Why The latte factor is one of the worst personal finance books I have ever read

Warning : this post contains spoilers. But, to be honest, I wouldn’t recommend this book to anyone, so go ahead and read the spoilers.

If you’ve read a few personal finance books in the past year or so, or browsed through some personal finance blogs, you’re likely to have encountered a reference or two to the now international bestseller The latte factor, by David Bach.

As a personal finance aficionado, I got this eBook on loan from the library a few weeks ago, after hearing a lot about it – if everyone is talking about this, it must be interesting, right ?

Right.

Sadly, The latte factor was, by far, the most disappointing personal finance book I’ve ever read.

Synopsis

Zoey cannot see any way off her endless treadmill—until one morning, when she strikes up a conversation with Henry, the elderly barista at her favorite Brooklyn coffee shop.

Over the next few days, as Henry reveals what he calls the “Three Secrets to Financial Freedom,” Zoey discovers that there is more to his life story than meets the eye—and that by following the simple, proven path he describes, she truly can create the life she’s always wanted.

What I didn’t like

The narration

The narration of this book felt terribly condescending and patronizing, and you could see every “plot point” miles before it even came up.

On a certain level, the story reminded me of another disappointing read : The 5 am club, by Robin Sarma. Both were a masquerade of financial advice disguised as a pseudo novel featuring an elder man as a mentor-like figure. Even the protagonists were similar : the Brooklyn journalist who wastes her money on coffee, and the entrepreneur who doesn’t know how to be productive, were both a version of the reader being lectured by the author.

Both these characters are women, by the way – isn’t it interesting how the ignorant protagonist is a woman and the wise, old know-it-all-but-still-seductive one happens to be a man ? Almost as if he were the writer’s self-insert, and the main character a projection of his misogynistic vision of women.

As one reviewer said : “Thanks for mansplaining money to me“.

The advice

It’s simply boring. The “three secrets to financial freedom” that Henry, the barista-actually-owner-of-the-coffee-shop (I told you there would be spoilers!) so generously gives to our main character are actually the following three things :

  • Pay yourself first
  • Make it automatic
  • Live rich now

And that’s… not really groundbreaking advice.

Pay yourself first

The first piece of advice is the best one – keep some money out of your paycheck to put into a savings account, before calculating how much you can spend on leisure or activities this month. The author’s take on the underlying logic behind this is, however, difficult to follow, and doesn’t seem that revolutionary.

Make it automatic

This is an extension of the idea that if you have to make efforts to save money, you won’t get around to doing it – but according to Bach, if you set up automatic payments from your main account to your savings or investments, it’ll be done without your active participation, and thus will have a stronger chance of actually being done.

This felt like a very condescending depiction of his readers : the author assumes that if you’re reading his book, you lack the self-discipline and/or organization skills necessary to put a set amount of money into your savings account every month. And sure, there might be people who need to make it automatic to make it easier, or to be sure they don’t forget – but that’s not a reason to treat your reader like a child, unable to do things themselves.

Again – not particularly bad advice, but not a secret, and not new at all.

Live rich now

The idea behind this one is to figure out what’s important to you – what projects or dreams you want to achieve the most – and budget for it accordingly. And even though, in the beginning of the book, the author tells us that budgets just don’t work for individuals – hence his second piece of advice – he seems to skip over the step where, in order to see if you can save the money necessary to take that extra photography class, or go on vacation, you kind of do need to make a budget.

Sorry, David. You can’t escape it.

The math

The problem behind the math in this book is that it’s blatantly wrong. Even the most basic parts.

For example : in the beginning, the author tells you that your latte at 5$ a day will save you 1885$ a year if you stop buying it – then goes on to explain that liking a nice coffee when you’re on your way to work is what secretly keeps you from becoming truly rich. But wait – if I’m getting coffee on my way to work, even if I work 6 days a week, that only amounts to… 1560$. Aaand we’re already more than 300$ off the mark.

But even if you choose to ignore the weird math : the most important piece of advice that’s supposed to help you become a millionaire with all those 5$ bills you’re so diligently saving is an investment – specifically, one with a 10% (or more !) return rate.

You heard right – more than 10% of interest.

As expected, when the main character goes home and talks about this amazing opportunity with a friend, they immediately tell her that she’s never going to get an account that will yield these kinds of returns – not in this day and age. Yet the author only uses that to further his point even more, making the friend sound like an idiot and doubling down on the 10% interest rates road.

In real life, investing all your savings into something high-risk that promises you a 10% interest rate is the best way to lose all your hard-earned money – and if you, like most Americans, need to save for retirement or pay pack heavy student loans ? That’s not an option you should ever consider.

What I liked

I’m sorry, I’ve got nothing to show here. I wish I could. Sincerely.

Conclusion

Don’t read this. For the price of this book, you could buy yourself 5 Grande lattes at your local overpriced Starbucks, and have a morning full of joy (and caffeine) – something you definitely won’t get if you decide to spend your time reading this.

In the end, the only person that will be enriched by The latte factor is… David Bach, with his masterclasses on how to follow the Latte factor method and live your dream – at “only” 50$.

Seriously. Go read something else.

A practical guide on personal finance : Simplify your financial life, by Dawn Starks

I’m not going to lie – I’m a big fan of personal finance books. I’ve always been interested in learning more about managing your budgets, planning for the future and organizing your financial life in the simplest way possible.

For me, this includes carefully planning my monthly budget in my bullet journal, using my credit card carefully, and checking every time I go grocery shopping so I don’t overspend – and reading financial management books.

So when I got an ARC of Simplify Your Financial Life: 104 Easy Tips for Creating the Abundant Future You Desire, by Dawn G. Starks, I didn’t hesitate one second before sitting down in my comfy armchair and reading it intensely. And I’m really happy that I did so !

Do yourself a favor and don’t bury your head in the sand. Be brave and face your financial difficulties head-on.

Simplify your financial life, Dawn G. Starks

This is a very useful book separated in clear themes and chapters, with a ton of pertinent tips for every situation you could possibly be in. It gives you the basics of financial planning, then goes into some more details on investments, retirement funds, and savings. The information is concise and to the point, and I liked the minimalist ideals to streamline your financial planning and make it as simple as possible.

I do think this is very focused on the American perspective of personal finance, as a lot of other cultures don’t have the same habits towards credit cards mortgage and student loans as the US, and the American continent as a whole.

Nevertheless, for the people it’s geared towards, this is an excellent book to have ! I would definitely recommend it to people who are struggling a bit with how best to manage their money, make their budget, or who aren’t sure how to use their credit card in the best possible way.