The Latte Factor | David Bach

Summary of: The Latte Factor: Why You Don’t Have to Be Rich to Live Rich
By: David Bach


Embark on a journey with Zoey, a 27-year-old Brooklynite working at a travel magazine, struggling to save money and achieve her dreams despite being bogged down by student loans and credit-card debt. As her life in New York takes her from one financial limitation to another, an encounter with a wise barista named Henry reveals a new perspective on her finances. In this book summary, discover the Three Secrets of Financial Freedom while debunking popular myths about money and how to attain wealth. By learning to harness the power of everyday expenses, like the cost of a latte, transform your financial life and achieve your dreams, no matter how far they may seem.

Zoey’s Awakening

Zoey, a 27-year-old Brooklynite, struggles with everyday expenses despite having a well-paying job at a travel magazine. Her Monday morning encounter with a photograph at her local cafe triggers an introspection of her life. While contemplating her dreams and aspirations, her boss suggests she speak to Henry, the barista at the cafe.

The Three Secrets of Financial Freedom

Zoey visits a coffee shop and admires a pricey seaside photo. There she meets Henry, who shares with her the first of his Three Secrets of Financial Freedom: Pay Yourself First. Zoey learns that instead of hoping for extra cash at the end of every month after all expenses have been paid, she should commit to paying herself first before anything else. By investing just $5 a day with 10% compound interest, she could save up to $948,611 in 40 years. Zoey begins thinking about how small changes in her daily expenses could make a huge difference in her savings.

The Secrets to Financial Freedom

Zoey discovers two secrets to financial freedom from Henry. The first is to “pay yourself first”, and the second is to make it automatic by setting up an automatic payment system that takes a portion of her paycheck and transfers it off the taxable and spendable grid. Zoey also learns that the stock market has grown by more than 10 percent every year since 1926, and the most conservative stock portfolio could earn her around 8 percent annually. With compound interest applied on a portion of her pretax income, Zoey can achieve financial freedom over time.

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