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Denying yourself the small things in life can be misery.

In the last few years of so, if you've been reading most of the
information about personal finance that's been flowing from countless
sources you'll have heard about how it's the little things that add
up to big dollars. An example they give would be 'give up your $3
gourmet coffee every morning, or stop drinking 5 cans of soda a day,
and by the time you turn 65 you'll have an additional $100,000 in the
retirement fund'.

I'm not here to defend or attack the source of this information. Nor
am I going to say you shouldn't cut back on the caffeine, everyone
has to make a health choice about their life. What I am saying is
that by cutting out the little sources of pleasure in life, you may
be setting yourself up for suffering and unexpected misery.

The math behind the long-term projections by others who call
themselves "financial experts" is probably very sound. Over many
years, a few dollars every day will add up to a large chunk of change
just as their multi-year projections show. Everyone who has bought
anything on payments knows how a small payment each month adds up to
serious money after 30 years.

Being realistic is one of the keys to saving money. Is denying
yourself a couple bucks a day practical or even the best way to
accumulate future wealth? Is this the most fundamental and best
method you can use to be able to afford retirement?
I say the answer is no and no. While it is a very good idea to be
financially frugal, as in smart, it is irresponsible to think that
one strategy, one little adjustment in the day will improve anybody's
financial situation.

Why it doesn't work like they say

• What money? - In theory, by not spending $3 a day on your morning
gourmet coffee you will be saving $15 a week. In reality, that $3 a
day probably rides around in your pocket until it becomes an extra
candy bar for the kids, or another slice of pizza at the convenience
store. You might as well admit it; $3 lacks sufficient size to be
noticeable by itself, and if you don't notice it being spent, than
you won't notice it being saved either.

• What bank? - How do you put $3 a day into savings? Do you stop by
the ATM on the way to work and make a deposit? No, in fact, most
people stopping by the ATM are withdrawing a $20 or larger bill. If
you do drop $3 a day into your home piggy bank, how long will it sit
there? You have to have real discipline to leave the money there the
next time you have a 'small emergency' and need $10 for the paperboy.
Again, accumulating the $3 a day and making a trip to the bank once a
month sounds good, but in reality most Americans lack the discipline
to make it work. In fact, that is why the American savings rate is at
its lowest level in years - the average man on the street will not
discipline himself to put money away for the future.

• It is denial. - Day-in and Day-out denying yourself of one of
life's little pleasures can be terribly annoying when you have
nothing to show for it at the end. If the only change in your
finances you make is to cut out a cup of coffee, you will be horribly
disappointed when you have no more savings after a year than you had
before your money diet. Just like a food diet where you cut out one
type of food and the scale doesn't back down, when you cut out a
spending choice and your savings doesn't grow, you will be more
liable to throw your hands in the air and declare it to be an
impossible "Who cares".

What I say will work

Allow me to reiterate that simply stopping yourself from drinking
coffee on the way to work will not produce noticeable changes in your
savings account. Instead, consider implementing lifestyle-based
savings strategies you will see your piggy bank over flowing. I don't
have time to go into detail in this article, but when you overhaul
your lifestyle you might be able to have your coffee and save the
money too.

• Are you buying a mansion? - Americans as a whole have been on a
housing frenzy for a while and you have to make sure you don't get
caught up in the maelstrom. The best thing you can do your lifestyle
and of course your finances, is to do yourself right when you buy a
house. You don't need a mansion just because it seems everyone else
does. Buy a house that you can afford early in your working career
and then stay there. Imagine how much of your income you can save as
it increases over the years while your housing costs remain the same.
Again, the key again is lifestyle and discipline. Keep your lifestyle
simple, and have the discipline to put the unused money into a
savings plan.

• Family Matters. - The size of your family is a highly personal
economic decision, rightly guided by spiritual and emotional
reflections. With that said, however, you have to be aware that the
cost of raising a family is increasing at a rate faster than most
incomes. Consider the cost of child care, education, and spoiling
that child because both parents are at work.

• Driven by Expenses - Americans have loved cars ever since they
first came on the market. Unfortunately, the trend over the past few
years has been towards bigger, fancier, and costlier. Why spend extra
money on a new car, with the latest gadgets? Just like buying a
house, decide how large and what style of car you need, buy the best
one you can afford, and drive it into the ground. Many vehicles will
drive just as well after they are paid for as they did before. Stay
in the driver's seat on insurance costs as well, and you can rack up
serious money over the vehicles 10 - 20 year lifetime.

I don't want anyone to misunderstand me; you can save money by
cutting out the little things in life. The problem is that usually
the money not spent on the little things goes into buying something
else. Overhauling your lifestyle can make the little things count and
give you the discipline necessary to hang onto the money.

Even better, overhauling your lifestyle can result in real money for
your savings plan. Go ahead and drink a cup of coffee on your way to
work, and enjoy peace of mind knowing that you can enjoy one of
life's little pleasures after making changes in your lifestyle that
truly will provide for long term financial security.