This is a common question in personal finance circles. Personal finance guru David Bach made the question popular by writing about people’s daily spending habits. He calls it the “Latte Factor” because so many people spend a few dollars a day on their morning specialty coffee. It doesn’t have to be limited to coffee. I’ve known people to buy their lunches for $10 a day. Imagine the savings of making your own coffee and lunch at home. Those simple changes add up to hundreds of dollars a month. If those savings are invested, they could be worth hundreds of thousands of dollars over time.

Often times when people realize this, they change their spending habits. The question is when do you stop trying to save every penny?

I struggle with this at times. I find myself looking at every penny that I spend and scrutinizing whether it’s a necessary expense. I have to admit that it’s not a comfortable frame of mind to be in.

Like many things in life, balance and moderation is the key. However, I think how vigilant you are with small expenses depends on your income. If you are high level corporate executive, you will probably find that saving a dollar here and there is more work than it’s worth.

On the other hand, if you are living on a fixed income, you may find it worth a lot of your extra time to save a dollar or two. I try to position myself somewhere in the middle.

I look for easiest things that I can do to save money. I find that this often gives me the best value for my time. Some might know this phenomenon as the 80/20 rule or the Pareto Principle. For example, I’ll buy generic foods rather than spend time clipping coupons for brand name products.

How much effort do you put into saving money on small purchases?

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Lazy Man has been a lender at Prosper since February 2006. His lending has been written up in the Globe and Mail, Canada’s largest national newspaper. He is the author of the personal finance blog, Lazy Man and Money. He enjoys watching Boston sports while sipping diet cola