Recently you’ve probably seen headlines about how you could be a millionaire if you just stopped buying coffee, eating out or paying for a gym membership.

There’s merit to being mindful about your spending, but recently some of the claims coming out of the personal finance world appear to be more focused on click-baity headlines than providing useful advice. It’s important you don’t miss the forest for the trees.

We’re going to break down some of this hysteria around some personal finance topics and a common emotion these articles conjour in relation to money: shame.

Not all advice is equal

Managing personal finances and determining how and where to delegate your cash is tricky business. You’ve got to worry about budgets, retirement planning, investing for your future, tackling debt, and everyday expenses—the list can seem endless. It’s no surprise, then, that a number of individuals rely on the advice of talking heads and financial “experts” to navigate their expenses and investments.

Like with many other facets of life, not all advice is good advice, even when it comes from a professional. In fact, some “advice” offered by those who claim to be financial gurus is not always grounded in a data-driven or practical approach. It is important to have enough knowledge about finance so you can separate the wheat from the chaff when it comes to advice you read online or see on TV. While it might seem daunting, being knowledgeable about your finances is not as difficult as you may think.

The whirlwind of personal finance advice, online, in print, and in real-time, lends itself to a caucus of white noise that causes many people to freeze up.

Shame & Money

People are overloaded with information, which causes decision paralysis. Advice telling people their five-dollar lattes (and other daily indulgences) is what is standing in their way of becoming millionaires is discouraging at best.

This “advice” that treating yourself from time to time is what is ruining your financial health has resulted in the cultivation of what a Huffington Post article describes as a “culture of shame” surrounding the personal finance industry. Even worse than shaming some for their daily treats, this view completely dismisses the plight of individuals who are struggling to make ends meet.

It can be argued that some of the most popular advice has become more of a list of tropes than genuine guidance, little more than a script that some personal finance professionals will recite to make a headline or get airtime on a financial network. It is good to be wise with your money and cut back where you can, but there is no need to shame yourself for living the life you want to live.

The Media’s Financial Panic

“41% of Millennials admitted to spending more on coffee in the past year than they had invested in their retirement accounts.”

How many times has this statistic been used? Are Millennials destined to fail when it comes to their finances?

Absolutely not.

Chase’s twitter account took a stab at money shaming too, tweeting:

“You: why is my balance so low

Bank account: make coffee at home

Bank account: eat the food that’s already in the fridge

Bank account: you don’t need a cab, it’s only three blocks

You: I guess we’ll never know

Bank account: seriously?

#MondayMotivation”

(The Tweet, originally posted on May 2019, has since been deleted.)

Chase wasn’t the only one to find themselves in hot water on this point recently. USA Today ran a now-infamous story claiming that the average American spends $18,000 each year on luxury expenses. The breakdown of what these nonessential expenses included was shocking to many. Included in the list were items such as personal grooming, gym classes or memberships, buying lunch, and, of course, coffee.

Further widespread panic around personal spending has set in since CNBC tweeted similar scare tactics in June, quoting Suze Orman’s words, “If you waste money on coffee, it’s like peeing $1 million down the drain.” Where is Suze buying her coffee?

Millennials Actually Care About Finance

Millennials, in particular, have received a disproportionate amount of criticism regarding their spending habits on “nonessentials.” It turns out that millennials are the segment of the population that is the most receptive to financial advice.

So while the impression might be this tweet, the reality is much different.

Millennials, quit whining. I paid off $150,000 in student loans and own a $400,000 home, because I SAVE. It’s not that hard. I
-Make coffee at home
-Bus instead of Uber
-Shop sales
-Had parents pay off my loans & buy me a house because I’m daddy’s special boy
-Got Hulu with ads

— PolterGyver (@TheAndrewNadeau) October 21, 2019

A study conducted in February of 2018 showed that nearly three-quarters of Millennials demonstrated an interest in attending financial seminars, more than prior generations. Plus, the number of Millennials that are looking to work with financial advisors is increasing.

What everyone – advisors and financial newbies alike need to understand is that the key to a healthier financial future lies in your big-picture and long-term decisions. Sure, flushing $5 down the toilet every day is a bad idea, but it’s often the mistakes around the big financial decisions (ones people often don’t spend enough time considering) that can have the most severe long-term impact.

But if giving up coffee isn’t what will build your future wealth, what will?

