The Latte Factor by David Bach, John David Mann
You don't have to be rich to live to the fullest.
In two words
The Latte Factor (2019) is the story of Zoey, an imaginary young woman living in Brooklyn. Even though she has a decent job in Manhattan, she doesn't know how to save money. Lucky, she meets an elderly man named Henry, who tells her three secrets of financial freedom.
For whom?
- Millenniums Who Want Financial Advice
- Baby Boomers Who Want to Grow Their 401(k)
- Anyone Who Wants to Know the Secrets of Financial Freedom
About the Author
David Bach is a best-selling author and financial expert. He has authored nine best-selling books for The New York Times, including The Automatic Millionaire, and is a frequent featured contributor to numerous media outlets, including NBC, ABC, CNN and The Oprah Winfrey Show. As of December 2018, his investment company AE Wealth Management owns $6 million. John David Mann is the co-author of several bestselling books, including Go Giver, which sold million copies and was translated into 28 languages. He has also worked as a prize winning composer and in concert to play the violin.
Like most of us, Zoey can't afford the life she wants, when was the last time you wanted to do something you wanted to do and convince yourself that you can't afford it. Whether it's your dream destination in Asia or learning to play a new instrument, all of these things require money, time, and energy that many of us don't have.
But what if achieving your dreams and saving money for retirement is easier than you think? Well, meet Zoey, an imaginary character who has the same problems as most of us. She works hard in her well-paying job, but still cannot get out of the trouble of not having money to achieve her dreams.
In this summary, we learn how Zoey managed to get herself out of financial trouble with the help of an elderly man named Henry.
Apart from this, you will also know how compound interest can make you a millionaire?
Why Not Budgeting, Automation Is the Way to Financial Success?
And how is saving $5 a day enough to achieve financial freedom?
The main character of this book is Zoey, 27, from Brooklyn, who works for a travel magazine. He has a good job, but living in New York is too expensive. On top of that, she has to give student loans and credit card loans as well and there is no extravagance in her life, yet she is able to meet her monthly expenses with great difficulty. Lack of money has become a common problem in her life – be it a photography course or her dream of traveling the world, there is always one answer. "I can't afford."
Zoey's life three years ago
We'll learn Zoey's story from 3 years ago, as usual on her Monday morning, before work, she bought a double-shot latte from Helena's, a coffee shop near her. Inside, Brocklin's culture was on display and the walls of the cafe were decorated with art and photographs, and the place had a casual and hipster vibe. But this morning's picture of Seaside Village caught Zoey's attention in particular.
He only had a few moments to look at the picture while ordering the latte, but she felt something of her own. Continuing her work with a ladle in her hand, Joey reached the station at the World Trade Center. An advertisement appeared on the screen with a photo similar to the one present in the cafe. The picture was accompanied by a message "If you don't know which way you are walking, you may not like the destination in the end." After reading this message, she started thinking about her life, where would she go. was it what were her dreams? And what was she doing to fulfill them? Before she realized she was late for work, she started walking towards her cause - the World Trade Center, the home of travel magazines where she worked.
A few hours later, it was time for him to have lunch with Boss, Barbara. Barbara noticed that Zoey was feeling a little lost that day and asked what was going on in her mind. So Zoey shared that picture in Helena's, and how much she would love to be able to afford such a photo for her living room. Barbara advises Zoey to talk to a coffee-seller named Henry, who was at the same coffee house where Zoey gets her deli coffee. And said that ask him about that photo and see what he says.
Henry told Zoey about the latte factor.
The next morning, Zoey stopped in Helen's to look carefully at the picture of the Seaside village with the price tag under it—$1,200. Monthly rent for one photograph. Still , admiring the beauty of the picture and thinking of the island where this picture was taken , she stood there when someone called " Mykonos " from behind . ( Name of that Erin ) Almost dropping her latte , she turned to meet Henry , the coffee seller whom Barbara had told her about . After both of them had a liking for that picture , Henry asked Zoey , why didn't she buy it ?
She replied shyly that she could not afford to pay such an expensive price for a photo. Henry then said something that Zoey had not expected, Henry said that if she could afford to buy this latte, she could also afford the photo. However, Zoey respectfully ignored his request and went to work , missing Henry 's words all day long . On Wednesday morning, Zoey was at Helena's to pick up her logs.
She saw Henry standing in front of her favorite photo. After the conversation again, he asked Henry to explain his previous point. That's when Henry began sharing the three secrets of financial freedom with Zoey. The first among them was that Zoey would first have to start spending on herself. This means that instead of looking at whether he has money left for himself after all the expenses of the month, he should first think for himself. This also means, before the government starts paying income tax from him, she should keep some money in her retirement plan.
Henry added, "Compound it with compound interest and the money will keep growing." Saving just $5 a day would make it $1855 after 1 year through compound interest. And 40 years later, $948,611 dollars. All this at the cost of that five-dollar lot. Zoe wondered if instead of spending it at the cafe, she would also take lunch from home for work? How much would she be able to accumulate if she changed her spending habits during her work week and saved $25 a day? Henry calculated that $3.4 million in 40 years. Surely Zoey will have to think about this a lot. Second morning, second Latte.
