Recently there was an article featured on Yahoo! News that stated that saving money on little things, such as the $4 often spent on a morning coffee drink from a high-priced chain, won’t add up to anything. In short, that cuts like these don’t really matter.
The truth is, they can matter—or they can NOT matter—depending on how you treat them.
The Goal of Cutting a Latte
When articles and books advise you to cut out your morning latte, part of the lesson they want to teach is about mindful spending. If you drop $4 to $5 every morning on coffee when you could make it for just a buck or two at home, you aren’t necessarily being thoughtful about what you’re spending your money on. Instead, you may be overindulging in a discretionary purchase that you can’t actually afford and excusing it because it isn’t a gigantic dollar amount.
Working from the same example, let’s think about how much your coffee purchases could add up to over the course of a year. At $4 per cup over 52 weeks a year, you could save $208 if you cut out one cup per week. It’s true that $208 per year isn’t going to accrue much in interest and it’s not going to make you rich, but it is going to beef up your savings. This could mean that you rely less on credit cards to deal with emergencies and the unexpected and, therefore, pay less in interest. And if you’re buying that cup every day of the workweek, cutting out three of them will save you $624 per year—which is nothing to scoff at.
This kind of exercise does more than just save money. It also shows you how every decision you make affects you. Every little expense can add up to a couple of hundred dollars per year—and if you cut more of them out, you begin to see some real accumulation.
Making it Count
The article also mentioned that while you may cut out small expenses, you aren’t likely to actually save the money but instead will waste it somewhere else. This could be true, but it’s pretty simple to make sure it isn’t.
Again, this calls on your power of discipline, a fantastic skill to learn when it comes to managing your money. All you have to do is keep track of what you save by reducing your small expenses and make sure to deposit that amount of money into your credit union savings account each week or month. That’s it. You will have no “extra” money to spend on creating other spending habits that replace the coffee, you’ll simply have more to deposit into your savings account.
If it sounds like it takes some amount of effort to make your small spending cuts add up to noticeable savings, it does. Managing your money isn’t always a walk in the park—especially with temptation meeting you around every corner. But that doesn’t mean it’s impossible to make small changes count, it just means you’ll have to be devoted to doing so.