Originally appeared in
Look after the pennies or don’t sweat the small stuff? Try both
Published in The Sunday Times on December 14, 2025.
I was thinking recently about the changing nature of things, how for example advice that was considered prudent once upon a time is later contradicted by newer thinking, often on a subject which logic would say is immutable in nature. An example that springs to mind is the old guidance that any more than three eggs a week was a recipe for an early grave or the anti-drink driving campaign that warned “Don’t have that fifth pint”, the implication being that having four was safe – since debunked as a joke that grew legs.
“Take care of the pennies and the pounds will take care of themselves” is a saying attributed to William Lowndes who was British Secretary to the Treasury from 1695 until his death in 1724. This was considered for centuries to be solid advice that astuteness in spending on the small stuff would result in a steady increase in net worth over the long term.
One way to garner attention on social media such as Linkedin is to propose a contrarian take on issues. I’ve recently seen “mind the pennies” contradicted with financial advice that encourages people not to sweat the small stuff, that basically the latte you treat yourself to on the way to work is unlikely to keep you off the housing ladder, and that financial management of bigger ticket items is where your focus should be directed.
We know that lifestyle creep can be an obstacle to wealth accumulation. If your lifestyle increases as fast as your salary you can find yourself running to stand still. I have heard people with seven figure incomes say that it is easy to spend it. That’s lifestyle creep at work. At the other end of the spectrum a common problem which is faced by Financial Planners and one you might not expect, can be getting people to spend money. A person who has been prudent and accumulated a good level of retirement assets can be over cautious when it comes to drawing down their pension.
Much of the value in financial planning is showing you what is possible during your working life when you are accumulating wealth, but also in retirement when you are decumulating. As they say there are no pockets in a shroud and all that, so what we need then is a rule of thumb that is easy to remember and dynamic in nature.
I favour a strategy proposed by Nick Maggiulli in his book The Wealth Ladder. The system is based on the premise that it’s the marginal cost of having nicer things that makes the difference to your finances.
Maggiulli divides net worth into six levels, level one being between zero and €10,000, two being from €10,000 to €100,000 and so on with level six being €100m plus – don’t you just love America! Many a budgeting commitment is breached based on a subjective justification so a rules-based system could be useful for those determined to stay the course. Maggiulli outlines a rule which you can use to decide if you can make that additional spend and still have a reasonable prospect of accumulating wealth.
Under the system you take your net worth and divide it by 10,000 and the resultant figure is your daily freedom number. Using this system, someone in level two has grocery store freedom, level 3 has restaurant freedom and level 4, someone worth between €1m and €10m, has travel freedom.
A person with a net worth of €1,000,000 has a freedom number of €100. If you are planning a weekend away and the difference between the cheapest hotel room and the one you would like to stay in is €100 or less per day, you can treat yourself. If you sit in level five, the math might tell you than you can fly first class. If you’re at the upper end of level 5 (€100m) it might tell you that you can fly private.
The effect of this system is that it allows for some lifestyle creep but only after you have put in the hard yards, which when you think about it is a happy medium between the two extremes.
Of course there are times when the lure of a good time will get the better of even the most prudent. If you’re planning on doing the 12 pubs of Christmas this season, remember, this system can be difficult to manage by the time you get to that fifth pint.
Eoghan Gavigan is a certified financial planner and the owner of Highfield Financial Planning hfp.ie
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