You've probably heard the slogan "Don't buy lattes." Best-selling author David Bach coined the term "the latte factor" as a way to illustrate how small expenses accumulate over time.
He points out that spending $5 per day each day of the year on a latte, biscotti and other small indulgences causes you to fork over $1,825 per year.
If you instead invest that money, and let it compound and grow over the span of decades, you'll wind up with many thousands of dollars more in savings.
But what if you absolutely love lattes?
Some of my readers have reached out to me, saying their daily Starbucks indulgence is a highlight of their day. They're anguished at the notion of sacrificing this one joy.
My response surprises them: If you feel that strongly, keep buying lattes.
Budgeting is the art of living in accordance with your values and priorities. If buying a daily latte is a high priority, go for it. Enjoy it, guilt-free.
However, to make space for that latte, you will need to cut out something that you value less from your budget.
Trimming the fat
Do you have any subscriptions to magazines you're not reading? Could you stop buying potato chips or cookies at the grocery store?
There's nothing inherently wrong with spending money on any particular item. Some people love traveling, so a huge percentage of their income goes toward overseas trips.
Others value playing ice hockey, so they spend the bulk of their discretionary budget on skates, equipment and uniforms.
These are fine purchases, as long as you've carefully thought about your priorities.
Spend with full consciousness and awareness. Don't let money slip away without noticing it. After all, at some point you will need to tap savings if you plan to have a decent retirement.
But feel free to indulge in something that you love. After all, you live only once.
Paula Pant helps people ditch the cubicle and live on their own terms. She's traveled to 30 countries, owns six rental property units and hasn't had an employer since 2008. Her blog, "Afford Anything," is the gathering point for a tribe that refuses to say "I can't afford it." Follow Paula on Twitter: @AffordAnything.