We asked 21 experts: Can cutting out lattes save your budget?

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Hanna Horvath, CFP®

Hanna Horvath, CFP®

CERTIFIED FINANCIAL PLANNER™ & former Managing Editor, Growth

Hanna Horvath is a CERTIFIED FINANCIAL PLANNER™ and former managing editor for growth at Policygenius. She helped produce the Easy Money newsletter. She passed her exam to become a CERTIFIED FINANCIAL PLANNER™ in November 2020.

Hanna's work has appeared in NBC News, Business Insider and Inc. Magazine. She is regularly quoted in top media outlets, including CNBC, Best Company and HerMoney. She has also appeared on the Money Moolala podcast and All's Fair podcast.

Prior to Policygenius, Hanna wrote for KNBC in Los Angeles and WNBC in New York. When she isn't writing, she's (often) running, (usually) cooking and (sometimes) doing photography.

Published August 27, 2020|2 min read

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The biggest budget buster? Coffee, according to Suze Orman. The personal finance expert said in a video for CNBC last year that coffee can cost you $1 million over time. Her logic: If you had instead invested your coffee money (around $100 each month) in a Roth individual retirement account, you’d have $1 million in about 40 years.

“Basically, you're peeing $1 million down the drain,” she said in the video.

Is cutting so-called unnecessary items out of your budget really the only path to improved financial health? Some experts think focusing on the bigger picture is more important.

We asked financial experts if Suze Orman’s belief that cutting out your daily latte is the best way to improve financial health. Most of them ... did not agree.

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Why some experts think cutting back on small purchases helps

Here's why some experts think Suze Orman may be right:

“We are creatures of habit and our habits shape our lives. So, developing good habits of saving and investing early on in our lives can shape our future success in reaching our goals. It is better to think of ourselves as savers/investors than consumers, and accumulation beats spending longer-term as a daily habit.” Allan Moskowitz, certified financial planner at Transformative Wealth Management.

“I think it is important to be mindful of your spending. It is all about conscious consumption. What seems discretionary to one person is an essential to another. If someone is able to save for their goals, they don't need to worry about small indulgences. If someone is having cash flow issues, then it does make sense to look for opportunities.” Marguerita Cheng, certified financial planner and CEO at Blue Ocean Global Wealth.

Why some experts disagree

Let's be honest. Cutting out coffee (especially when it keeps you sane) is probably not going to be the deciding factor on if you become a millionare. And most experts agree:

“No, cutting out small daily purchases is not the best way to improve your financial health, especially if coffee helps you get through life! It’s about knowing where your money is spent and making a conscious decision that each purchase provides a commensurate amount of benefit to your daily life.” Jason Hunt, certified financial planner at Hunt Financial Planning.

“While changing a habit like a daily coffee may help finances, the best way to improve financial health is to spend less on the biggest lifestyle purchases, typically one's residence and transportation.” Virginia Asher, certified financial planner at TrustBank.

“No. ‘Small’ things like a good cup of coffee and a superhero show in the morning are the things that keep me sane.” Michael Whitman, certified financial planner and managing partner at Millennium Planning Group.

Last week, we asked people if they should bother with Dave Ramsey's preferred method of paying down debt. Here's how 21 experts responded.

Image: Nastia Kobzarenko