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Is Pinching Pennies The Ultimate Secret To Wealth?

8 minute read

David Ning

By David Ning

I’ve always identified myself as a penny pincher. However, I wouldn’t necessarily say I’m proud of that label. Then again, I’ve never fully shied away from it either. After all, I credit my willingness to scrap and save for giving me courage to jump into the unknown of entrepreneurship when I started, all those years ago. It’s certainly changed my life for the better. If I didn’t have the commitment to save every available dollar back then, I may still be toiling away at my old job — working in sales for a slave driver of a manager.

Penny Pinching Isn’t Enjoyable

Having said that, I’d be lying if I told you that I actually enjoyed pinching those pennies. It was a tedious, stressful time. I’m much more relaxed about it now, but I used to go to great lengths just to save a dollar or two. It wasn’t fun. Like, at all. But I still did it, since every dollar I saved was a dollar I got to keep for myself.

These thoughts were stirred up again recently. I was having a conversation with my friend and he started explaining how pinching pennies via the Latte Factor is a short road to frustration. And I think he’s right.


Big Effort For Small Results

Have you heard of The Latte Factor? At some point, people starting coffee shaming millennials. They suggested that if people just stopped buying those $5 frappe-caramel-whipped-whatevers at Starbucks every day and invested the money instead, they could retire with millions. It made waves when it was introduced and was fairly blasted by those who realize that buying coffee isn’t the reason many young people can’t afford to buy homes or have children.

My friend also seemed to get this point. He theorized that skipping the drive-thru line at your favorite coffee shop to save $5 is a bit more complex. You’d need to invest in a decent coffee machine for your kitchen, plus buy the coffee grounds and filters. Or maybe you get one of those single use K-Cup machines (although they are terrible for the environment). After that, you have to deal with the cleanup. You may save a bit on the per-cup price of coffee. However, you probably won’t like your home brew as much as the real deal from Starbucks.

So you go through all that effort. Sure, now he coffee might only be costing $2 or $3 per cup. So you’ve technically saved a bit, but not the whole $5. Do you really want to go through this every day? There are easier ways to save, after all.

How Far Will You Go to Save a Dollar?

I like to compare the Latte Factor to the lineup of people waiting outside of Baskin Robbins on their free ice cream days. The free cone is probably worth about three bucks. Or even less if you just buy a whole tub of their brand at the grocery store. Despite that, people are willing to pack the kids into the car, drive 15 minutes to the closest location, and wait an hour in line just to save a few bucks for ice cream. It seems silly to me.

Penny pinching requires too much work for such small results — especially if you’re giving up something you really enjoy. Instead of figuring out how to pinch pennies and save $30 a month, I’d rather make a big change. Consider how to negotiate a lower cable or cell phone bill, or start shopping around for cheaper car insurance. You’ll likely find way more savings there (which you’ll enjoy every month) than skipping the latte or camping out for free ice cream. All it takes is a bit of research and a couple phone calls.


Giving Up What You Like

I don’t really think it’s penny pinching to review your priorities and then give up something that you don’t particularly enjoy. For example, I rarely buy new clothes. I’m not big into fashion. Everything I already own fits me just fine. I certainly don’t care enough to spend the time (and the money) picking out new outfits constantly. In fact, as I write this, I’m currently wearing a long sleeve shirt that I bought over a decade ago!

Everyone still thinks I dress like a million bucks, since I have a decently nice jacket covering it. I can’t even call it a sacrifice to be wearing decades-old apparel. When there isn’t really a big loss, I don’t consider it penny pinching. Now, if I had to give up going out to eat a few times a month, then that’s a completely different story, because I enjoy that much more than clothes shopping.

Sometimes, giving up what you like just isn’t worth it — even if it saves you a few bucks. There’s something to be said for enjoying your life too (as long as you aren’t racking up the debt to do so). Those little enjoyable moments make life worth living, after all. Why give those up just to save a few dollars a month? Instead, find something you’re ambivalent about and get rid of that. Having wealth is about much more than dollars in the bank. What else are you giving up when you choose to save another penny?

What Does Penny Pinching Cost You?

I recently went on a trip with the whole family to the Grand Canyon. As part of the trip, we stayed at one of the lowest priced lodges in the grounds. We got a special low price on the room. At check-in I decided not to upgrade to a better room close to the lobby.

