“My lattes are costing me nearly two million dollars?!”

- From The Automatic Millionaire by David Bach

This was the first personal finance book my Mom gave me when I was 14 years old.

The book focuses on three tried and true principles on building wealth: 1) find the extra $5 a day you spend on lattes (or your latte equivalent) and save it, 2) pay yourself first, and 3) automate your saving contributions.

These principles are timeless. There are, however, much bigger financial decisions in life that can either stagnate or hyper accelerate your path to building wealth. And I’m not talking about whether or not to get a banana loaf with your latte (I say get the banana loaf, they are delicious).

Two of those big financial decisions are how much house you buy and what vehicles you choose to drive. It’s common to see big mortgage and car payments leaving little room for monthly savings. It’s not the $5 lattes that are leaving some people hamstrung.

Saving your $5 latte a day ($152/month) for a decade with a 7% return would grow to about $26,000. Nothing to sneeze at, and maybe it is worth cutting lattes down a bit.

Buying a house, however, for $500k instead of $600k would reduce your mortgage payment and property taxes by over $400/month*. If you saved the difference over the next decade with the same 7% return, it would grow to nearly $70k; over 30 years, almost $500k.

Next time you face a big financial decision, grab a latte (and a banana loaf) and be sure to take the time to weigh out all your options.

*20% down. 25 year amortization. 3% interest rate.