The Latte Principle: 7 Financial Mistakes That Prevent Us From Being Richer Than We Are

Perhaps in school, in technology lessons, you were told about the basics of family budgeting, but if since then you have not gone to study as an economist or accountant, then most likely you have studied further rules for handling money exclusively empirically. And whatever your success, we think you have understood one thing for sure: the financial situation is determined solely by the set of financial decisions that we make every day. And how to make the right choice so as not to accidentally create offensive gaps in the budget can be difficult to understand.

Of course, the seasoned heroes from Theodore Dreiser's novels do not grow up overnight. But you can start with at least an analysis of the most common financial mistakes that, alas, most of us make (so far).

We spend often and in small amounts

Let's start with the most obvious: some of your income is spent on useless little things. Yes, taking a cappuccino with you from a nearby coffee shop in the morning or going to a restaurant with friends once a week may have little effect on your monthly budget, but if you think in perspective, a dinner at a restaurant by check, say, 1,500 rubles can result in you 6,000 rubles. month. Or 72 thousand rubles a year, which could well be enough to pay off a decent portion of the loan or other mandatory payments. Of course, we do not urge you to give up the ordinary joys of life, but nevertheless, if you are experiencing financial difficulties, it is useful to remember that by giving up just one dinner at a restaurant a week (or at least reducing the amount of the check), you can save quite good money.

Moreover, in the popular economy, there is even a specially formulated principle to describe this error - the so-called "latte principle". Its meaning is very simple: by giving up just one cup of aromatic coffee from a coffee shop a day (which can be easily replaced with analogues in the form of a coffee machine at work), after just one year, you can save up a good amount of money. The money saved can be invested at interest, and if you do not go into the intricacies of refinancing rates, in 10 years you will have accumulated about a million rubles, in 20 - about fifteen million, and so on.

Putting aside savings in the presence of debt

Let's make a reservation right away: we are talking about placing savings in the form of bank deposits. Of course, we would all like to live (and not grieve) on bank interest, but the reality is that it will take a very, very long time to wait for at least some tangible benefit from such a decision. Moreover, sadly enough, the interest rates on loans are always higher than the interest received from the deposit. In other words, if you take the money to the bank and at the same time open a credit history, then, say, in a year your profit from the deposit will be incommensurably less than the debt accumulated over the same time. In short, it is a matter of prioritization. If you have free money, then it can (and should) be put into work. If there is no free money, then it is better to deal with debts first.

We are not receiving the money we owe

And we are talking not only about social benefits (although it will not hurt to ask if you are entitled to material assistance under the law, especially since in Moscow the amount of social benefits is regularly increasing). But also about tax deductions, which are due, for example, to people of certain professions (including authors of works of art), those who made transactions for the purchase or sale of real estate, or those who pay for their own education or the education of their children and some relatives (which will be especially useful for mothers who take their children to countless paid sections and circles, as well as parents of students studying on a paid basis). In general, spending an hour or two of your time on the website of the tax service does not hurt:in some cases, this can save you up to several hundred thousand rubles a year.

We do not save

“To live here and now” is, of course, not a bad mantra, but still, in the modern world, only small children can afford to live without looking into the future. Life is unpredictable, and no matter how stable it may seem to you now, you cannot exclude the risk that one day you will need savings for unforeseen expenses (in this regard, it will not be superfluous to start some kind of your own emergency fund). How to start? Try to save at least 30% of your income every month: by the end of the year, you will have a decent amount of money saved up.

We do not plan

As already mentioned, our financial position directly depends on our own decisions. In this sense, we also need cost planning, like planning our working day, week, and so on. It is important to write down all of your financial goals: maybe you are going to buy a car next year or pay for a child's higher education in five years. The same system works here as with making a to-do list: until you write it down, you will not understand (see also: How making a list of tasks boosts your brain).

We do not monitor communication rates

You turn on auto payment for the Internet, TV, mobile communications, get used to the amount that is debited from your account every month, and you are no longer even interested in what you pay for. Or you buy a package that costs a little more than a hundred rubles, but now your unlimited Internet comes with a TV that you don't even watch. Sound familiar? It is really easy to get confused in payments for communication (as well as in all kinds of promotions, offers and gifts), because, say, if you exceed the mobile Internet limit, then your operator will charge you huge amounts for each additional gigabyte. As a result, you will spend two or even three times the size of your tariff.

At such moments, it is worth, again, to set aside an hour of your time, open statistics (look for it in your operator's personal account) and analyze your expenses. Do you really need 500 minutes and as much free SMS if you don't open anything on your smartphone except social networks or instant messengers? Do you really need a tariff that allows you to download up to 4 GB of mobile traffic if you only browse news feeds on the Internet? If not, then it is worth picking up a new package, the limit of which will more accurately meet your real needs.

Making impulse purchases

Perhaps this is one of the biggest sins of the consumer society. We are so accustomed to receiving everything at once that even in those moments when we are in a not very favorable financial situation, we continue to buy tickets for premiere movie screenings (and do not wait until the same movie can be watched online) and spend huge sums on things from new collections (without waiting for discounts) and go into debt to buy ourselves a smartphone that has just been released (and then we swear ourselves for the next six months). At such moments, it is useful to listen to the logic: do you urgently need this or that thing? 99 times out of 100, your mind will tell you that you may well wait until better times.

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