A few years ago, David Bach coined the phrase “Latte Factor” in his book, The Automatic Millionaire. Latte Factor refers to the small expenses that drain money from your wallet without you noticing such as buying coffee. Even though it is called the Latte Factor, it can refer to many things such as bottled water, magazines, etc.

There was a recent article about frozen yogurt becoming the new Latte Factor.

It is okay to spend money but it is important to realize how much you are spending and what you are spending your money on. It is referred to as conscious, when you are thinking before spending money on something and deciding if you really need to purchase the item.

Nancy Kvamme

JD Roth from Get Rich Slowly has done several blogs asking readers what they spend on different categories.

Every one is in different circumstances, so even though your spending may appear to be out of line when compared to others it may work for your life. He writes these posts to get a general idea of how people spend their money and for others to see how their spending compares to others.

Nancy Kvamme

The Suze Orman Show airs on Saturday nights on CNBC. One of the segments of the show is “Can You Afford It” where people call in with their income, debt and other information and what they want to purchase. Suze then tells them if she thinks they can afford to spend the money.

Last night, one of the callers was calling about $15 per day for coffee and lunch with friends. Most callers have a total amount for a trip or item. Suze pointed out that she stated it as $15 per day since it doesn’t sound like as much money as stating it per month or year. For a month it would be $450 and yearly it would be over $5,000. After reviewing her financial information, Suze denied her.

This is a great reminder of how a few dollars here and there can add up to a significant amount over time.

I suggest to people to track your expenses for at least a week or preferably up to a month to realize where your money goes. Keep track of every thing you spend money on and then take a look at it to see if any can be cut out or cut down.

Nancy Kvamme

One way to either save money on bakning mixes for your own use or to give as gifts is to make your own. As in this post with a little time you can mix up the dry ingredients for recipes with instructions for wet ingredients and baking directions to use in the future. You can do the same thing with recipes you have or look online for other recipes such as cookies and bars.

If you are planning to use for yourself you can store in quart or gallon size storage bags or jars. You may want to store them in the freezer so they last longer.

If you are planning on giving them as a gift some ideas are putting in ziplock storage bags with a border on the top of the bag. Cut a piece of cardstock or scrapbook paper the same width as the bag and long enough to fold over the top of the bag and glue or tape the sides together like this. You could also put the mixes in glass jars and wrap the lid with ribbon. When giving as a gift include a card with the wet ingredients needed and baking instructions.

You could include the mixes in a gift basket with other items such as potholders, pans, baking chips, etc. I have also seen an idea online of using a 5 gallon pail with flour, sugar and other items needed for baking.

These mix ideas could be used for gifts for neighbors, teachers, bus drivers, and other people you want to purchase gifts for.

This is part of a 90 day series with tips to help make your holidays easier. Click here for previous posts.

Nancy Kvamme

To many people budget is a bad word. But if you learn how to start a budget and see how it can work it will make managing your money easier.

I spoke to a group of college students today on budgeting, spending and other topics. One example I mentioned is from Dave Ramsey. If you consider the average income is $40,000. After 10 years of working you will have earned $400,000. If you were to build a $400,000 house would you start building without a blueprint or plan? Budgeting is the same thing, you can plan how to spend and save your money. With a budget you tell your money what to do instead of your money telling you what you can do.

I realize it is difficult for college students to afford certain things. But if you take a look at your spending, small changes may be able to give you more to spend in other areas.

Nancy Kvamme

Many people think I disapprove of spending money on anything. I like to relate budgeting and spending to dieting. Just as with dieting you need to consider your calorie intake and amount of exercise you get. With budgeting you need to consider your income and the fixed expenses you have. Once you deduct your fixed expenses such as mortgage/rent, utilities, food and debt repayment then you can see how much you have to spend on other things.

As it is discussed in David Bach’s books, “Smart Women Finish Rich” and “Smart Couples Finish Rich” and other resources it is helpful to sit down and think about what is important to you about money. Once you decide what you value, it may be easier to budget your money towards those things.

I feel it is also important to track your expenses so you can see how you are spending your money. It is easy to take out cash and all of a sudden your wallet is empty and you may have little idea of what you actually spent your money on.

