Continue Buying Those Lattes

January 22, 2014  

latteThe way you ask a question will have a profound impact on how you answer it.

This is a fundamentally critical concept in the world of innovation. If you are working on a problem/opportunity, changing just one word can influence the types of solutions you get. I’ve discussed this concept extensively on my blog.

But did you know that the way you frame your New Year’s Resolution (if you set one) will have a huge impact on the actions you take towards the achievement of that goal?

According to a survey I conducted a few years ago, over a third of people set financially related goals each year.

For many this means, “save more money.”

Paradoxically, the goal – “save more money” – can have unintended consequences that might leave your bank account with less money in the long run.

When we want to save, we look at where we currently spend money, and how we can reduce those expenditures. For many, their daily stop at Starbucks is one of their guilty pleasures.

As a result, there are many financial advisors who will tell you to “stop buying lattes.” If a latte costs $4 a day, you could save about $1,500 a year by cutting them out. That’s a lotta lattes!

But cutting out your lattes requires a lot of willpower. And as it turns out, willpower is not an unlimited resource.

Let’s examine some scientific research on this.

Imagine individuals tasked with solving a complex problem. In the room where they are sitting wafts the aroma of freshly baked chocolate chip cookies. On the table in front of them are two dishes: one with the cookies and another with radishes.

Although the combination of the olfactory and visual stimulation made the cookies irresistible, some individuals somehow managed to use their willpower to stay clear of the gooey chocolate.

Kudos to them. They win. Right?

Well, as it turns out, the people who resisted the cookies performed significantly worse on problem solving and other tasks. The willpower it took to resist the delicacies robbed them of their ability to perform a variety of activities. Researchers call this “ego depletion.”

What this implies is that the energy it takes to save $4 may in fact be robbing you of your skills required to make even more money.

What if, instead of focusing on saving $4 a day, you put your energy into finding ways of making an extra $10, $100, or even $1,000 a day? What if you used your latte as fuel for making more money?

There is of course nothing wrong with saving money. I am certain that all of us could do a better job and would benefit from it. But it is important to recognize there is a hidden cost.

As an entrepreneur, I would rather spend money on the guilty pleasures that energize me, help me stay focused, and in the long run enable me to make even more money.

P.S. Of course there are health implications of too many lattes. At 200 calories each, this may add an extra 30 pounds to your waistline each year. Other than bacon, my guilty pleasures are usually healthier (or at least lower calorie) alternatives.

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6 Responses to “Continue Buying Those Lattes”

  1. Stefan Lindqvist on March 20th, 2014 4:20 am

    Great article on the subject of thinking big! I believe the example is valid in all other areas of life as well, not economy alone although the result is easier to measure.

  2. Gareth Garvey on March 20th, 2014 10:43 am

    $1000! not even I can drink 250 lattes a day. But seriously you have an excellent point here. I have seen many open minded and creative people turned into small(er) minded moaners when they had their freedoms curtailed by petty cuts and savings.

  3. sshapiro on March 21st, 2014 6:51 pm

    Thanks Gareth. If you drank 250 lattes a day you would not have time to work because you would be in the men’s room all day – or maybe the emergency room!

  4. sshapiro on March 21st, 2014 6:52 pm

    Thanks Stefan, I agree, the concept has wider application. Investing in relaxation (which is considered unproductive time), for example, can make you more productive overall.

  5. knowledgetransfertao on March 22nd, 2014 12:45 pm

    Here’s the biggest aha! I am taking away from this. As a seriously underemployed contractor, I keep obsessing on smalls ways I can lower my expenses. I get the oil changed in my car regularly and I take my loping, gorilla body to the gym. These are “necessary expenses”. Is going to the movies every couple of weeks necessary? If you are going to see the Lego Movie (about creativity it is!). Is going to a concert of the music I love every couple of weeks required? (Yes, all recorded music is canned beans). So when I look at the whole body-mind-soul-chocolate continuum, even in hard times, a little bit of yes can help dispel a lot of no.

  6. sshapiro on March 23rd, 2014 1:04 am

    Thanks! I’m glad you found the article useful. I do find that the mental energy it takes for me to not do the things I like (or to do the things I don’t like), prevent me from doing what really needs to get done.