Opening Up to the Big Picture

Instead of worrying about saving a few bucks here and there on minor purchases, the average American should be considering the impact their larger-scale decisions could have on their financial future. Those truly in tune with the bigger picture of finance will focus less on daily coffee expenses and more on avoiding bad decisions. A few examples include:

1. Cosigning a Bad Loan

It can be easy to misunderstand the meaning of cosigning a personal loan or a car loan, especially when a family member or close friend asks for help. However, cosigning a loan isn’t a way to validate a loved one’s character or reliability—it’s a surefire path to put you at risk to struggle with loan payments when the primary borrower can no longer keep up on payments.

More than one in three cosigners polled said that they had to pay the loan once the

primary signer defaulted. Furthermore, 25% of responders reported that their credit score was damaged due to late or absent payments on a loan they cosigned.

When agreeing to cosign a loan, a cosigner is legally obligating themselves to pay the loan in full if the primary borrower defaults on the loan, or makes late payments.

This huge (and easily misunderstood) commitment can have long-lasting damage on an individual’s personal finance record and even land them in legal trouble, not to mention the emotional damage it can cause.

2. Taking Out an Interest-Only Mortgage

Another financial decision with long-standing impact/consequences that new homeowners often face is whether or not to take out a fixed-rate mortgage or an interest-only mortgage. Given that the average length of a mortgage is about 30 years, there is no denying that this decision should rank highly on the “big picture” scale of important financial decisions.

While interest-only mortgages may look great in the short-term, financial advisors

focused on the importance of big-picture decisions will encourage their clients to

consider this type of mortgage’s long-term risks— “payment shock,” for example,

when the interest-only period expires, and payments suddenly skyrocket to include both primary payments and interest.

3. Ignoring Credit Scores

Plenty of Americans are afraid of checking their credit scores, and 14% of Americans have no credit score at all. Despite this, credit scores remain crucial to a person’s financial and even personal well-being and can majorly impact an individual’s quality of life. Every time a person with a bad credit score looks to rent an apartment, connect a new phone line, open a new credit card, apply for a mortgage, or take out a loan, their credit score will be under scrutiny. Even employers have access to their employees’ credit scores.

However, a survey asking Americans about their knowledge of the risks and potential troubles that accompany a bad credit score found widespread misconceptions and a general lack of understanding. A different report stated that one-third of Americans don’t know how their bad credit is affecting them.

It’s easy to see that a bad credit score can negatively impact many aspects of an

American’s life, so shouldn’t influential financial institutions and major news outlets

focus more on educating the public about how to maintain a good credit score (or

establish credit in the first place) rather than contributing to the guilt surrounding small splurges like that coveted pumpkin spice latte?

4. Not Saving for Retirement

Nearly half of Americans are living paycheck to paycheck, and even less are saving for their retirement. Just 39% of Americans saving for their retirement began doing so in their 20s.

The earlier you start saving money towards your retirement, the less you will have to put away on a monthly basis. Nerdwallet reports that in order to become a millionaire by age 67, a 23-year-old should put $415 away each month, whereas a person who starts saving at 35 should plan to put $912 into their retirement savings each month. With earnings from compound interest building over time, you may even find yourself having to put less away in retirement accounts than initially planned if you get a head-start.

If available to you, an employer-sponsored 401(k) is a great retirement savings account option, with many employers offering to match employee contributions (up to a certain amount). Contributions are made pre-tax, with tax being paid when withdrawing. However, there are penalties (10% fee on top of tax) for withdrawals made before retirement age, so it is best not to dip into this as a personal emergency fund.

According to the Government Accountability Office, 29% of households headed by people 55 or older have no savings in a retirement account.

With it being near impossible to predict the cost of retirement perfectly, it is imperative to have enough saved up; otherwise you can expect to be faced with downsizing and even possibly downgrading your quality of living as you age and look to work less. It is imperative to have money saved in times of rising living, housing, and medical costs.

A critical first step is taking ownership and drafting a plan. Within that plan, you can find a way to balance those small splurges that keep you happy with your long-term goals of financial freedom.

What now?

What does this all mean for the average person? It means that it’s okay to grab a green tea latte or enjoy an iced mocha. It’s often fine to spend money on a gym membership or on personal grooming habits, and eating out occasionally won’t result in bankruptcy.

While every financial decision is important (even the day-to-day ones), it’s the big-picture decisions that matter most when shaping your financial future.

Everyone should look to arm themselves with the basic financial acumen, so they can make the right decisions for themselves. Letting headlines and talking heads scare you isn’t going to open up a new world of financial freedom.

Taking action to prepare yourself by having a budget, a retirement plan, and avoiding big financial landmines along the way will help to support a sound financial future.

In closing, have a plan but don’t let the clickbait headlines scare you.

Note: CNote is not a registered investment advisor, and this information should not be relied upon as individualized investment advice. Every financial situation is different and you should seek tailored advice to suit your specific financial circumstances.