I was recently catching up with a friend over coffee, and she brought up how expensive everything has become and how she is not saving as much as she used to. Which, let's face it, is something many of us can relate to.

Inflation is squeezing us from every angle: groceries, utilities, gas, even medications. By the time the month is over, there often seems to be very little left to put aside.

But here is the ironic part: there we were, grumbling about prices while happily sipping our $7.50 café lattes on Front Street.

It is funny how life sometimes sends you little reminders about your old self, and one of those reminders came through a podcast I stumbled across called the Latte Factor by David Bach.

Bach’s idea is simple but powerful. The latte factor is a financial principle that suggests small, everyday splurges such as a $5 coffee, or in Bermuda a $7.50 coffee, can quietly add up to a surprising amount of money over time. If you invest that money instead of spending it, even modest amounts can grow into meaningful wealth.

It is a concept that resonated with me because I remember many years ago, when I was working in investment advisory and planning, how often I gave advice on ways to save money. A lot of the time, that meant looking at people’s daily habits and identifying opportunities to reduce spending and strengthen their savings.

More often than not, it came down to things like cutting out daily coffee runs or cutting back on happy hours. These may seem like small changes, but over time they can make a real difference.

So the question is: do these little adjustments really make a meaningful financial difference in the long run?

Honestly, when you do the maths and factor in a realistic time horizon, the answer is “yes”. Skipping those daily coffee runs and cutting back on happy hours can have a real impact on your finances over time, especially if you invest the money instead of simply setting it aside in a regular account where it earns very little.

For example, a coffee may seem like a small expense, perhaps anywhere from $4 to $7 a day. But over a month, that becomes about $120 to $210. Over a year, it adds up to roughly $1,440 to $2,520. Keep that up for 20 years, and the total spent on coffee alone could be somewhere between $28,800 and $50,400. That is a lot of money for something that is, in the moment, just part of a daily routine.

Now let's look at it from the other side. If you brewed coffee at home instead and invested that same $210 a month into an investment earning a 7 per cent annual return, compound growth could turn that money into approximately $103,308 over 20 years. That is the power of consistency and time. It does not feel dramatic day to day, but over decades, the difference can be enormous.

The same idea applies to drinks after work, or buying lunch at work, or any other regular social spending. Spending $20 to $40 on happy hour or lunch two or three times a week can quickly reach $240 to $480 a month. That is before you even factor in the tip, a taxi home from happy hour, or even a side of fries with your lunch.

Over time, that money could go towards:

• Paying off a credit card, which reduces unnecessary interest expenses

• Building an emergency fund

• Saving for a vacation

• Saving for a down payment on a house

• Saving for the long term

The fact is, it is not that coffee or happy hour is bad; it is that repeated, automatic spending can quietly crowd out better uses for your money. A café latte here and a drink there do not feel like much in the moment, but when they become habits, they can shape your financial future in a big way.

One of the biggest challenges is not just the spending itself, but the mindset behind it. It is often about retraining the brain to move from a spending habit to a saving mindset.

Shifting your financial thinking is less about strict budgeting and more about changing the way your brain responds to money decisions.

For many people, spending triggers a quick reward. There is a sense of pleasure, comfort, and immediate gratification. Saving, by comparison, can feel dull or even restrictive. But that feeling is not permanent.

The goal is to start connecting saving with something positive: a sense of progress, peace of mind, and future security.

One useful technique is to reframe the story you tell yourself. Instead of thinking, “I am giving up this, that, and the other,” try thinking, “I am choosing to pay my future self.”

That simple shift in language can make a surprising difference. It changes saving from something that feels like loss into something that feels intentional and rewarding.

You can also create small rewards for saving milestones. For example, after transferring money into your savings account, take a moment to look at the balance and acknowledge that you did something worthwhile.

It may sound simple, but this kind of positive reinforcement helps build new habits. Over time, saving starts to feel less like sacrifice and more like accomplishment.

And trust me, I enjoy spending, but I feel far more accomplished knowing it is more mindful and thoughtful when it occurs.

Mindfulness also plays a big role. Before making a non-essential purchase, pause for a moment and notice the urge to spend without judgment.

Ask yourself how you will feel about the purchase tomorrow, next week, or next month. That brief pause gives your rational brain a chance to step in before your impulse takes over.

This is where small decisions matter. Choosing to skip one café latte, one drink, or one unnecessary lunch does not change your life overnight. But repeated many times, those small decisions begin to build momentum. Over time, they can shift your relationship with money from reactive to intentional.

At the end of the day, the point of the latte factor is not really about coffee; it is about awareness. It is about recognising that the small things we do every day have consequences, and that those consequences compound just like interest does.

If we are thoughtful about where our money goes, we can create more room for what matters most, whether that is peace of mind, a stronger emergency fund, a family vacation, or an earlier retirement.

• Carla Seely is the chief operating officer at Freisenbruch Insurance Services Limited and has 26 years of experience in international financial services, wealth management, and insurance. During her career, she has obtained several investment licences through the Canadian Securities Institute. She holds the ACSI qualification through the Chartered Institute for Securities and Investments (UK), the Qualified Associate Financial Planner (QAFP) designation through FP Canada, and the Associate in Insurance (AINS) designation through The Institutes. She also completed a Master's Degree in Business and Management through the University of Essex.

• For further inquiries or suggested topics, e-mail: justaskcarla@outlook.com