Financial Resource Center

Money Management

Make Big Changes to Save Money

by Michelle Niewald / February 27th, 2020

The “Latte Factor” was dumb financial advice, in my opinion. That was the term coined by David Bach in his book by the same name. 

If you’re in a lot of debt and are struggling to make ends meet, you probably already know that spending $3 to $5 on your morning coffee isn’t a good idea. And, even if you’re not in a dire financial struggle, that money could certainly be spent better elsewhere.

But chances are it’s not the coffee breaking the budget. Five dollars isn’t much for a small indulgence, and it’s not the spending cut that’s going to fix your problems, particularly for the thousands of Americans struggling with outsized student loan debt.

More practical advice would include bigger changes: moving to a cheaper apartment, cutting unnecessary monthly bills like cable, and, maybe most crucially—earning more money.

Up Your Income

Upping your income no longer means waiting tables or taking a retail job that consumes your whole weekend. You can earn extra money from blogging, babysitting gigs, selling your handmade goods, renting an extra room to out-of-town guests, or becoming an Uber or Lyft driver.

Finding a side hustle does more for you than helping your financial goals. It can help your career by giving you the chance to earn more money outside of your day job, while simultaneously sharpening a new skillset.

Working on the side also provides you the opportunity to get paid for doing what you love, such as painting or making car repairs—which you might not be able to do at your day job.

Watch Out

Take heed, however, and remember to keep solid records for tax time. Additionally, remember why you developed a side hustle in the first place. This extra income is aimed to get you financially free, not fuel bad habits.

Put your extra money toward debt and emergency savings, invest in an IRA (individual retirement account), and don’t forget to enjoy a small indulgence from time to time—like your morning coffee, for instance.

Your wallet, your future self, and your mental health will thank you.

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