When it comes to financial planning I’m a proponent of having visibility into your cash flow and knowing what money you have coming in and where is it going.
The purpose is not to cut out that daily $3.50 coffee or to order less take out. (Both are things that I need to get under control). But just by having visibility and tracking where your money is going you will have a better probability of success of hitting your financial goals. If you took that $3.50 and instead saved it for retirement you would have an extra $131,000 to use in retirement. This is assuming a 7% annual rate of return and saving the $3.50The opportunity cost calculation can be measured for other things like ordering take out 4x per week ($1,277,000), cutting the cable cord ($272,000), or getting rid of your unused gym membership ($73,000). It’s not about cutting out everything and living a Spartan life. It’s about ensuring that you control your money and that your money doesn’t control you. If going on a vacation is important to you, then work in a vacation every year into your financial plan.