Stop Counting Pennies and Focus on the Dollars


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Stop Counting Pennies and Focus on the Dollars

I have this problem where I’m always counting pennies in my head. Not literally, but rather that I’m always conscientious of all our spending… to a fault.

Don’t get me wrong, being mindful of what you’re spending is a good thing. If you don’t know what you’re spending, it can become very difficult to get ahead.

The problem, however, is that counting pennies isn’t as important as focusing on the bigger money. In other words, saving a few extra dollars with some coupons might make you feel great, but if you then go out and buy a brand new luxury car, did it make much of a difference?

The habit of staying focused on what we’re spending permeated my soul while on the path to financial independence. I wanted to get there faster and, in my mind, every penny counted. And although you can argue that that’s technically true, it’s really not that relevant in the grand scheme of things.

Counting pennies is something that will serve to make you more miserable and likely won’t help you in your financial goals over the long term.

Counting pennies in my life caused a little confusion

I wrote a post about 6 months ago titled, We Don’t Need More Money… But I Want It!. In it, I talked about exactly that – we’re good with where we’re at money-wise and can live happily ever after. However, having more money would allow me to loosen the reins a little.

The post was later syndicated by my friend Leif from Physician on Fire, which was extremely nice of him to do. But then it was discussed in the White Coat Investor forums and several folks didn’t understand the point I was trying to convey. Quite a number of the posters felt that we just retired before we had enough money. Granted, these are much higher income earners who are generally on a different playing field when it comes to money.

So I realized maybe I didn’t make my point clear in that initial post. So I’ll say it now – we don’t have a problem with money. We have enough to live our normal lives, travel, and do the fun things we want to do.

The issue is me.

I’m still stuck in my old ways of counting pennies when I don’t need to be doing that. Spending an extra dollar here or there isn’t going to blow our retirement plans. We have enough money. I just struggle to let go of the old habit of being too conscientious about every nickel that’s being spent.

Stop Counting Pennies and Focus on the Dollars - Pennies and Dollars

Ensure your finances are in check first

Look, everyone’s saving and spending habits are different. However, if you’re careful with your spending and you’re doing all the right stuff, a few extra dollars here and there aren’t going to crush you.

Let’s start with the most important piece of the equation… the saving and investing side.

While on the path to financial independence, I eventually got everything put on autopilot:

  • My 401(k) contributions were taken out of my paycheck before I even saw them. That was set up so I would contribute the federal max every year and automatically be invested in a low-cost target-date retirement fund (one of my only suitable low-cost options available).
  • My HSA contributions were also taken out of my paycheck before I even saw them. This was being maxed out for the last few years of my employment as well. The money was automatically invested in the Fidelity ZEROSM Total Market Index Fund, which I was lucky to have available during the end of my career.
  • A day or two after my paycheck would be deposited, my bank would automatically transfer some of it over to my online savings account at a different bank.
  • A day or two after my paycheck would be deposited, Vanguard would also pull money out of my account, put in my Roth IRA, and invest it in Vanguard Total Stock Market ETF (VTI). This was set up to ensure I maxed this account out each year as well.
  • All my credit card balances were (and still are) configured to automatically pay off my balance each month.

This is the true meaning of paying yourself first, friends!

Life wasn’t always this way (far from it) and we were very lucky to be able to do this. The way we got to this point was by slowly upping each contribution and savings transfer once or twice a year. It’s hard to miss the money that way and before you know it, you’ve built up a sizable nest egg.

Personal Capital is the free tool I use to instantly see my net worth, track my spending, and manage my investments. The built-in retirement calculator, fee analyzer, and other tools make this awesome software even better! If you’re looking for a good way to manage your finances, check it out!

But the point is that I had everything automated. We had a personal savings rate of an impressive 60% shortly before I retired at the end of 2018.

At this point, we were doing things right financially. We had our savings and investments on autopilot and had our spending in check on the big three… the second part of the equation.

The big three expenses in life are generally housing, transportation, and food. If you’re already living in a modest home, driving your car for 7 or more years, and doing your grocery shopping at a place like Aldi, you’re positioning yourself much better than the rest. Give yourself a high five!

