Millionaire told how to become rich by giving up coffee

Self-made millionaire David Bach claims in his book The Automatic Millionaire that “regardless of the size of your salary, you already earn enough money to become rich.”

Фото: Depositphotos

According to him, the state can be built in a very simple way: simply by refusing to purchase morning coffee, he writes CNBC.

“We all throw away too much of our hard-earned money on unnecessary, small expenses, without realizing how much they take away from us in the aggregate,” Bach writes.

He calls it the "latte factor." The basic idea is that if you spend $5 every day on a latte—or any other small luxury you regularly indulge in—then you're losing money that could be turned into investments. Over the course of a few decades, this money can grow significantly, turning you into a rich person.

Bach did a tally to show how important small purchases are. Say, if you cut your daily expenses for 5 dollars, it will give you 35 dollars per week, or about 150 dollars per month. If you invest 150 dollars every month for 10% profits, you will end up with:

• A year later: 1885 dollars
• Through 10 years: 30 727 dollars
• Through 15 years: 62 171 dollar
• Through 30 years: 339 073 dollars
• Through 40 years: 948 611 dollars

If you save 10 dollars per day or 300 dollars per month, you will earn 1,9 investments of one million dollars per 40 years, assuming that you will receive 10-percent annual income. If you invest 20 dollars a day, you will have $ 3,8 million for 40 years.

Millionaire argues that you need to look at savings from a long-term point of view, while choosing an amount, the rejection of which will not create problems for your monthly budget.

Bach is sure that "small victories add up to a big state." Even if you can't wait for 40 for years, this kind of savings will allow you to set aside a certain amount, which, if necessary, can be used to cover unexpected expenses.

To try this, start by determining your “latte factor”, tracking your spending throughout the day to determine exactly what you are wasting money on. Then reduce this item of expenditure and send the money released to the investment account.

“Starting with about $5 a day is a great start. Ideally, I want you to save more: $10 or $20 a day. This can change your life,” Bach emphasized.

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