When making a financial plan, it is a good idea to carefully consider where you put your money. The power of personal finance choices can be great, and it can determine the difference between being financially solvent and running into financial problems.
One of the most basic things to remember is to consider what you are spending your money on. Think about whether where you put your money results in interest earned (the power of earning interest is great — see my post on the Rule of 72), or if it is just so much money wasted.
Intangible benefits can also be considered. If you buy a book, will it contribute to your lasting enjoyment? Is it educational? You get something out of these choices. The same is true if you eat out every once in a while. The key is to consider what you are getting in return.
Items like the lottery, which offer a very low chance of getting anything in return, or a latte every day from the coffee shop, are things with very diminished returns. You can have your own coffee most days, and save more money (or better yet, invest it). That goes double for something like the lottery, which doesn’t even offer you the satisfaction of a caffeine buzz.
Consider the personal finance choices you make. If you are spending money on something that feels like a waste to you, change your habits. Imagine how much you could earn, in interest, if you put that money for a lottery ticket into an investment.