Have Your Latte -- And Save, Too

I have a confession to make: I bought a latte yesterday. And it gets worse. Because I work from home, I had to drive across town to get it. Considering how many personal finance publications (including Kiplinger's) are advising people to give up their daily latte to save money, I must have committed one of the biggest money sins. Or did I?

I rarely have lattes, but every now and then I treat myself. And that's okay -- as long as the cost of those treats remains within my budget. You see, if there's something you really enjoy, you don't have to give it up entirely to save money.

Put it in perspective. What percentage of your budget are you spending on your treat? Say you spend $8 to $10 on lunch every other workday. That's about $90 to $110 a month. If you have $1,000 left every month after paying the bills, etc., then your lunches out consume about 10% of your spending budget. But if you have only $500 left every month, those lunches are taking a 20% bite out of your budget.

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Enjoy in moderation. If buying coffee, dining out or having drinks after work is a daily routine, you'll have one expensive habit. But a $3 latte (or even a $50 dinner out) once a month won't break your budget. So restrict yourself to an occasional treat to keep costs under control.

Give up something else. Say your indulgence is cable TV. It's not like you save money by enjoying it in moderation (the cable company won't cut your bill in half because you only watch TV every other night). If you really value ESPN or Showtime, commit to cutting out something else, such as other entertainment (movies, concerts, amusement parks).

Find a cheaper alternative. My husband and I like to go out without the kids, but a dinner date can be expensive because we're paying the restaurant tab and a babysitter. It's a lot cheaper for us to go on an occasional lunch date, when the kids are in school and the meal prices are lower. A cheaper alternative to cable TV is a Netflix subscription and network Web sites, which are increasingly posting full episodes online (see Cut the Cable Cord).

Get your indulgences at a discount. Use coupons to avoid paying full price. My colleague Stacy Rapacon got a free drink coupon from Starbucks for her birthday after signing up for its free rewards program. She also scored coupons for a $1 drink and popcorn at AMC Theatres after signing up for its rewards program. At Restaurant.com you can get $25 restaurant gift certificates for only $10. And you can save money on massages, facials and other services by scoring deals online at Groupon.

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