How many times have we heard budgeting advice simplified down to “cut coffee out of your daily routine”? Sure, it’s sound advice and I’ve probably even made that recommendation myself from time to time. It’s true that cutting back on small, repetitive items can have a large impact, but it’s often easier and more effective to focus budgeting efforts on larger items, what I call the heavy hitters. Reducing costs on more expensive items not only has a larger effect, there’s typically more margin available to be cut.

This philosophy is similar to one outlined by authors Marcus Buckingham and Curt Coffman in their book First, Break All the Rules. They stressed the value of managers spending as much time as possible with their top performers rather than wasting time on under performers. The same idea applies to your budget: Spend as much time and effort reducing your largest costs. You can cut back on coffee all you want, but doing so won’t have nearly the effect as reducing your largest costs (like housing, insurance, and food) by the same percentage.

Spending time tweaking and optimizing your smallest expenses is noble, it’s just not particularly effective. Many small expenses seem dispensible and I think that’s why we look to them first. We think that completely eliminating an item must be the way to go, rather than considering reducing a larger expense. To continue with our coffee example, if you spend $3 a day on coffee, 5 days a week, that’s $780 a year. Don’t get me wrong. If you can cut that out of your budget, that’s great, but is depriving yourself of your daily coffee really worth that effort for a minimal savings? You would probably find it much easier to shave the equivalent ($65 a month) out of a larger expense without having to give up a simple pleasure.