Zoey couldn't believe the secret to finance it and decided to meet Henry again to get answers to her questions. Lucky, he was ready to meet. When she figured out the whole "Pay Yourself First", Zoey reveals that she doesn't feel disciplined to keep doing it all the time. Henry recognized this as an unrealistic view. That's when he shared the second secret of financial freedom with Joey, don't budget automatically. Henry explained that budgeting could work for a corporation.
But when it comes to financial planning of a person, it doesn't really work. People are busy and they do not have time to keep track of every transaction of money.
Henry further explained that the solution is an automatic payment system
Henry further explained that the solution is an automatic payment system so that whenever she receives her payment, some part of it goes into the tax, expenses and grid automatically. Once the automatic payment system is setup, it will run automatically. For that no discipline and self control will be required.
Henry said, think about most companies, whether it is a cable provider or a local gym, they automatically take money from the account, right? The reason he does it is the same reason you have to do it too - it's simple and effective. Zoey was starting to see hope. But then she remembered that one of her friends had told him last night that the talk of 10% compound interest had become obsolete.
She asked Henry, how can anyone get such a high return in this modern world? Henry's answer was simple, since the beginning of reliable market data collection in 1926, the stock market has grown by more than 10% every year. Yes, it depends on the year, and the market will always go up and down. But since the 2008 financial crisis , the trend has continued , in fact , even the most conservative stock portfolio will give you 8% interest .
In the end, Henry said, 5, 8 or 10 percent doesn't matter, it matters that the compound interest on your pre-tax income will continue to increase. Just insure that it automatically reaches your account every month.
Zoey's boss, Barbara, tells her 3 money-related myths
Zoey meets Henry's friend, the Baron, on Thursday before leaving Helen's Cafe. Henry had helped the Baron with a change of life and finances. In addition, the Baron tells Zoey that Henry is the owner of Helena's Cafe. From that minute on, Zoey started learning about this mysterious finance. That morning, Barbara came to Zoey's desk and asked if she had spoken to Henry. Zoey replied yes, but she still had doubts in her mind, she had admitted that she didn't have a good understanding of money. Barbara decided to share some of her knowledge with Zoey, and started telling her about 3 myths related to money.
Barbara said, the first myth is that earning more money makes you rich. Most people think that the problem is their low income, but the real problem lies in the way they spend. Those who earn more simply spend more. Solution? Change your spending habit. For example, bringing food to work saves $15 a day. Barbara explained, the second myth is that money is needed to make money. Barbara had forgotten the number of people who had told her this.
You don't need to be a mathematician or a Wall Street investor to know how compound interest works, as Henry pointed out, starting with as little as $5, Barbara added. On the contrary, that money should be created automatically - you don't have to worry about it all the time. In the end, Barbara said, the third myth about money is that there will be someone to be your support in bad times.
Whether it is government or family, you cannot always expect that someone will be there to help you. Barbara explained that this is often the case with us women. We think that when bad times come, some Prince Charming will come from somewhere and take us away. But this is just Fairy Tail. Zoey needs to be her own Prince Charming.
The last lesson Henry told Zoey is that you don't have to wait for retirement to live your life, you can still do it.
On her way to work on Friday, Zoey realizes she only has two out of three secrets from Henry. So she decided to find out the third and last secret and went to Helena's Cafe to get more knowledge from Henry. Henry was happy to talk again and began by asking what was most important to Zoey, not in the future, but now. After thinking for a while Zoey replied that she would like to learn to take good photographs. And for the long term, her dream is to travel the world. It made her sad that she worked for a travel magazine, but never went out of the country. Henry told that the time had come for the third secret to be put into practice.
Saving for yourself and automating it is all fine
Saving for yourself and automating it is all fine, but there is also a need to live without worrying about money in the present.
Henry asked, how much does a good photography course cost?
Zoey replied , about $ 600 dollars , Henry smiled , Joey needed to open a dream account .
In addition to her pension plan, if she saves $5 a day, she will have enough money to take a photography course within 6 months.
But will the dream account be enough for her plans to travel the world? she will still need to stop work for a while. Then Henry explained to him the radical sabbatical concept, under which he had taken time for himself to travel to 100 countries. One of the first places he visited was Greece.
Actually that photo of "Mykonos" from where it all started was clicked by Henry. After understanding the three secrets, Zoey now knew what to do. First she sat down with the HR of her travel magazine and opened a pension account. After that, she opened two dream accounts, one for photography courses and the other for world travel.
She finally sat down with Barbara and asked if she could take her own radical sabbatical once every year. She can still work from Abroad. Barbara agreed on one condition - Zoey would send her a postcard.
Three years have passed since then, Zoey has taken a radical sabbatical, even more so that the photos she clicks while traveling around the world got published in the same travel magazine where she works. Zoey is making her dreams come true, and it all happened by realizing the real value of the $5 latte.
Overall, from this story, we learned three secrets of financial freedom. Start by saving money for yourself in a pre-tax account. Use automation instead of budgeting. Zoey's story tells us how by opening a dream account we can live our dreams now and in the future too. Overall, there is no excuse for living in an unstable situation - all you have to do is save $5 a day or rather - the cost of a latte.
You can Buy this book from here.
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