So having your saving and investing along with your big expenses in check is critical… as is being able to pay off your credit cards every month. Credit cards are awesome if you capitalize on the rewards, but you still need to pay them off each month for the benefits to be meaningful. I have a list of our favorite credit cards that we like on my Recommended Credit Cards page.

Why counting pennies is silly

Ok, so we established that you’re on track for your financial goals. And depending on what you have leftover as well as your mindset in general, you may or may not be a frugal person with the remainder. I’m in the camp of being a frugal person.

But it’s time to not let frugality on the little stuff overpower you.

Let’s say you need a jar of peanut butter and see it at a grocery store where it’s $2 more expensive than you’re used to paying at Aldi. If you need it and don’t plan to be at Aldi anytime soon, put the damn thing in your cart and buy it.

This is the type of thing I struggle with all the time. I know it’s only a $2 difference in this example, but my brain goes crazy knowing that it’s cheaper elsewhere. Why not just go to the other store and get it cheaper there? Because it’s unnecessary to waste time in your days counting pennies when you’re already plowing ahead on track financially.

Take a step back and think about it. How often does this stuff seriously happen? If you’re already smart with your money, it’s probably not that often. Hell, let’s say it happened 100 times in the year. Yes, you’d be wrestling with caving in and spending the extra money “unnecessarily” but is it a big deal in the scheme of things?

Not really. If this happened 100 times in a year, that comes out to a measly $200! That’s it! It’s not worth the mental heartache.

This, of course, doesn’t just apply to overpriced peanut butter or other groceries. Let’s say your dining out is already in check and you don’t do it too often. When you do go out to a nice dinner, don’t spend your time comparing two items and then choosing the one with the cheaper cost just because of that.

It’s ok to splurge a little and choose the entree that you really want. Live a little and give yourself that bit of happiness. It’s not going to crush your retirement plans.

Stop Counting Pennies and Focus on the Dollars - Boca Chica Restaurant in David, Panama
Boca Chica Restaurant in David, Panama… delicious!

I’m giving examples like these because these are areas I have a hard time with. I know that a few dollars here or there isn’t going to make a difference, but my brain still can’t process that very well. Yes, you might find that a little crazy, but I figure if I fight with this, others might as well.

Being content with the idea that spending unnecessarily on the small things is my biggest hurdle financially. Counting pennies truly is a little silly if you’re already on track with your financial goals.

An extra dollar here and there ain’t gonna hurt you!

This might be blasphemous to say in the personal finance community, but spending money even a little needlessly ain’t gonna kill you.

Obviously, you need to have some rules in place. As I said, the biggest of these is ensuring your finances are already putting you in the position you want to be in. If the spending is going to hinder your financial plans, then you might want to think twice about it.

But counting the pennies isn’t as important as counting the dollars. The big dollars are what truly matter. Those are what need to be kept in check unless you’re rolling in the dough.

Once you’re in the position that your money is doing the work for you, it’s ok to relax a little bit.

Buying some “street meat” from the local street vendor… not a big deal. Getting a coffee while out and about… not a problem. Paying a buck or two extra while already at one store so you don’t need to waste time going to another… a-ok.

Stop Counting Pennies and Focus on the Dollars - Street Meat Vendor
Mmm, street meat!! What kind of meat is it though? We may never know!

As early retirees of over three years now, I can tell you that we’re in good shape with our finances. We have more than enough money for our day-to-day expenses and to include plenty of fun like vacations and travel. We plan well and live a fun life.

And we’re already enjoying that stuff so it’s time that I stop worrying about the little expenses that don’t really matter. Even if caving in and letting all those little things happen would somehow cost us even another $1,500 over the course of a year, it’s not going to crush us financially.

Again, this can’t be everything and it doesn’t mean going overboard. But for already frugal people who are good-to-go financially, loosening up the reins should be just fine.

It’s time to take a stand and know that counting pennies isn’t what makes the wealth, the big decisions on saving and spending are!

Am I alone in being someone who thinks too much about spending an extra dollar here and there?

Plan well, take action, and live your best life!

Thanks for reading!!

— Jim

You know you wanna share this!!

33 thoughts on “Stop Counting Pennies and Focus on the Dollars”

  1. I can identify with you, Jim. I see the pennies as tangible and the dollars as numbers on paper. I, too, need to move on.

