Small Changes, Big Impact

3 Secrets to Financial Freedom

By Amy Andrews McMaster
[Mindful Money]

I have some fantastic news: I read a financial book cover to cover, and it was terrific! The truth is, before digging into David Bach’s The Latte Factor, I’d never read a financial book from cover to cover. Previously, I’d either lost interest, struggled because the content was out of my wheelhouse, or subscribed to the myth that my finances would take care of themselves. (Subconsciously hoping my husband would do the dealing? Guilty as charged!)
This short, simple, straightforward story taught me so much. The Latte Factor: Why You Don’t Have to Be Rich to Live Rich shares three myths of money and three secrets to financial freedom. The book is completely digestible and easy to translate into action—two characteristics I love. While I am happy to share some of the gems in this book, I still recommend reading it yourself or giving it to someone you care about. I plan to share it with my 9- and 12-year-old kids so we can start the financial conversation I wish I’d heard decades ago.

Secret One: Pay Yourself First

The first secret to freedom was a big wow for me. Bach recommends that the first hour of earnings from each workday gets paid directly to you, before the government takes out taxes. This smart action builds your net worth and retirement savings. Since the majority of Americans are living paycheck to paycheck, over 10 percent of a paycheck may not seem possible. No worries! You can start with $5 per day, $25 per week. If you save $5 a day and it earns 10 percent annual interest, in 40 years it will be more than $600,000!
It’s best to start young with whatever amount you can, and have it come out of your paycheck pretax so it earns interest faster than it would post tax. If you are in your 40s, like me, see if you can work toward investing 10 percent in yourself before spending anything. Though I love spending more than saving, I certainly don’t want to get toward retirement without enough money to feel secure and happy. If I keep thinking “I’ll invest someday,” instead of actually doing it, I may not like what my future looks like.

Secret Two: Don’t Budget—Make It Automatic

Since the vast majority of us hate budgeting, the key is to make it automatic. Secret one, pay yourself first, won’t work unless you make it happen automatically, so you don’t have to think about it. Figure out how to have the money taken out of your paycheck, before taxes, and then you don’t have to think about it again unless you want to change it. Place it directly into the 401(k) or IRA you think is best.
Next, think of the other things that are important to you and your family. Save for these items, education, or adventures in the same way—a little bit each paycheck.
Have the money go into a separate savings account. It seems like a pain, but the alternative could be not reaching your goals or living in alignment with your values. The beauty of this is that it helps us honor what we most value. It requires a shift in thinking and more patience than we are used to in our bigger, better, faster, more culture.
Instead of putting it on the credit card and paying later (plus paying interest), we save and wait. Whatever you want—the trip, the class, the expensive water filtration system—you save and wait until you reach your goal.

Secret Three: Live Rich Now

Secret three is my favorite. The first two secrets are the how; the final secret is the why. “Live rich now” invites us to look at our dreams and our values—to be mindful of what really matters.
When we are mindful about what really matters to us, it is easier to make clear, intentional decisions. My core values are courage, connection, and impact. Sometimes the “richest” actions I can take are showing up to a yoga class, having a tough conversation with a friend, exploring nature, adventuring outside my comfort zone, or helping someone who could use a hand. These activities bring feelings of peace, love, and freedom. They help me remember life is more about feelings and less about things. Gratitude, presence, and appreciation for each joyful moment, for all the abundance in my life, help me live rich now.
My finances aren’t just going to manage themselves. That’s my job. Fortunately, this book helped me realize that small changes can make a big impact. I wish you success on your own financial journey. If you pay yourself first and make it automatic, hopefully you can live rich now!

It Isn’t About Coffee, It’s a Metaphor!

Despite the title, The Latte Factor isn’t about coffee. It’s a metaphor for the extra things we spend money on that we could happily do without. According to Bach:
“The latte factor isn’t about being a penny-pincher or denying yourself. It’s about getting clear on what matters. It’s about the daily extravagances and frivolities, whatever they may be—the five, ten, twenty dollars a day that you could just as easily redirect toward your own future. It’s about giving up something small to get up to something big.”

Bach, David. The Latte Factor: Why You Don’t Have to Be Rich to Live Rich. New York: Atria Books, 2019: 83.

 Amy Andrews McMaster is the director of training and coaching for Conscious Time. Her purpose is to help curious and courageous people awaken to their optimal potential. She loves to help clients transform obstacles, uncover possibilities, and create new solutions. Contact her at