Where Does My Money Go?!! Part I

Most readers (and writers) of personal finance blogs understand basic money management skills. Though many of us are still struggling to manage our money or tackle debt, we understand the theoretical principles fairly well. Unfortunately, that’s not the case for the majority in our country and abroad.

For those individuals who just need some financial tidbits to get them started down the path to money management, I’ll be doing a series of posts about the basics of managing your money and sharing my own journey along the way.

For many of us, money is constantly on the brain. Most of us know that we should save as much money as possible in a retirement saving account and investments that are essentially growth vehicles for our future selves, but we also need to save for the immediate future. If you have a flat tire, leaky roof or need to replace your refrigerator, your retirement account is not the place to retrieve these funds.

The best avenue for “rainy day” savings is either a simple savings account or a easily accessible money market account (if you’re looking for more growth potential). That’s all well and good, but how do you find money to save with all of life’s other necessities?

First, start by tracking your savings and seeing where your money goes. You really only need to do this for two to three months so that you can get a rough idea. Keep in mind that this type of tracking won’t take into account those expenses that come up once or twice a year e.g. property taxes, insurance premiums, holiday gift buying and birthday presents, etc. Once you have tracked all of your expenses (yes, that $0.79 candy bar counts), start by determining what your “Latte Factor” is. What’s a latte factor? It was a phrase that was coined by David Bach to describe the little things we all buy that can add up to a nice sum of change over the course of a year.

For some, their “latte factor” is actually latte’s! Do you find yourself at Starbucks a few times per week? If yes, then you are probably spending about $4 per visit. If you go to Starbucks four times per week, that can add to more than $800 per year!

Do you go to the salon once a month? At $50 per visit, that’s about $600 per year. We can go on with more examples, but you get the picture. Now figure out what your “latte factor(s)” is and calculate a rough estimate of what this costs you every year.

Now, it’s time to cut back. Notice I said “cut back,” not “cut out.” The thing with “latte factors” is, is that they’re the small things that bring us some joy on a daily basis. If you vow to cut them out completely, there’s a high probability that you won’t succeed (though check out this debt destroyer if you want to try going cold turkey, she did it!). You may end up feeling deprived and miserable. So instead of cutting them out completely, decide the minimum you can live with to start. If you typically visit Starbucks three times per week, decide that you will only visit on Monday or hum-back Wednesday to get you through your week.

If you go to the salon monthly, cut it down to every other month. Make small cuts to all of your latte factors. The next step is probably the most important step. Put the money that you would have spent immediately into a savings account. If you vow to cut back your salon visits, but don’t actually save that $50, it’s a guarantee that the $50 will be spent elsewhere. One of the best ways to make sure these “savings” are actually saved is to start automatic deductions every two weeks on payday to your savings account for the amount of all of your “latte factors,” whether that’s $10, $15 or $20.

Even though these amounts may seem very small, once you’ve built up $1000 in your savings account, you’ll be on your way to protecting yourself when that “rainy day” comes.

So, you may be asking, where does your money go, Ms. MyCountDown? Good question. In all honesty, even though I know these basic money management principles, I still ask myself this questions pretty regularly! I track every single expense in YNAB (yes, including that $0.79 candy bar),  and man oh man, it’s an eye opener. Honestly, I love grocery shopping as I mentioned here (that’s a bit weird, yes I know) and I can drop a pretty penny at the grocery store if I’m not careful.

Mr. MyCountdown and I (well, especially me) love wine, and I’ll walk out of the grocery store with four or six bottles of wine at a time. Yikes! Though that should last about two months, I make sure that our wine is kept well stocked. I think this would definitely fall into the “latter factor” category.

So what have I done to reign in my “latte factor?” I honestly can’t vow to not buy anymore wine, but I have started limiting my purchases. I typically shop at the local Kroger and they have a great deal where you get 10% off if you buy four bottles at a time. So, for the past year, I’ve been limiting my wine buying to every 3 months, 4 bottles a pop. That way, I can still have a nice glass of wine with dinner if I feel like it, my overall wine consumption decreased and I save money.

I do practice what I preach as far as actually saving the money saved from reduced “latte factor” spending. Along with saving for my retirement, I transfer money every pay day into my online bank account to to be there when I have a “rainy day.”

What are your “latte factors?” Have you tried to reduce your latte factor spending?



  1. books and fabric are my two big money latte factors. i’ve gotten better as i recognize i probably have hundreds of books i haven’t even read. same with fabric…too much i haven’t even used. plus i have to put it somewhere and space in my little homeis at a premium. but yesterday i bought some beautiful red fabric. not sure why. i don’t ever wear red. but it cost $3 per yard! what a bargain! and it’s beautiful! still have some work to do curbing myself.

    1. I hear ya. I’m an avid reader and I have bookshelves upon bookshelves of books, plus books that are boxed and in my basement. For the last three or four years, I’ve been going to the library pretty exclusively for my reading, so that has helped curb that book buying “latte factor.” It’s hard to stop yourself when you find a great deal relating to a hobby that you love. I’m sure you’ll find something beautiful to make with the red fabric.

  2. ….. getting my nails done! That was a tough one to gradually eliminate… but I ended up buying a shellac machine and started doing my own nails! It became a great way to relax and try out funky designs!

    Another “latte factor” was buying books as well… i too started going to the library + being able to put on hold books online, and ship them to the nearest branch was (and still is) AMAZING! I “force” my husband to come with me so he can help me carry them home (isn’t that why we married them? lol)

    -Two millennials.

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