There’s nothing wrong with the occasional treat, or indeed a daily treat should you so wish.
But, the danger comes from supposedly small purchases that actually add up significantly – usually without people realising it.
I’m using a cup of coffee as an example, but that could easily apply to other small purchases.
Personally, I have a penchant for the fresh prepared fruit punnets from a local supermarket – the cost is about the same as a coffee at £3-£4 a time.
As I said, there’s nothing wrong with these purchases provided they are accounted for in the budget.
But, when you do account for them you realise the actual cost.
£3.50 a day might just be written off as a normal cost of living, but over a month we are actually talking about £105! That’s enough to lease a small car, or to be well over 50% of a reasonable person’s entire food budget for the whole month.
By taking a step back you can personally choose whether that cost is something you are willing to pay for the enjoyment – it might be a cost you are happy with, in which case it becomes a permanent line on the budget.
But if not, then there is a surprising calculation to be done:
£105 a month over an ‘average’ working life of 40 years, invested and compounded at 6.75%pa after inflation would give you…
So, that seemingly insignificant small purchase could actually become a significant expense if not accounted for.