Saving money is not as simple as avoiding spending on small expenses. We have to be intentional about getting our priorities in order and committed to paying ourselves first.

There has been long history among the online personal finance community to blame your poor savings habits on a lack of self-control around spending money on little things like coffee. Or weekend trips to your local brewery.

The criticism goes like this. If you were to simply invest that money instead each day for X number of years at Y rate of return in several decades time you, too, could be a millionaire. All your current money issues would be solved!

If only life were so simple.

This is a problem for me because, well, I. LIKE. COFFEE.

Since when did the pursuit of personal finance goals become about giving up the things that we like about our lives?  Isn’t that the point, after all, of engaging in financial planning in the first place? To learn better ways to use money to support our ideal lifestyle?

There are several key problems with this sort of overly simplistic rule-of-thumb that you should be aware of.


More isn’t Always Better

Missing from all the discussion around daily coffee shop avoidance is any mention of your goals.

Sure, not buying that coffee (or beer or shoes, or whatever it is that you like) and instead investing the money might result in having more in the future. But why should this matter to you?

How will this money benefit you in the future? What does spending $4 on coffee today prevent you from doing down the road that saving or investing it  would allow you to do instead?

For example, what is the experience of meeting a friend at the coffee shop or bar after work worth in a monetary sense? It’s hard to put a price tag on the experiences that make our lives meaningful.

If accumulating the most money possible by resisting all temptation to spend it on seemingly ‘unimportant’ things is the only path to success, then where should we draw the line?

What makes coffee less important in your budget than, say, a gym membership, or Netflix? What it comes down to is that It’s all about priorities.

Your priorities are just that; yours. It’s not our job as financial advisors to tell you what things should be important in your life.  We can help you determine what things are important and how to prioritize your spending to support those things.

But it isn’t our job to make you feel bad for spending too much on such things. We do it too.


Your Behavior is to Blame

The point is, it’s our behavior that matters.  Taking the logic of the ‘gurus’ to its extreme, anyone who doesn’t drink coffee should be a millionaire because of all of that money they have saved by not drinking it.

The reason we don’t save money isn’t always because we spend too much but because we don’t make it a priority. 

Defenders of this thinking will be quick to point out that the coffee is merely a metaphor for any of our mindless impulse spending and not to be taken literally.

It represents any small incremental expenses that can be trimmed to encourage additional savings.

But, just like you know you should probably eat better, drink less, exercise more, and lose a few pounds, you don’t because your behavior gets in the way.

And you VALUE the experience of your daily coffee ritual or evenings out with friends — more than what it costs you monetarily.

Spending money in the moment feels good for a lot of us and the act of spending as opposed to saving isn’t a problem by itself. Especially when done in ways that are personally fulfilling.

Money, after all, is just a tool that can help you design and live your ideal lifestyle.

Sure, spending too much is counterproductive, especially if you find yourself spending money you don’t have and are borrowing on high interest credit cards.

But the cost expressed only as missed opportunities undermines the purpose of earning money in the first place.


What can you do instead? 


Understand what motivates you when spending your money.

This is as important as tracking your spending to help make sure that where your money goes each month is supporting your goals and values.

This is an effective way to make sure you are putting your priorities in the right order.


Control the big expenses in your life.

Things like choosing what city to live in, housing, the car you drive, etc. can have a great deal of impact on your bottom line – much more so over a lifetime than avoiding your daily latte habit.


Work with a financial advisor

We can work with you to help clarify your goals and make sure that your spending decisions are helping you put each dollar that comes into your financial world to its highest and best use.

These three things are critical to the success of a long term financial plan.  By taking the steps to get your priorities in order you can breathe easy and enjoy that next latte knowing that you have a plan in place.


Material discussed is for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual solutions can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. This material contains  the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.