  2. Wow, this resonated with me. Exactly how I am. I just can’t get over it. Lines up with my OCD. We are at a 70+% savings rate as well and in-line to retire at 45 or so with double the amount to spend that we spend now.

    Part of me enjoys the hunt of saving money and it is a hobby. But sometimes, it is mentally taxing.

    We could win the lottery tomorrow and not sure anything would change!

    1. That’s funny, Mike, I can relate to the enjoyment of trying to save money as well. It becomes a sort of game that’s actually fun (sometimes). I’d probably be the same way, too, if I won the lottery… but I’m determined to try to open the purse strings more on the little things that don’t matter much.

      1. Hi Jim,
        Just found your site. I’m the same as you. I would spend hours researching how to save or pay the least for the items I need/want. Just last week, my garbage disposal died. I decided to save $12 to buy a new disposal that was not corded. I simply transferred the old cord from the old disposal over to the new one. Can I afford the extra $12 for the corded version? Absolutely! Saving money is like playing a game that challenges my brain. It’s fun (most of the time). Then the next day, I rewarded myself with first class air ticket to New Hampshire for some hiking fun. LOL

    2. This is so true of us. My wife and I grew up in poor families. Now that we have achieved a level of financial security by being frugal and working hard, we constantly have to remind ourselves it’s okay to enjoy our rewards. But I really believe that we deserve to let loose occasionally. Enjoyed your article!

  3. Jim, after years of aggressively pursuing FIRE, it’s only natural to count the pennies. Here’s one for you: challenge yourself to start intentionally buying the more expensive option. LOOK for that peanut butter that costs $2 more. ORDER that meal choice that’s $1.50 more expensive. Smile every time you do it. It’s time to break the habit. Remind yourself, every time, that “we’re fine,” and enjoy those small luxuries along the way. It worked for me, maybe it’ll work for you. Enjoy the jungle tree house, sounds awesome!

    1. Haha, I think that exercise might kill me, Fritz! 😉 But I still might try it regardless… I like the challenge!

      We’re on our way to the Jungle Lodge now. We stopped off at a store so I could get an air horn first for my peace of mind in case I need to scare off any jaguars!

    1. Try to be cognizant of it now then, Marc, because it can be a hard habit to break later. If everything’s already automated with your desired savings rate in place, then don’t worry about the small dollars here and there… you’ll be happier in the long run. This message will self-destruct in 10 seconds. 😀

  4. Great read. I don’t think the “penny counting” thing is a bad habit. After all, that’s the thinking that got me where I am today and I’m not able to shake that way of living. I will say that I’m happy my wife and I have that mindset. Don’t get me wrong, we like our vacation time, fun gadgets and occasional dinner nights out when I spontaneously pick up the tab, but when the time comes to spend that extra two bucks on the peanut butter, I cringe..
    I don’t think I’ll ever be able to change or get rid of that way of thinking.

    1. I’d say that it’s not a bad habit if it doesn’t bother you and helps you maintain control. But the cringing part that we have on the couple dollars here and there is a hurdle I wouldn’t mind getting past. 😀

  5. Death of a thousand cuts is the analogy of spending too much on “the little things” and saving only on the big things. This is how we all achieve such great FI savings.
    It is a very hard habit to break but maybe ease up now and then instead of trying to completely change? I think of money like calories on a diet. A “cheat day” is okay but keep yourself focused enough on saving here and there to keep yourself and finance’s in check.

    1. Agreed, Patti, and I don’t think that’ll ever change in general… especially for the big money spending. But, if I could just stop worrying about spending an extra dollar here and there when that occasion comes up, I’d be set!

  6. You are not alone. I was paralyzed in Walmart. My wife wanted raisins and they were out of GV brand. I knew Aldi had them for $1 but after 5-10 minutes I put the Sunmaid in the cart for $2. I told myself I will buy 2 next time I’m at Aldi. Kinda told myself I’m dollar cost averaging down so the average doesn’t sound so bad.

