Will your love of pumpkin spice lattes ruin your budget?

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Hanna Horvath, CFP®

Hanna Horvath, CFP®

Managing Editor & Certified Financial Planner™

Hanna Horvath, CFP®, is a certified financial planner and former managing editor at Policygenius. Her work has also been featured in NBC News, Business Insider, Inc. Magazine, CNBC, Best Company, and HerMoney.

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It’s the most wonderful time of the year — pumpkin spice season. Big retailers like Starbucks and Dunkin’ will be injecting the fall flavor into about any drink they get their hands on.

This fad isn’t cheap. A grande Starbucks PSL is $5.25. The chain's new pumpkin cream coldbrew, the first addition to the PSL lineup in 16 years, runs a little cheaper: $4.45 for a grande. If you make a PSL a daily habit over the course of the fall season, you could end up spending hundreds to fuel your pumpkin-filled cravings.

These little purchases could cost you even more in the long run, according to some experts. Personal finance expert Suze Orman said in a video that buying coffee every day costs you $1 million over time. The Motley Fool, a financial advice website, said Americans waste an average $18,000 each year on “nonessential” items, including personal grooming, lunch and gym memberships.

It may seem like cutting so-called unnecessary items out of your budget is the only path to improved financial health. But here’s why it may not make financial sense to sweat the small stuff.

Focusing on larger expenses

“These small purchases will not wreak financial havoc,” said Nick Defenthaler, certified financial planner at Center for Financial Planning. “I somewhat cringe when I see these types of articles.”

Those who struggle with debt or saving for retirement may want to focus on the bigger picture. Larger financial decisions, like buying a house or car, will more drastically move the needle in your financial life, said Defenthaler.

“If you purchase a $300,000 home instead of a $350,000 home, you can purchase as many lattes as you like and it won’t wreck your budget,” said Kaleb Paddock, a certified financial planner in Colorado. “A car payment or car lease is another huge expense.”

A strict budget with a line item for every single purchase is often hard to stick to. Paddock recommends automating fixed expenses and savings, which frees you from worrying about covering essential purchases each month.

Here are some ways to start saving right now.

“The smaller decisions like lattes fade to the background,” he said. “You can essentially spend whatever is left in your checking account if you have your savings automated.”

Depending on your finances, big money moves may not be on your radar yet (like if you don't own a house or car). There may be times when focusing on the small purchases may make a difference on your wallet. Here’s how to prioritize.

When you should cut out the caffeine

Changing your financial life can be a difficult task. It may be easier for some to cut out smaller, specific expenses instead of overhauling their entire budget.

“If you spend money on things you want, but don’t need, like getting Starbucks versus using the coffee machine at work, that’s a luxury,” said Peter Hoglund, certified financial planner and vice president of Financial Life Planning. “The question is, can you afford it and are you willing to sacrifice in other areas to make up for it?”

Cut small expenses and invest the money and overtime your savings will grow. But if you can’t make it through the day without caffeine, you may want to consider curbing spending somewhere else.

“Maybe you have to say no to the next bachelor party or go on living with the same wardrobe for another year,” Hoglund said. “Just like starting a diet, these smaller choices help make decisions more real and attainable.”

Most don’t have to pinch pennies to improve their money. Try instead to make (and stick to) a budget. Make one yourself using this downloadable spreadsheet, or follow the simple 50/30/20 budgeting plan, which organizes your budget into three simple buckets: needs, wants and savings. Learn more here.

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