So it is alright to spend money, just think about what you are spending it on.

Nancy Kvamme

Recently I saw a post online about 50 money habits everyone should have. Of the 50 habits, I have listed 10 of them below.

1. Opening your bills when you get them.
2. Spending less than you earn every month.
3. Keeping a budget.
4. Paying your bills on time to avoid spending money on late fees.
5. Saving part of your income for retirement.
6. Regularly checking your credit report for errors or signs of fraud and identity theft.
7. Review credit card statements for errors and erroneous charges.
8. Increasing your 401k contributions when you get a raise.
9. Using your credit card to buy things only if you can pay if off in full at the end of the month.
10. Maintaining an emergency fund.

Nancy Kvamme

Just by taking a little extra time throughout your day, you can make many of your daily experiences into learning moments for your kids. Some examples are:

– At the bank, explain what you are doing when you make a deposit or withdraw/transfer money.

– When dining out, explain tipping. In the book, “Money Doesn’t Grow on Trees” by Neale S. Godfrey there is a story about a friend of hers that took his young sons across the country to visit their grandparents. When they were almost home, he asked one of the boys why he was always lagging behind when they stopped to eat. The boy told him that he had been picking up the money he had forgotten on the table. To a young child that had not been told about tipping it would look like his father had been forgetting his money.

– Also when dining with older children, you can have them figure the amount of the tip. This will also let them realize what it costs to take a family out to eat.

– At the grocery store you can give the child a list of items to look for. You can also have them compare prices versus brand and sizes.

– When checking out, explain that you need money in your checking account when writing a check or using a debit card. If using a credit card, explain that if you do not pay off the balance at the end of the month, you will need to pay interest charges on the amount still owed.

Posted in Saving
Nancy Kvamme

What are your financial values? When we know what are values are and what is important to us it is easier to understand why we spend our money the way we do. To learn more about your financial values take the LifeValues Quiz.

The quiz consists of 20 multiple choice questions pertaining to the four LifeValues. They include Inner LifeValues, Social LifeValues, Financial LifeValues and Physcial LifeValues.

Inner values include our identity and social identity. From a financial perspective they frame the behaviors that lead to financial security. Inner values also shape our sense of purpose and meaning in life.

Social LifeValues are about “belonging” and relatedness. Our desire to be with others or to be a loner affects our living and working habits. Also, providing for others, budgeting jointly and sharing expenses are part of this area.

Financial LifeValues are about money and finances. They reflect what we think or believe about our money and financial affairs more than how much money we actually have.

Most people, regardless of their educational level or financial situation is concerned with three things. These are “Do I have enough”, “How long will my money last” and “Is this the right choice for me?”

Physical LifeValues are about the tangible aspects of life: the external world as well as the state of our physical health and well-being. Such values relate to the amount of space we need to feel comfortable and the degree to which we are satisfied and fulfilled by aesthetic stimulation and material possessions. Physical values involve the actual health of our bodies and the measures we are willing to take to secure that health, but they also are about our desire for beauty and comfort.

So once you determine what you value you can see more clearly why you are spending your money the way you do and if there are things that you can give up that are not as important to you.

Posted in Saving
Nancy Kvamme

In most cases, your financial health doesn’t depend on how much you earn, but how much you spend. Your fixed expenses will be the same each month and can’t be changed but you may be able to make changes to your variable expenses.

Many people do not pay attention to how they spend their money and do not realize how the small expenses add up. I was talking to a friend last night about this and she said her husband doesn’t like spending large amounts of money but doesn’t realize how small expenses can add up.

One way to identify variable expenses, keep track of all of the money you spend for at least a week, or you could try for a month. But even keeping track for a week can help you see where the money goes. A dollar here or there doesn’t seem like a big deal but if you spend enough of them, they can add up to a considerable amount.

When you track your spending this way, you may find things you can cut down on or cut out completely. It is easy to take out cash and if you don’t keep track of how you spend it, it can disappear quickly without realizing how much you are spending.

Posted in Uncategorized
Nancy Kvamme