After seeing our room, though, I kind of wish I had. The light switch covers and outlet covers were loose. The WiFi internet was spotty, and none of us were able to get online. It was cold but being an older hotel, there’s no central air system. That means air circulation unless you open the window to let the freezing air in.


The Kids Weren’t Complaining The Loudest

The kids whined a bit because they couldn’t play on their iPads at night before bed. However, they quickly got over it. They just turned on the TV, read, and slept a little earlier than if we had unlimited internet access.

It was actually me that complained the most, just to myself, inside my head. I felt like my attempt at saving a few bucks on the room had yielded inadequate results. It reminded me that I promised myself I shouldn’t always try to penny pinch. Sometimes, trying to save a little extra cost you in other ways.


Our Grand Canyon adventure reminded me that I truly enjoy experiences. Part of traveling, for me, is the good experience of a comfortable room. Sometimes, when you work to save extra money, you miss out on some experiences that you value.

It’s one thing to “rough it” on a guy’s ski trip with my buddies, since we basically won’t ever be in the room. However, but it’s quite another to stay in a beat up shack and not sleep well when the whole point of the trip was to enjoy time with your family.



For me, this is an even bigger consideration than experience. I place a high value on my time. These days, if I can save time by paying a little extra for something, I’ll do it. Getting the absolute cheapest price for something is not as important for me anymore — not if I have to spend a lot of time to do it. This is especially true of free promotions. I’m not going to stand in line for three hours for a free item that it would only cost me $5 to buy otherwise. I have other things to do with my time.

I ended up running around the area every night, trying to connect to the internet just so I could send a few work emails out and check to make sure my website was still up and running. It wasn’t the end of the world, but it was far from what anyone would call having a good time on vacation.


Another consideration is convenience. Sometimes, if you want improved convenience, you need to pay for it. For example, if I have to fly for business reasons, I’d rather catch the 10:00 AM flight after a good night of sleep. That beats the 4:00 AM red eye flight, which people take to save on airfare or reduce their hotel stay by a night.

Likewise, the convenience of buying movie tickets online is worth the price for me. They charge an extra buck or two to pre-select our seats, but that means we don’t have to rush to arrive early just to make sure we get seats together. Not having to deal with that anxiety is worth an extra $2 per ticket to me.



Sometimes you really do get what you pay for. If you pay bottom-dollar for something, there’s a chance that you will get bottom-quality as well. Sometimes, that lower quality can actually cost you more over time. If you need replacement parts (or end up having to replace the entire item), you likely would have spent less just buying the better quality version in the first place.

This is extra true these days, when the labor costs are way more than buying the machine or tool itself. If you buy an inferior product and end up having to pay double because someone needs to come fix it (or haul it away and deliver a new unit), did you really save anything?

Do You Even Need to Pinch Pennies Anymore?

I feel like this question often gets lost when we discuss whether penny pinching is worth the cost. Penny pinching only saves, well, the penny. This is money in the bank, money that can benefit from compounding, and certainly money that can go to pay other bills. But is having that extra penny — or dollar, or even a hundred dollars — necessary? Is your standard of living in jeopardy if you choose to let that savings pass you by?

I’m sure you’ve heard of others pitching you to figure out how to earn a bit more instead of pinching pennies. That’s certainly true. But even if you don’t spend another lick of time building another income stream, you could just retire another three or six months later. For many, a few months of employment can equal tens of thousands if not hundreds of thousands of dollars of extra income. Most people don’t want to work a day more than they have to but if it’s to avoid a lifetime of being frustrated pinching pennies, then it could well be worth it.

The Bottom Line

Sometimes, it makes sense to pinch pennies and save as much as you can. However, there are times when saving the extra money costs you in a number of other ways. Carefully consider all the costs involved before making your spending decisions. Sometimes, the non-money costs outweigh your savings.

And even during the times when the savings seems to justify the effort, you have to weigh it against whether you can just work a bit more to come up with the difference. Work sucks, sure. But does it really suck more than decades of less time, less convenience, and more frustration? Only you can answer that.

David Ning

Experienced Finance Writer

David is a published author, entrepreneur and a proud dad. He firmly believes that anyone can build a solid financial foundation as long as they are willing to learn. He runs, where he discusses every day money issues to encourage the masses to think about their finances more often.


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