborhood coffee Helena’s and bought a double-shot latte as usual before going to work. The cafe’s interior reflected the vibrant spirit of Brooklyn; paintings and photographs adorned the walls, and the atmosphere was warm and hipster. However, one print in particular captured Zoey’s attention—it was of a small beach town at first light. She barely had a brief opportunity to gaze at the image while placing her latte order, but it caught her attention for some reason.
With her latte in hand, Zoey continued her trek and eventually arrived at the World Trade Center station. On a screen with a picture like the one at the cafe, an advertising emerged. “If you don’t know where you’re headed, you might not like where you end up,” the photograph’s accompanying message read.
This message made her consider where she was going in her own life. What did she dream about? And how did she go about achieving them? But before she could respond, she realized she was running late for work. She then moved on to her destination, One World Trade Center, where she worked for a travel publication.
It was time for lunch with her supervisor, Barbara, a few hours later. But Barbara noticed that Zoey seemed strange that day and enquired as to her thoughts. Zoey then recalled the incident involving the image at Helena’s and expressed her desire to purchase such pictures for her own living room.
Then Barbara made a weird proposal to Zoey: talk to Henry, the seasoned barista who serves Zoey her morning latte at the local coffee shop. See what he says after asking him about the print. The following morning, Zoey visited Helena’s to get a better look at the picture of the beach. Its frame was marked with a $1,200 price. Rent for a month for a single image.
She persisted in looking at the picture, attempting to determine where it was shot, and mumbling to herself the names of Greek islands until someone behind her remarked, “Mykonos.” She spun around to greet Henry, the barista Barbara had recommended to her, and nearly spilled her coffee in the process. Henry questioned Zoey about why she didn’t buy the image after they both expressed their enthusiasm for it. She apologetically acknowledged that she couldn’t afford to pay that much money on a single picture.
Then Henry said something unexpected to Zoey, telling her that if she could afford the latte she had just purchased, she could afford the picture as well. Zoey quickly brushed aside this comment and went off to work, but Henry’s puzzling assertion stayed with her all day.
When Wednesday morning rolled around, Zoey returned to Helena’s to get her latte. Henry was seen standing in front of her preferred image. She started talking to him again and asked him if he would elaborate on his puzzling statement from the day before. Henry started explaining his Three Secrets of Financial Freedom to her at this time.
First and foremost, Zoey had to start paying herself first. That implied that she should resolve to pay herself first each month, rather than checking to see if there was any money left over for herself after covering all of her expenses. That implied that she should start saving money for her retirement in a 401(k) plan even before the state started taxing her salary.
Henry noted that if you combine it with compound interest, the money will start to build up. With a simple daily savings goal of $5 and a 10% compound interest rate, you might save $1,885 in just one year. and 40 years later? $948,611. For the price of the latte Zoe is holding.
What if Zoey took lunch from home to work as well, saving money on going to the cafeteria, her mind raced? If she adjusted her workweek spending patterns and reduced her daily expenditure by $25, how much could she save? According to Henry’s calculations, this would generate $3.4 million over 40 years. Zoey certainly had a lot on her mind.
One more latte in the morning. Zoey made the decision to go back to Henry and ask him a few more questions because she was having second thoughts about this incredible tip for organizing her funds. Fortunately, he was prepared to comply. While Zoey said that she was aware of the whole “pay yourself first” concept, she didn’t think she would have the self-control to consistently do it.
Henry concurred that this was an improbable scenario. He then revealed the second financial freedom secret: don’t budget; make saving automatic. Sure, Henry said, budgeting might be ideal for businesses. However, it just doesn’t work in practice when it comes to personal financial planning. People don’t have time to record each and every financial transaction they make because they are too busy.
Henry continued by recommending setting up an automatic payment system so that when she received a paycheck, a piece of it would be immediately taken off the taxed – and spendable – grid. After all, you shouldn’t spend money you can’t get your hands on. The automatic payment system would operate by itself once it was set up. There would be no need for self-control or restraint.
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