    I’m taking the family to Peak n Peek for skiing for an overnight stay. It is a 1 3/4 hr. drive and have driven home after skiing many times. But as I get older I want a place to camp so we are spending money on a room at the inn. We are going during the week when it is cheaper, and my boys get discounted tickets for being in college…. It is hard to pay more (for me). It is like a game and I don’t want to lose. Tipping and paying for an art or small business is not a problem. It’s the big corporation thing…

    1. Haha, that’s a great story, Scott… and I can definitely relate! 😂

      I hear you on it being sort of a game, too. My goal is to still enjoy that part of the game on the bigger stuff but try not to cringe on the smaller stuff (we’ll see how that goes!).

      Have fun on the ski trip!

  7. We still carry out leftovers from restaurant meals too large for us. I know a lot of people wouldn’t do that, but it seems wasteful not to. We buy store brands whenever possible. However we have learned to pay for higher quality on our running, tennis and hiking footwear and trekking poles, etc. But I still buy $10 jeans at WalMart and pretty cheap hiking and tennis wear. Frankly I can’t tell the difference in a Target synthetic sports shirt or shorts and one with a name brand on it. But to save wear on my body I do get natural gut tennis strings in my racquets even though they cost $50 each time and I get a lot of racquets restrung each year. Anything that impacts wear and tear on my aging athlete body, like the very best hiking boots and running shoes, is a bargain to me. Good shoes are relatively cheap compared to being able to stay active and not injured.

    1. We always keep the leftovers, as well – easy meal for later, too! And the same with air brands.

      That’s a good way to look at what to splurge on. Something that keeps the body from breaking down more is vital. That said, I probably should have spent more than $45 on the running shoes I bought for hiking up the volcano a couple of weeks ago… probably wasn’t my best idea! 😂

      1. I used to hike in trail runners, basically slightly beefed up running shoes, but once I tried light weight hiking boots (Merrill’s my favorite) I’ve never gone back. They’ll set you back $140 but well worth it to protect your feet and ankles. The superior traction of the heavily cleated soles can save you from some painful falls as well.

  8. Yep focus on the basic expenses so I don’t have to sweat the latte factor, that’s what I did. It’s way easier to make two or three big financially reasonable decisions than to try to be perfectly disciplined every single day forever.

  9. Great post. I’m looking for a place to transfer my HSA for better returns. Would you still recommend Fidelity fund? Thanks

    1. Hi Kathy – unfortunately, I can’t recommend investments because I’m not a certified planner. Personally, I’m still all in on FZROX in my HSA because it’s a zero-cost index fund that makes sense in my case. Being an index fund, it’ll never beat the market or do worse than it because it tracks it. But having the same return as the stock market over the long haul is absolutely fine with me. 😀

  10. We’re still frugal, but we don’t watch every penny anymore. We’re in a position to spend a bit extra to save time or for convenience. We still don’t splurge much. That’s okay too because we still have a long way until we’re 65. Once we’re there, we’ll probably loosen up a lot more.

  11. Great article, agree that my OCD for getting the best possible deal has gotten our family to this point, but I’m determined to change when it comes to freely spending (not penny pinching so much) on the small fun things (vacation, eating out, school events, family events) in life; so our family can enjoy the fruits of our labor/ saving over the years.

    Thanks for again opening our eyes to the possibility of a better/ happier way of life.

  12. I hear you Jim. I grew up with the philosophy that “every penny counts”, so I counted every penny.

    That may have mattered once, when all I had were pennies, but now that we’re well into the 7-digits club I’ve slowly begun to shift my thinking to dollars, not pennies.

    Having a frugal mindset still matters of course, but a few pennies here or there isn’t worth the extra hassle.

    Where do you draw the line? At what point do you shift your behavior to save money Jim?

    For example, I’ll go to a grocery store slightly further away from my home when I know I can save at least $10 for 10 extra minutes of my time.

    1. Yeah, agreed that there needs to be a line somewhere, but that’s going to be different for everyone. Our net worth means we might need to be a little more stringent than you guys for instance from the math side of things. But then the comfort level comes into play and that can easily be different than the math. Maybe I’m more comfortable than letting a few dollars go than you are (not sure if that’s true or not). But I think the point is that if you’re on track with where you need to be financially, then it’s ok to let go of the tiny amount of uncomfortableness that might come along with letting a dollar slide here and there.

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