It’s easy to adopt one concept and use that concept to define your world. You commonly see this in religion, but I’m referring to personal finance concepts, as you might expect from Consumerism Commentary. One popular financial guru talks about The ECRD Factor. His followers — a guru can’t be a guru without a throng of fans who believe the guru’s words are gospel and question nothing — spread the word and this concept becomes well-known even if the name of the guru is not as widespread.

Outside of Consumerism Commentary, in what is usually referred to as “real life,” when the conversation turns to money for whatever reason, it is not uncommon for someone to share their advice. And often, someone will explain to me how wise and financially savvy they are because they’ve given up their daily morning coffee or doughnut or other expensive treat.

I will admit that saving four dollars a day is not entirely a bad idea. If this savings is repeated five days a week for fifty weeks a year, you’ve “earned” yourself $1,000 a year. Taking that concept to the next step, you could invest that $1,000 each year and grow your nest egg over time, doing much more for yourself your quality of life than a daily doughnut ever would. But the choice to forgo a daily treat does not exist in a vacuum.

In the cases of some of the people who have discovered their alleged personal financial freedom through their daily latte resistance, they’ve made this sacrifice only to lose ground on the larger, important financial decisions. They’ve taken daily baby steps forward but every so often, leap so far back that they’re worse off than they were when they started.

It’s very noble to have achieved the mindset that allows you to change your habit and break free from spending a few dollars each day. But if your real problem is buying clothes you can’t afford, or a car you can’t afford, or a house you can’t afford, any progress you’ve made by eschewing gourmet coffee or fattening doughy products can be rendered null and void. And the people I’ve spoken to who have been eager to flaunt their smart decision of going without a daily latte often fall victim to these other harmful behaviors.

If you pay $40,000 for a car when you only need one worth $16,000, you just undone twenty-four year’s worth of missing daily lattes. And that’s only if you pay cash. If you get a loan, the interest will harm you even further. If you pay $400,000 for a house when you should have spent for something smaller or in a different location $200,000, you can’t even live long enough to make that up in daily lattes. If you don’t manage your credit wisely, you could qualify only for a high-rate mortgage, costing you thousands of extra dollars — a thousand lattes or more — throughout the life of the loan.

The little things, like the daily small savings that accumulate over time, are helpful to your financial condition, but making wise decisions for the larger purchases can have a much larger bearing on your personal wealth. If an expensive coffee-related drink keeps you happy and sane, I say enjoy it, but make better decisions about the big things like cars, houses, the size of your family, and the location where you decide to live. The “mistake” of enjoying a daily treat doesn’t compare with the real financial decisions you make.

Keep in mind that I have no problem with people buying fancy cars or big houses, particularly if they can afford it. But someone opting to trim their expenses by skipping coffee is someone who wants to improve their financial condition, so it would be fair to assume that they should want to do so in the most effective manners. Everyone is free to set their own priorities, but life works better when those priorities actually match the goals.

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