Should we choose only one?

12 Ways to Save Money from Rising Prices Due to Inflation

Choose any personal finance TED talk guru or “how to save money” blog post, and chances are at some point you’ll hear about getting rid of those little luxuries in the name of budgeting.

“Making your own coffee at home could save you a billion dollars a year!”

Okay, sure, going from a $5 a day Starbucks habit to making Folgers at home can help you save a decent amount of money in your savings overtime. (Over $1,500 a year, in fact.)

But in the grand scheme of your financial well-being, will switching from your freshly ground, mocha-whipped delights to freeze-dried coffee blocks improve your odds of success?

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Rami Sethi, the guy behind “I’ll Teach You How to Be Rich,” isn’t so sure. According to Sethi, it’s not the little things we should focus on – it’s the big picture things.

You can’t cut that much

In a recent post on Twitter, Sethi summed it up like this: “Buy all the lattes you want. A $5 coffee isn’t going to change your financial life. But learning to invest automatically, to select the right asset allocation, and how to negotiate a $15,000 raise. I believe in asking $30,000 questions, not $3 questions.”

Here he is half right. A $5 latte? No, it probably won’t decide your entire financial future. A latte for $5 a day? It can definitely have a much bigger impact on your budget, especially if you might be invest the difference.

But he also went on to make another point that I think is also worth adding to the conversation:

“There’s a limit to what you can cut, but no limit to what you can earn. Frugality won’t get you far. You can’t cut that much! But you can always earn more, and once you you learn how, a lot of your money problems will go away.”

And that, I think, is the crux of his position in the whole latte debate. Sure, you could cut out your daily coffeeshop run, but what happens then? What if that wasn’t enough? Better to focus on diversification and increase your incomerather than trying to remove everything that makes life enjoyable.

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As Sethi says, “You should spend extravagantly on what you like and slash ruthlessly on what you dislike. I don’t believe in slashing small purchases. I want you to spend MORE on things you like.”

Why not the two of them?

In the end, both sides are valid. The traditional advice to cut unnecessary budget busts is sound. If you’re struggling to earn rent, cutting out expensive cafes in favor of home-brewed cafes will definitely make a difference to your bottom line.

But Sethi is also right. Once you’ve cut the budget to the bone, what’s left? And even if you manage to minimize everything to the point of maximum frugality, how long can you actually sustain it before you, well, lose your mind?

As the name suggests, personal finance is personal. Yes, there are guidelines that apply to everyone. But most of what works for your neighbor won’t be the same as what works for you. They might be able to live off a subpar coffee without taking a major hit to morale, but you might prefer to work a few extra hours a week so you can splurge on a superior sip.

It’s all about balance. Have a smart budget that works for you and develop your broader financial skills by learning how to save smart and invest wisely. Boost your career, increase your incomeand keep going – batten in hand.

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We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts.Britney Myers has no position in the stocks mentioned. The Motley Fool holds positions and recommends Starbucks. The Motley Fool recommends the following options: $85 short calls in July 2022 on Starbucks. The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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We are firm believers in the Golden Rule, which is why editorial opinions are our own and have not been previously reviewed, approved or endorsed by the advertisers included. The Ascent does not cover all offers on the market. The editorial content of The Ascent is separate from the editorial content of The Motley Fool and is created by a different team of analysts.Britney Myers has no position in the stocks mentioned. The Motley Fool holds positions and recommends Starbucks. The Motley Fool recommends the following options: $85 short calls in July 2022 on Starbucks. The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

Sarah J. Greer